Trucks
Switching from diesel to electric trucks involves more than just changing fuels – it often requires different financing solutions as well. The key is to find a financial partner who can offer flexible options to ease the transition and minimize risks.
Similar to conventional diesel trucks, numerous financial partners are available to assist with electric truck purchases. However, it is crucial that they understand the different costs associated with electric vehicles in order to adapt their solutions effectively.
Why is electric truck financing different from diesel?
Higher purchase prices, lower operating costs, and uncertain residual values are just a few factors that can vary significantly when transitioning to electric trucks. These differences can completely alter traditional total cost of ownership (TCO) calculations, often necessitating alternative financing options.
“As many people know, the main difference is the much higher purchase price,” says Tim van Norden, Sales Director for Volvo Financial Services Netherlands. “This can pose a challenge for many businesses since the return on investment in an electric truck typically occurs over the vehicle’s lifecycle. Our goal is to work together with the customer to find a solution that is more affordable and better suits their business’ cost structures.”
Our goal is to work together with the customer to find a solution that is more affordable and better suits their business’ cost structures.
How can you integrate subsidies and incentives into the purchase?
In many markets, governments offer a range of incentives and subsidies to help finance electric truck purchases. However, the bureaucratic procedures for applying for these subsidies can be time-consuming and complex. If not handled correctly, there is a risk that a business is left burdened with high loan costs while waiting for their subsidy applications to be processed.
By partnering with a financial institution that understands the regulatory landscape, it is possible to seamlessly integrate the subsidy into the purchase.
“On the instructions of the customer, we can often manage the subsidy application on their behalf. We have extensive experience in applying for government subsidies and can assist throughout the process,” says Tim van Norden. “The customer can then use the subsidy as a down payment for the truck, simplifying the whole process for the customer.”
Lease or loan – what are the pros and cons?
For many businesses, electric trucks can be perceived as a risky investment due to their status as new technology. There remains uncertainty about the resale value of electric trucks, as the secondhand segment is still immature. One alternative is to lease the vehicles.
Volvo Financial Services, for example, offers two solutions. First, there is a financial lease, in which the customer purchases the trucks and can take full advantage of any available subsidies. However, this option also entails assuming all risks associated with resale value. Alternatively, customers can opt for operational leases, where they lease the trucks from Volvo Financial Services and return them after a set period. While this means they cannot benefit from government subsidies, it allows them to avoid risks related to the vehicles' residual value.
We’re exploring usage-based business models that allow customers to better align their costs with their income.
What’s the difference between a captive financer and a conventional bank?
A captive finance company, such as Volvo Financial Services, is a subsidiary that provides financing and services for its parent company’s products. Their primary advantage is their extensive industry knowledge, their understanding of the market and ability to tailor solutions to meet customers’ unique needs and challenges. Conventional banks on the other hand, typically focus solely on a company’s financial situation and loan repayment capabilities.
“Our salespeople work closely with Volvo Trucks, since we’re part of the same group,” says Tim van Norden. “We meet prospective customers in person because we want to truly understand each customer’s unique circumstances. This approach helps us tailor solutions that enable them to transition to electric.”Having these insights into the truck industry also positions Volvo Financial Services to develop new financial solutions better suited to the electric trucks market.
“What we’re seeing is that more companies want to use trucks without necessarily owning them,” says Anders Carlander, Business Development Manager, Volvo Financial Services. “Therefore, we’re exploring usage-based business models that allow customers to better align their costs with their income.”
As the supply of electric trucks continues to evolve, partnering with an experienced financing provider that stays updated on industry developments can be increasingly beneficial for customers.
To learn more about making a seamless transition to electric trucks, read:
Volvo Financial Services
Volvo Financial Services understands that no two businesses are alike. That’s why they create customized, flexible offers designed to help each individual business to grow and thrive.
