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Forget Tesla—the real revolution is electric garbage trucks

Rick Newman
Senior Columnist

You’re not likely to hear auto critics wax rhapsodic about the acceleration or handling characteristics of a 10-wheeled, 30-ton refuse collection vehicle. But at least one automotive visionary believes the humble garbage truck represents the future of electric-vehicle technology—while battery-powered passenger cars don’t.

Ian Wright, one of five co-founders of Tesla (TSLA) back in 2003, now runs a Silicon Valley startup called Wrightspeed that builds electric powertrains for vehicles weighing 60,000 pounds or so. Even though investors and auto critics love Tesla, Wright argues that for ordinary drivers, electric vehicles still don’t make economic sense, because the savings on fuel don’t recoup the high upfront costs. “They’re going to be a niche for a very long time,” he tells me in the video above. “The only cars it makes sense for are taxis and police cars.”

While virtually all big automakers offer some form of electric vehicle today, they’re priced far higher than cars with ordinary gasoline-powered engines. The federal government has been trying to spur development of EVs through a $7,500 tax credit for anybody who buys one. Even so, the market share of electrics today is just 0.2%, and most forecasters expect that to rise slowly, if at all. Tesla, for all its popularity, still isn’t profitable.

Wright, who no longer has any involvement with Tesla, says electric powertrains become economically feasible—without any kind of subsidy—for vehicles that burn about 4,000 gallons of fuel per year or more in urban-style driving with a lot of starts and stops. To spare you the math: a typical car averaging 25 miles a gallon and driven 12,000 miles a year burns about 480 gallons of gas. A workhorse pickup truck driven 40,000 miles per year at 15 MPG would still consume only about 2,700 gallons of fuel.

A cargo delivery truck, by contrast, might be large and heavy enough, if driven every day, to be more cost-effective with an electric powertrain than with a gas or diesel one. Wrightspeed has already retrofitted two FedEx trucks with electric powertrains, with 25 more on order. The Wrightspeed powertrain can drive such a vehicle on battery power alone for about 30 miles, before a “range extender” powered by diesel, natural gas or propane kicks in to keep the electric motor humming.

“It costs more for bigger vehicles, but you save vastly more on fuel, so the scaling works in your favor,” Wright says. The technology can pay for itself in as little as four years, which can produce large savings for big fleet operators that hold onto trucks for a decade or more.

Garbage trucks: ideal for electrification

The next target for Wrightspeed is garbage trucks, which typically can make 1,000 hard stops per day, consume upwards of 14,000 gallons of fuel per year and weigh 10 to 15 times as much as a Tesla Model S sedan. Since electric powertrains have maximum advantage over traditional ones at low speeds that require a lot of torque, garbage trucks that crawl from stop to stop are an ideal platform for electrification.

There’s one nice side benefit for the people whose garbage is being picked up: Electric motors are much quieter than the big diesel engines that power most garbage trucks now, which should dull the roar when the garbage collectors come by. (That won’t help, however, with the clamor of cans and bottles being hurled into the metal compactor compartment.)

Wrightspeed, which has 25 employees and is privately owned, has a contract to retrofit 17 garbage trucks in the San Francisco area with its electric motors. And Wright predicts rapid adoption of the technology after that. Within 10 years, he says, half of all garbage trucks in the U.S. will be powered by battery-electric systems.

Wright’s a fan of Tesla’s Model S and Roadster, but he learned one surprising thing from his involvement with the groundbreaking automaker. “Tesla builds complete vehicles,” he says. “We don’t.” Tesla, he says, had to spend 90% of its money building the basics of an automobile—chassis, suspension, control software and so on—leaving only 10% for the company’s true innovation, the electric powertrain. Wrightspeed, by contrast, only builds powertrains, either retrofitting them into vehicles already in the fleet or installing them in new trucks ordered with everything except the engine.

That business model obviously wouldn’t work in the passenger-car market. General Motors (GM), Ford (F) and every other automaker builds their own powertrains, leaving nobody for a supplier of such systems to sell to. And few consumers seem likely to order a car without an engine, then go to the trouble of arranging a to have a custom powertrain installed (which would probably invalidate the manufacturer’s warranty).

Wright himself has struggled to figure out the best business model for EVs. After leaving Tesla, Wright initially established his new company to build a high-performance sports car called the X1 that would have been faster and even more exotic than Tesla’s first car, the Roadster. But Wright changed his mind in 2009, revamping the company to focus more on big trucks and move away from full-blown car production. If he doesn’t get it right this time, maybe the fourth time will be the charm.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.