WHITEPAPER: Comparative analysis of efficiency costs in electrified industrial vehicles

Industrial electrification is transforming material handling, but hidden inefficiencies in drivetrain design still impact operational costs and productivity. Our new white paper, “Comparative analysis of efficiency costs in electrified industrial vehicles.” explores how OEMs can calculate ROI when investing in high-efficiency technologies and make informed decisions that drive long-term value.

Energy management in electrified industrial vehicles

Electrified industrial vehicles such as forklifts, pallet trucks, and automated guided vehicles (AGVs) are now standard in warehouses and manufacturing facilities worldwide. Today, most OEMs and fleet operators manage energy consumption primarily through battery capacity and charging infrastructure rather than focusing on drivetrain efficiency. The prevailing assumption is that as long as the battery pack is sized correctly and charging stations are available, operational continuity is guaranteed. However, this approach overlooks the significant role that motor and inverter efficiency play in determining how much energy is converted into useful work. Before diving deeper into this comparative efficiency analysis, let’s review some key industry benchmarks that provide context for the current operating landscape.

Industry benchmarks:

To provide a realistic comparison, we consider a Class I electric forklift operating under typical warehouse conditions with mixed duty cycles (traveling, lifting, idling). Industry data shows these vehicles consume 8–12 kWh (1) per operating hour, depending on load and usage intensity. For consistency, we use 10 kWh/hour as a reference point, representing a moderate duty cycle.

• AC Induction Motors (IM): Common in electric forklifts for their robustness. Under real-world conditions, these motors typically operate at 85–90% efficiency, meaning 10–15% of the energy drawn from the battery is lost as heat. This accounts for rotor slip losses and less optimal performance at partial loads.
• Permanent Magnet (PM) Motors: High-efficiency brushless designs eliminate rotor copper losses and offer superior torque density. In practice, PM motors achieve 92–96% efficiency. This translates to only 4–8% energy loss as heat, improving battery utilization and runtime.

While these numbers may seem modest at first glance, they compound significantly across large fleets and over multi-year lifecycles. When factoring in charging downtime, labor costs, and accelerated battery wear, the financial impact becomes substantial, often reaching tens or even hundreds of thousands of dollars for medium-sized operations. Despite this, most OEMs continue to prioritize minimizing upfront costs rather than optimizing energy efficiency. This short-term mindset leaves considerable savings untapped and limits opportunities for differentiation in a market increasingly driven by operational performance and sustainability goals.

Inefficiencies in current practices

Despite the widespread adoption of electrified industrial vehicles, many OEMs and fleet operators underestimate the cumulative impact of drivetrain inefficiencies. Standard AC induction motors, while cost-effective upfront, introduce energy losses of 10–15% per operating cycle. These losses manifest as heat, which not only wastes battery energy but also accelerates thermal stress on components, potentially shortening their lifespan. For a typical Class I forklift operating 2,000 hours annually, this inefficiency translates into 400–600 kWh of wasted energy per year, roughly the equivalent of powering a small office for a month.

The problem extends beyond electricity costs. Every additional charging cycle caused by reduced runtime adds 15–30 minutes of downtime, during which the operator is idle. At an average labor rate of $25/hour (2), this can amount to $625–$1,250 annually per vehicle in lost productivity. Multiply this across a fleet of 50 forklifts, and the hidden cost exceeds $30,000 per year, not including the operational disruptions caused by scheduling around charging breaks.

Moreover, frequent charging cycles accelerate battery degradation (3), reducing usable life and increasing replacement frequency, a major expense given that industrial lithium-ion battery packs can cost $8,000–$12,000 each. These inefficiencies collectively inflate the Total Cost of Ownership (TCO), eroding the economic advantage of electrification and creating a false perception that electric vehicles are inherently expensive to maintain.

These inefficiencies ripple through every aspect of operations, from labor productivity to asset longevity. For example, consider two forklifts operating under identical conditions: one equipped with a standard AC induction motor and the other with a high-efficiency Permanent Magnet (PM) motor. While the AC motor may cost less upfront, its lower efficiency results in higher energy consumption, more frequent charging, and accelerated battery wear. Over a five-year lifecycle, these factors can add thousands of dollars in avoidable expenses.

Comparative analysis: AC Induction vs PM Motor (per vehicle)

All ROI calculations in this white paper assume an electricity cost of $0.12 per kWh (4) for conservative modeling purposes. Actual savings may vary based on regional energy prices and operational conditions. The benchmarks and cost models presented are based on data from the North American industrial market. OEMs operating in other regions should adjust inputs to reflect local energy rates, labor costs, and duty cycles.

Assumptions: 2,000 operating hours/year, Class I forklift, $25/hr labor rate, $0.12/kWh electricity cost.

This table illustrates that while PM motors may require a 15–20% higher upfront investment (5), the long-term savings in energy, labor, and battery replacement can offset the initial cost within 12–18 months, delivering a significantly lower TCO over the equipment’s lifecycle.

Strategies for improving energy efficiency

Improving energy efficiency in electrified industrial vehicles requires a holistic approach that addresses both component selection and operational practices. OEMs can implement the following strategies to deliver measurable savings:

The motor is the heart of the drivetrain, and its efficiency directly impacts energy consumption. Upgrading from an AC induction motor (85–90% efficiency) to a Permanent Magnet (PM) motor (92–96% efficiency) can reduce energy losses by up to 50%. Similarly, pairing the motor with a high-efficiency inverter ensures minimal conversion losses during acceleration and regenerative braking. While these components may increase upfront cost, the long-term savings in energy and labor quickly offset the investment.

Many industrial vehicles operate under variable loads and intermittent duty cycles. By analyzing usage patterns and adjusting motor control algorithms, OEMs can minimize peak current draw and reduce thermal stress. This optimization can improve overall system efficiency by 3–5%, extending battery life and reducing downtime.

Regenerative braking recovers kinetic energy during deceleration and returns it to the battery. In high-frequency stop-and-go applications, such as warehouse operations, regenerative braking can contribute 5–10% energy savings per shift, reducing the number of charging cycles and extending runtime.

Advanced controllers can monitor real-time energy consumption and adjust torque delivery to match load requirements. This prevents unnecessary power draw during light-load conditions and ensures optimal efficiency across the operating range.

Barriers to adoption

Despite the clear technical and financial advantages of high-efficiency solutions, many OEMs hesitate to prioritize them. The primary barrier is cost sensitivity, as procurement teams often focus on minimizing upfront expenses rather than evaluating lifecycle costs. A PM motor can cost 15–20% more than an AC induction motor, and without a clear ROI model, this premium appears unjustifiable.

Another challenge is lack of awareness. Many decision-makers underestimate the cumulative impact of energy losses, downtime, and battery degradation. Efficiency gains of 5–7% may seem marginal in isolation, but when translated into annual savings across large fleets, they become substantial. Additionally, fragmented responsibility within OEM organizations, where engineering, procurement, and finance operate in silos, makes it difficult to align on long-term value versus short-term cost.

Finally, market inertia plays a role. AC induction motors have been the industry standard for decades, and switching to PM technology requires changes in design, sourcing, and sometimes service training. These perceived complexities often outweigh the motivation to innovate, even when the financial case is strong.

A step-by-step ROI calculation guide for OEMs

To overcome cost sensitivity and justify the investment in high-efficiency PM motors, OEMs need a clear, data-driven framework for calculating Return on Investment (ROI). Below is a practical methodology that OEMs can apply when comparing a Brushless Permanent Magnet (PM) Motor to a standard AC Induction Motor for an electric forklift.

Step 1: Define key parameters

• Annual Operating Hours (H): Typical forklift = 2,000 hrs/year
• Average Power Demand (P): 10 kW
• Electricity Cost (Cₑ): $0.12/kWh
• Labor Cost (Cₗ): $25/hour
• Motor Efficiency:
  • AC Motor = 90%
  • PM Motor = 96%
• Upfront Motor Cost Difference: PM motor costs $X + 20%
• Battery Replacement Cost: $10,000 (assume PM motor extends life by 10%)

Step 2: Calculate annual energy consumption

10 kW ÷ 0.90 × 2,000 hours = 22,222 kWh per year.

For PM Motor:

Author: Francesco Patroncini