Electric Fleets: Transforming the Waste Management Industry

Cost Implications of Transitioning to Electric Fleets

Transitioning to electric fleets involves strategic investments in sustainability and technology to reduce costs (WM). Companies aim to offset inflation through pricing and efficiency measures (RSG). Leveraging existing production lines and improving vehicle and battery technologies are key to making electric fleets more affordable (TSLA). Reduced fuel costs also contribute to overall savings (RSG).

"As we progress through 2024, we’re maintaining our focus on three priorities, disciplined pricing across each line of business, leveraging technology to permanently reduce our cost to serve our customers and executing on our strategic investments in sustainability growth." --- (WM, earning call, 2024/Q1)

"So it starts with price, and again, we look to get somewhere around 100 basis points of price in excess of our cost inflation, and then together with some of the investments we've made in realizing the benefits." --- (RSG, conference, 2024/04/04)

"We are focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products, increasing vehicle production, utilized capacity and delivery capabilities, reducing costs, improving and developing our vehicles and battery technologies, vertically integrating and localizing our supply chain, further improving and deploying our FSD capabilities, including through our planned robotaxi product, and expanding our global infrastructure, including our service and charging infrastructure." --- (TSLA, sec filing, 2024/Q1)

"​ transportation challenges and impacts from global events. We continue to take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business." --- (WM, sec filing, 2024/Q1)

"The unfavorable impact was partially offset by a decrease in fuel costs due to a decrease in average fuel price per gallon." --- (RSG, sec filing, 2024/Q1)

Technological Advancements and Operational Efficiency

WM has invested $300 million in technology to enhance efficiency, focusing on data analytics and predictive tools for capacity planning. These advancements are yielding significant operational benefits, aligning closely with their expectations for improved efficiency and cost savings over the coming years.

"We spent $300,000,000 on technology, working on how do we become more efficient." --- (WM, conference, 2024/06/05)

"Is there any way to quantify some of the operational efficiencies or savings in terms of the technology investments that you’re making, some of the data analytics tools, just in terms of how much bps you might expect over one year, three years and what you’re kind of seeing relative to expectations?" --- (WM, earning call, 2024/Q1)

"I mean, that’s something we’ve been very focused on. Some of the technologies we’ve implemented over the last handful of quarters are really starting to show benefits is really around capacity planning and making sure that we can see around the corner, using, frankly, data and analytics that we didn’t use a handful of years ago to be very predictive with a very small deviation between what history would tell us we need to plan for and what we actually plan for and we’re still getting better at that." --- (WM, earning call, 2024/Q1)

Future Outlook and Potential Challenges

WM anticipates adjustments in future operating EBITDA and margins due to indeterminable but potentially significant items. Additionally, the company projects a $25 million increase in the ITC benefit for 2024, indicating a positive financial outlook but also highlighting potential challenges in accurately forecasting financial impacts.

"Additionally, projected future operating EBITDA and margin is anticipated to be adjusted to exclude such items that are not currently determinable but may be significant." --- (WM, earning call, 2024/Q1)

"Thank you. So, our original expectations for 2024 were $120 million. So our current outlook of $145 million is a $25 million increase of the ITC benefit in 2024 specifically." --- (WM, earning call, 2024/Q1)