Today, more than 95 percent of trucks on the road around the world run on diesel or gasoline.1 The traditional truck ownership model of combining purchasing or leasing with selected add-on services is a proven model for both OEMs and customers. Large-fleet customers have a strong understanding of vehicle life cycles, including the expected residual value when vehicles leave their fleets. They know how to arrange for emergency engine repairs and are on a first-name basis with aftermarket agents.
However, the shift to zero-emission (ZE) trucks—driven by regulatory requirements, long-term total-cost-of-ownership (TCO) benefits, and end-customer demand for greener products—will necessitate new business models for OEMs and other truck ecosystem participants. The transition is approaching now—EU regulators, for example, are calling for 45 percent reductions in road transport CO2 emissions in 2030 compared to 2019.2
To reach regulatory decarbonization targets, 15 to 20 percent of new medium- and heavy-duty truck sales globally will have to be ZE by 2030. This profound shift will affect sources of growth and profits across the commercial vehicle ecosystem. Nearly half of industry profits in 2030 will come from opportunities beyond vehicle and aftermarket sales that do not exist today, McKinsey analysis suggests.
OEMs can position themselves to capture this value by focusing on business models that encourage ZE adoption and improve margins. Although service bundles and solutions are already well established in the commercial vehicle ecosystem, the shift to ZE truck fleets (and, eventually, autonomous trucks) propels OEMs to offer a next-generation “truck as a service” (TaaS) business model.
However, capturing this value can be risky for OEMs. Already, we have seen some OEMs lose market share because they have not offered the mix of services needed by their customers in different segments or have not priced them correctly. TaaS models can result in more debt as OEMs need to finance more assets that are held on their balance sheets. In a few extreme cases, OEMs have even declared bankruptcy, either because they were unable to orchestrate the needed product and services ecosystem or because investors canceled their support.
This article explains one pathway to the TaaS model, explores the benefits and challenges of TaaS for different stakeholder groups, and discusses TaaS success factors—timing, investment, and partnership strategy—to avoid costly missteps.
Service bundles and solution offerings have already changed ways of doing business
Leasing and financing commercial vehicles has been a critical alternative to vehicle purchasing, especially in Asia, where up to two-thirds of vehicles are leased rather than purchased (compared to about one-third in Europe and North America), according to McKinsey analysis. These shares have remained stable since 2016, although total revenues have increased during that period. European and North American revenues from leases and finance grew from $20 billion in 2016 to $30 billion in 2024; in China they grew from $22 billion in 2016 to $27 billion in 2024. For OEMs, the operating lease in particular, with a fixed monthly rate plus options for services, is an important financing product. These service options typically come in one of two forms: bundles or solution offerings (Exhibit 1).
Service bundles. OEMs frequently bundle additional services with the core truck vehicle product and associated lease agreement. They typically target bundles to large-fleet customers with a model partially based on optimizing TCO to share the upside. They also often have their own repair shops on site, especially in the current world, which is dominated by internal-combustion-engine (ICE) vehicles.
Customers may choose from among a menu of services covering traditional components such as insurance, aftermarket services including parts and maintenance, and fleet management services (for example, telematics) as well as newer services such as fleet transition consulting, component financing (for example, for batteries), and charging infrastructure provisioning.
Customers configure their own bundles based on their perceived needs, paying for each additional element they add. More crucially, high variability in customer configurations increases complexity for OEMs and their ecosystem partners.
Solution offerings. Solution offerings are the next evolutionary step after bundling services. They are designed for smaller-fleet customers, a group that includes the majority of European fleet owners. Solutions typically provide customers with three options—vehicle purchase financing, leasing, or rental—with a set monthly payment that also includes an integrated package of services. Solution offerings are curated for customer segments—such as long-haul, regional distribution, construction, or urban delivery—based on their distinct characteristics (Exhibit 2).
For example, OEMs may promise uptime compensation payments3 to logistics providers operating on low margins of 3 to 5 percent. Urban delivery vans, by comparison, may benefit from access to charging infrastructure and instant parking assistance. Meanwhile, fleet owners of special construction trucks may need mobile, on-site repair assistance from qualified service centers.
Solution offerings can be attractive to fleet customers because they offer a suitable financing product (for example, an operating lease) and appropriate, segment-specific services that can help mitigate risk. Risk mitigation comes in many forms:
- A leasing offer that includes vehicle buy-back helps reduce asset risk; ZE trucks still have rather uncertain residual values, and customers are often not prepared to take on risks for new, unproven assets.
- Uptime compensation can transfer utilization risk from customers to OEMs.
- Predefined packages of services (for example, insurance, fleet management, and maintenance) reduce complexity risk (compared to managing components separately with multiple vendors) and allow integration across vehicles from multiple OEMs.
- Paying a monthly fee rather than making a sizable up-front investment substantially reduces capital risk, especially since ZE trucks not only cost more per asset than ICE trucks but also add significant cost and complexity (to reconfigure depots and install charging infrastructure).
- By effectively outsourcing fleet optimization, repair, and maintenance to a solutions provider, customers reduce labor risk; customers often lack the experience needed to integrate ZE trucks into operations.
How the TaaS model works
Despite the appeal of solution offerings, they are an intermediate step en route to the TaaS model, which requires additional organizational redesign. OEMs and other ecosystem participants can apply a TaaS approach to capture value in ZE and autonomous fleet truck segments—if they avoid repeating missteps taken by some providers (Exhibit 2).
TaaS front end
On the front end (from the customers’ vantage point), the TaaS model is the same as solution offerings. OEMs offer financing combined with a “carefree” package of services designed with the needs of customer segments in mind. Potential services could include insurance, fleet management services (for example, telematics and dynamic routing), repair and maintenance, charging infrastructure, and energy services (for example, depot electrical upgrades).
Customers pay a fixed monthly rate but have the option to contract for a more advanced, usage-based arrangement (for example, paying per kilometer traveled). Equipment utilization, uptime, and asset risk are covered by OEMs (or a captive bank or other bank), which takes ownership off customers’ balance sheets, thus reducing residual value risk for customers and creating potential upside for the OEM.
TaaS back end
Where TaaS differs, however, is on the back end. Several critical factors can increase chances of success.
Organizational structure and operating model. OEMs embracing TaaS would need to reorganize their P&L—from the traditional approach with multiple profit centers to a single profit center in which full P&L responsibility (by geography) is bundled and relevant cost centers report to a single senior sponsor. Some incumbents and fleet rental companies have already made this shift. Additionally, a separate, dedicated owner manages asset and recycling value risk including the remarketing strategy. By reimagining the current operating model and breaking down internal silos (for example, between sales and aftermarket), they can support the shift in focus from volume to margin. Meanwhile, new processes and systems can help evaluate risks and mitigation options. An integrated operating model also supports stronger risk management at the customer level.
Customer centricity.The model is highly dependent on OEMs shifting to a customer-centric mindset with a single, integrated interface with the customer, a single contract person per customer across the entire lifetime of the relationship, and a single monthly rate for the full TaaS offering. Making the shift will require OEMs to set up a scalable IT and service architecture to support end-to-end customer management and a system for gathering and monetizing customer insights. This can build on OEMs’ existing customer relationship management (CRM) systems, which may be oriented toward the hardware sales pipeline, with a shift toward a more TaaS-like approach.
Services strategy. OEMs can carefully assess which services to offer directly, based on their existing capabilities; which to acquire; and which to outsource. Leaders will need to evaluate complex make-versus-buy decisions as part of the transition to TaaS. They will develop an extensive service network with a strong ecosystem of partners in the right locations to offer best-in-class services at the best price. Skilled leaders can define the partnership strategy for the solutions ecosystem and create fixed solution packages for industry subsegments with a clear understanding of the asset life cycle management for each.
Pricing strategy. New pricing processes, supported by access to larger data sets and analytics, will be needed along with new dealer incentive programs and new rules of engagement to support the TaaS transition and accrue benefits from network effects.
The model will require OEMs to reassess their talent strategies—including training, reskilling, and recruiting—to get the skills they will need (for example, in M&A and portfolio management and ecosystem partner management). A well-orchestrated change management program should support the transition across the company and ensure it sticks.
TaaS delivers benefits to multiple stakeholder groups
The TaaS model has the potential to create substantial financial value for OEMs throughout the vehicle life cycle, especially in the European Union and the United States, where ZE truck transition is projected to ramp up more quickly.
According to McKinsey profit pool analysis, by 2035 the OEM commercial vehicle profit pool in the United States and Europe will be $13.6 billion, including $10.4 billion (76 percent) in recurring profits from services throughout the life cycle and $1.0 billion in recurring potential profits from TaaS (Exhibit 3).
Due to adjusted back-end processes in the TaaS model, margins could increase more than 5 percent compared to both service bundles and solution offerings and more than 10 percent compared to the older vehicle-centered services model based on operating leases.
Additionally, TaaS helps OEMs gain a deeper understanding of customer needs and unlocks upselling opportunities. It creates new revenue streams from sales of supplementary services, improves margins through economies of scale, and helps optimize vehicle usage.
OEMs also traditionally lose customers to the independent aftermarket, where maintenance and spare parts are less costly, after roughly five years. With TaaS, customers stay directly connected to OEMs for reasons including the single rate and longer contracts, and have higher satisfaction through better services, a carefree package, and reduced asset risk. Finally, the appeal of the TaaS model could accelerate the ZE truck transition and thus decarbonization of the commercial vehicle and transportation industry.
Based on a proprietary McKinsey survey of more than 400 fleet managers and owner operators in five countries (France, Germany, Italy, the United Kingdom, and the United States),4 customers have expressed high interest in the TaaS model because it offers better services in a carefree package with reduced risk (Exhibit 4).
The road to autonomous driving and the continued evolution of TaaS
Laying the TaaS foundation today will also help position OEMs and the wider ecosystem for the next mobility phase: autonomous driving at SAE Level 4 and above.5 With autonomous driving, two new “as a service” business models could emerge.
<c-hed>Driver as a service (DaaS). Fleet customers purchase or lease trucks from an OEM and pay either the OEM or an AI company for “virtual drivers” on a per-mile basis at a projected cost of $0.30 to $0.50 per mile. The OEM or AI company is responsible for operating the trucks and earns revenues from truck sales or leasing (autonomous trucks cost $50,000 to $100,000 more than nonautonomous trucks) and recurring revenues per mile.
In this model, fleet customers such as freight or e-commerce companies still plan their distribution routes, organize truck freight and capacity, engage with end customers, and otherwise manage day-to-day activities. They outsource only the autonomous operation of trucks.
For fleet customers, the recurring DaaS fee is significantly lower than the cost of paying drivers, although it is partially offset by the labor cost of loading and unloading.
Moreover, OEMs could develop the pay-per-usage model so that they share in those savings with slightly higher payments from customers. The DaaS model also strengthens their value propositions because fleet customers face high barriers to adoption of autonomous trucks and can use DaaS to smooth their ZE transitions and reduce capital and uptime risk.
Capacity as a service (CaaS). The OEM or AI company provides CaaS with full-service leasing or financing. In this model, the OEM or AI company assumes complete control (and risk) of trucks and all aspects of daily service operations including route planning and deliveries, effectively disintermediating fleet customers and working directly with end customers. Both incumbents and new entrants actively adopt CaaS.
CaaS offers similar benefits as DaaS to OEMs and AI companies. However, it also entails additional risks, including entering the full-truck-load market, in which they have little expertise; direct competition with current customers; and the financial and operational risk of an asset-heavy business model. The role of external investors or other banks becomes more important than ever.
Challenges of TaaS implementation
Although customers express high interest in adopting TaaS, OEMs first need to overcome two key challenges.
Implementation challenges. Having substantially more assets on their books for longer periods of time significantly increases financial risk. However, OEMs can mitigate this risk with special-purpose financing to remove assets from the balance sheet or transfer them to another corporate entity, which can also attract external investors. Doing so would necessitate restructuring the organization and forming a separate entity dedicated to TaaS.
Additionally, they may need to adapt their go-to-market approaches including redesigning pricing processes (facilitated by analytics against much larger data volumes) and retraining commercial teams. Furthermore, they will need to manage more complexity because although customers have a single point of contact, a broad array of stakeholders—including departments, IT systems, partnership networks, a profit center and multiple cost centers, and potentially investors—are operating behind the scenes.
Operational challenges. Because there is not yet a mature aftermarket for ZE trucks, OEMs may have difficulty assessing the residual value of vehicles, thus increasing asset risk. Moreover, integrating the back end into one TaaS profit center could obscure sources of value and create an unwelcome cycle of internal analysis that does not serve end customers; therefore, the integration must be carefully sequenced and managed.
Considerations for CEOs
To master TaaS and enable the ZE truck fleet transition, CEOs can start by answering three key questions.
Which customer segments and geographies offer the best starting point? OEMs can identify pain points with the ZE fleet transition for customers in different segments and geographies (for example, based on their fleet size or location). Next, they can define a clear customer segmentation model, prioritizing customers (for example, according to their willingness to pay and expected margins) and a higher likelihood of accepting the new business model based on their electrification needs, company size, and financial strength.
What business model should an OEM initially adopt to start the shift to TaaS? CEOs can start with a basic TaaS offering that their sales forces and end customers can easily understand and that clearly resolves known pain points with the ZE transition. They can clarify their competitive positioning compared with others in the services ecosystem and select partners, ensuring they have the size, capabilities, customer proximity, physical footprint, and risk appetite to align with and execute the OEM’s strategy. The OEM can also develop a new sales strategy by adopting a multibrand approach to appeal to different customer segments. In addition, the OEM can design an effective asset management strategy centered on three questions: Who is the best owner of the truck? Which investors, insurance providers, and asset management companies should we involve? What is the residual value of the ZE truck and the battery at the end of the contract?
How can the organization get off to a strong start? OEMs can ensure their board members and relevant leaders throughout the organization are aligned with the TaaS vision and secure their commitment to the venture and acceptance of the risk return profile. Next, they can assemble a core team with a mix of internal and external talent representing all the key knowledge areas required for TaaS and, most important, with an entrepreneurial mindset and a strong bias for action. Last, a new organizational pilot to test front- and back-end dynamics of TaaS can be helpful. It could include one TaaS offering with P&L accountability and a single profit pool, enabled by end-to-end IT infrastructure connecting different cost centers.
This approach could generate insights from pilot customers and team members to inform a lighthouse case to help ensure acceptance of the change throughout the organization.
