The world is rapidly transitioning toward zero-emission electric vehicles (EVs) and away from internal combustion engines (ICEs). EVs are superior in many ways. They have far fewer moving parts, require little maintenance, have immediate torque and powerful performance, and in the right applications, they will cost far less to operate.
Globally, numerous jurisdictions have already legislated the end of the internal combustion engine (ICE) – some as soon as 2030. In response to ever-increasing demand, auto and truck original equipment manufacturers (OEMs) are quickly stepping up the production of battery-electric vehicles (BEVs), and stepping away from building ICEs. Notably, on January 28, 2021, General Motors pledged to cease building gasoline and diesel cars, vans, and SUVs by 2035. Several other original equipment manufacturers (OEMs) followed with equally aggressive plans for EVs. Concurrently, EV prices are coming down; it is believed EVs may reach price-parity with ICEs as soon as 2025.
The Impacts of EVs on Commercial Fleets
What does this historic transition to EVs mean to commercial fleet managers? ICE-powered vehicles will quickly become outdated as EVs rapidly take over. ICE-powered vehicles purchased for a fleet today with a current-day value in the millions of dollars may be nearly worthless in a little more than a decade from now when ICEs eventually become obsolete.
Despite the advantages of zero-emission electric vehicles, few, if any, fleets would – or could – replace all their internal combustion engine (ICE) units immediately with EVs, given capital budget constraints and the fact that offerings are quite limited at this time. For these reasons, EVs must be phased in over many years. That is why our approach at Fleet Challenge is based on data modeling to evaluate the gradual impacts of fleet EV adaptation on a 10- to 15-year phased-in basis.
Electric, Zero-Emission Vehicle Phase-in Planning
Fleet managers need to have a plan and the time to plan is now. We believe that phasing-in of EVs should occur based on optimized lifecycles to balance long-term budgets based on return on investment (ROI). In other words, the first units to be replaced with BEVs should be those that have been assessed as the optimal candidate vehicles that will deliver the best ROI. These are typically units with higher utilization and fuel consumption.
Long-Term Approach. EV phase-in timing is critical. As so, our team prepares long-term low-carbon and EV transition/phase-in plans for our clients with balanced long-term capital (a 15-year capital budget horizon is our standard), ROI, and operating expenses based on the combination of an optimal mix of low-carbon and EV options. The plans and strategies identified by our team are developed through comprehensive data analysis, information acquired through a lifecycle analysis LCA study, and shaped by stakeholder feedback.
Electric Vehicle Supply Equipment Capital Planning
Today, only light-duty (cars, SUVs), transit buses, and a handful of medium- and heavy-duty (MHD) truck EV models are available. However, by model year 2022, the types of vehicles that comprise a significant portion of most fleets, including pickup trucks and vans, are expected to be available as EVs. And by 2024, EV medium- and heavy-duty truck offerings will be more plentiful. Therefore, the time is now to begin preparing for the transition to EVs by investing in electric vehicle supply equipment (EVSE), better known as charging infrastructure, while awaiting suitable EVs to become readily available.
With this in mind, we have developed an EVSE (charging equipment) costing outlook tool to provide long-term capital planning for charging infrastructure needs, based on several estimations including the fleet’s average annual mileage, current battery range capabilities, charger rates (in kWh) and acquisition costs for level 2 and 3 chargers specific to the client.
We develop EV charging infrastructure capital investment plans for our client’s consideration. We provide a well-balanced capital investment plan that allows charging infrastructure to outpace the demand for EVs and specific to the needs of the fleet.
Our team determines level 2 (L2) and level 3 (L3) charging needs through analysis of fleet baseline data and discussion with fleet managers to clarify any uncertainties.
Funding the Charging Network. Challenge believes that fleets should not be keeping up with the demand for EV chargers based on the number of new EVs added to their fleet; they should be outpacing demand to allow for a smooth transition. Therefore, we estimate the number of L2 and L3 chargers required for purchase to outpace demand, possibly financed by a temporary pause in purchasing internal combustion engine (ICE) vehicles through the extension of lifecycles and awaiting EV models to become available – to maximize the use of capital and “front-load” the investment in EVSE.
Fleet vehicle drivers often have strong feelings about their employer-assigned vehicles. Therefore, changes to the status quo may be worrisome and threatening to some. However, many employees also like to be part of the green fleet change and have a say in how it will unfold. Their buy-in is essential to green fleet success.
The human element must be considered and properly managed. Fleet Challenge maintains that sustainable low-carbon, green fleet, and EV fleet plans must be environmentally and fiscally sustainable while considering the human element (i.e., the essence of corporate social responsibility – social, environmental & financial – the triple bottom line). Our signature approach includes stakeholder engagement mechanisms that invite input and consideration in best efforts to ensure an effective and smooth low-carbon green fleet EV transition.
Interim Green Fleet, Low-Carbon Solutions
A full-on transition to electric fleet vehicles may take years. Greenhouse gas (GHG) reduction actions are needed today to head off the negative effects of climate change. Cost-effective and proven low-carbon, green fleet interim solutions will take your fleet in the right direction and on a path of environmental leadership.
There is no standard definition for ‘green fleet’ in Webster’s dictionary, and asking Alexa is futile – even Siri will be stumped! However, at Fleet Challenge we know that successful green ﬂeets tend to focus on two overarching goals:
- Goal 1: To optimize efficiency (i.e., mode of travel, fuel, route planning, operations, managing driver behaviors, best practices, enhanced vehicle specs, ﬂeet/vehicle size, etc.)
- Goal 2: To increase the use of alternative/ renewable fuels, electric vehicles, and sustainable technologies
Low-Carbon Solutions and the Bottom Line
Fleet Challenge maintains that to be successful, well-planned and executed low-carbon, green fleet plans should be sustainable – both environmentally and financially. For this reason, our approach to developing sustainable low-carbon, green fleet strategies for our clients is based on data modeling of the current situation and a number of go-forward scenarios.
To achieve optimal efficiency in completing green fleet analysis and planning, our team uses our own data-modeling software tool “Fleet Analytics Review” (FAR™). FAR is used extensively by Fleet Challenge to analyze complex fleet planning initiatives, in order to develop challenging, yet realistic and achievable green fleet plans that are cost-effective.
The proprietary FAR software tool uses historical cost metrics and vehicle operating data (i.e., miles/kms-driven, fuel usage, repair and maintenance costs, unit age, cost of capital, downtime, residual value, etc.) to establish the fleet’s fuel usage and GHG emissions baseline, but also financial and service levels (i.e., utilization, availability/uptime) performance. FAR highlights the exception units – vehicles whose function is sub-standard regarding cost and performance; it identifies the reason(s) why, thereby enabling management opportunity for action(s).
With the fleet’s FAR baseline established, the software is then used to model go-forward fuel usage and GHG reduction methods. FAR takes into consideration the operating expense (Opex) implications and assesses whether capital expense (Capex), investment, or up-charges for premium (e.g., more fuel-efficient) vehicles or fuel-saving technologies and/or best practices will be offset by Opex reductions.
If an alternate or renewable fuel (such as natural gas, propane, biodiesel etc.) or electrification (such as battery-electric or plug-in hybrid, mild hybrid, etc.), or some other energy source were under consideration as a means of saving fuel (and emissions), FAR calculates whether the investment in vehicle conversion costs, and/or fueling infrastructure, or electric vehicle supply (charging) equipment (EVSE), would yield a net operating reduction, and in what time frame.
Newer vehicles are (generally) more fuel-efficient and issue less GHG emissions. In this context, FAR is especially useful in calculating the Opex impacts of vehicles retained in the fleet beyond their viable age and when salvage values are diminished. Aged, earlier technology vehicles consume more fuel and consequently produce more GHGs. Older vehicles (usually) cost more to operate, are less reliable and may also present a safety risk – FAR calculates and quantifies these impacts in a business case format.
Is this the end of the ‘ICE age’? (ICE=internal combustion engine). Globally, some jurisdications have already legislated the end of the internal combustion engine. It is clear that vehicle electrification has reached it’s tipping point – sales of EVs are rising with some manufacturers exeeding their sales targets of EVs, and demand for electric vehicles often exceeding supply.
For fleet managers, light-duty battery-electric (BEV) and plug-in hydrid (PHEV) options (cars, SUVs) are here and now. Coming very soon are electric pickups, medium and heavy trucks, all of which have been announced by major, and emerging auto/truck manufacturers. It’s only a matter of time when EV trucks will become commonplace. And with electic vehicles comes (usually) lower operating costs, less moving parts, reduced maintenance demand and of course, zero tailpipe emmissions.
For fleet managers, its time to start thinking about, and planning for EVs and EV charging equipment. Todays EVs have greater range than ever, but some applications may not be suitable candidates for electrification at this time.
EVs will have an additional acquisition cost even with sudsidies (if available and applicable). For maximum impact and return on investment, and in consideration of capital budget planning, the correct placements in your fleet must be carefully considered.
To assist fleet managers in making these types of cost-benefit EV decisions, Fleet Challenge recently developed a new EV Cost-Benefit tool. The tool is used to make data-based analysis for a variety of fleet and vehicle types, from cars up to class 8 trucks. The tool compares the total cost of ownership (TCO) for EVs to standard ICE vehicles.
The tool uses actual, average operating metrics from our own proprietary fleet database (almost 50,000 vehicles) to make evaluations as to EV cost/benefit. For a Powerpoint desription of the tool click here
The tool is available free of charge for the asking from Fleet Challenge, RSI (our not-for-profit). Click here to request a free copy
Green Fleet Recommendations
With our FAR analysis of the available low-carbon, green fleet options completed we will present our detailed recommendations and implementation strategies for you, our client’s consideration.
For each scenario Fleet Challenge will present the strengths, weaknesses, risks and benefits to help inform fleet management personnel in decision-making around which of the strategies should be adopted and when they should take place. These decisions should be made with consideration for budgets and cash flow planning, current and expected future business climate, and corporate culture.
Green Fleet Success Factors
From our team’s work in developing low-carbon, green fleet strategies for more than 15 years, we have observed that certain elements lead to the highest rates of successful implementation. These include:
- A corporate culture that encourages environmental leadership
- An internal “champion”
- Commitment to greening the ﬂeet – from the ground floor operational level up to the most senior level of the organization
- Carefully managed risk – and a willingness to experiment
- A strong green ﬂeet commitment – stated in policy, clearly defined timelines and responsibilities
- Procurement policies that take into consideration life cycle costs of vehicles
- Carefully prepared green ﬂeet plans that are based in reality and practicality
- Reliable and consistent ﬂeet operating data
- Measurable, measured, and achievable goals – with a degree of stretch
- A strong communications team to share successes
Contact Fleet Challenge today to discuss your green fleet plans and objectives.
Please visit the E3 Fleet Standards Program, our affiliated not-for-profit green fleet accreditation program.