Electric Vehicle Fleets: What Are the Perspectives for Companies?
When is it worthwhile to switch to electric vehicles for companies? Many fleet manager have thought of making the switch, but the steps towards that, are not so clear. It is a complex economic and organisational question impacted by several factors.
Today Electric cars enter into a competition with gasoline models about both price and performance. While the number of EV vehicles on our roads is still relatively small today, they are growing significantly year-over-year
The electric vehicle market grew almost 20 times at a CAGR of 111.07% between 2011 to 2015 (Source: ALD Automotive). Tesla Motors was once a groundbraker — basically alone in thinking seriously about making EVs for mass markets, but now automakers have been spending billions to electrify their fleets. Frost and Sullivan expects the growth from 2.8million in 2016 to approximately 14 to 16 million vehicles by 2025.
To be or not to be — green?
Despite the promising statistics and billions of EURs invested in the new EV models and charging infrastructure, there are still significant barriers ahead of the mass commercialisation of EVs. Companies have to answer the following questions when making the decision:
- What kind of use cases within my fleet can be supported by EVs?
- What kinds of EVs are out there in the market? What are the technical capabilities/limitations?
- How much does it cost to implement EVs into the fleet operations? What is the expected Total Cost of Ownership and Return on Investment? What is the right fleet mix?
- How can I charge my EVs (home, office, public charging opportunities)?
The early adopters seems to be businesses that have car sharing policy or that use their vehicles for operations in a well planned and/or a specific ‘urbanized’ environment. These might be around-town, run-around fleets that don’t need to do big distances, where there’s a lot of stop-start and wear and tear. By the help of the charging infrastructure development and increasing ranges, these cases will change in the upcoming years making mass-adoption possible into a variety of currently not possible, or inefficient use-cases.
The future is bright
The reason why I believe in fleet electrification is very simple: Fleet owners are more open than individual consumers, as they focus on total cost of vehicle ownership, and not only the upfront costs. On the long run, these higher upfront costs of an internal combustion engine vehicle can be outweighted by lower operating and maintenance costs over time.
Fleets can also benefit from cheap commercial and industrial electricity rates. This is what private EV consumers lack.
Working with electric cars and fleets made out of them with Konetik, I am really optimistic about the future. These trends explaing why:
1) Improving battery technology, which results in increasing range of EVs while lowering the cost / kwH which has a huge implication of purchasing price of EVs (50% of the production cost of EVs is related to battery)
2) Coverage and availability of office/home and public charging stations is developing
3) Tax incentives, public funding programs facilitates EV penetration and reduce the problems caused by higher upfront price
4) The development of self-driving cars and car sharing schemes also give a boost.
In order for EVs to become attractive to fleets, governments will have to implement a number of policy changes. These may include changing the company car taxation schemes (this is pretty problematic due to the higher upfront prices of EVs), point-of-sale purchase incentives, tax credits for private fleets, and renewable energy support for fleet vehicle charging infrastructure,
Implementing EVs into the fleet operation could be soon a cost-saving measure beside a brand-burnishing asset. Sustainability isn’t necessarily going to be a strategy, but it is a consideration. As Yvon Chounard, Founder of Patagonia said:
“There’s no such thing as sustainability. It’s just kind of a path you get on and try — each day try to make it better..”
One thing is sure: For the mass uptake of EVs we need to balance the three pillars of sustainability: environmental, social and financial.