Continuing to expand on observations from Verge 22 put on by GreenBiz Group, I want to focus on a sector that seems primed for rapid growth – Vehicle Fleet Electrification. EV Fleet adoption is predicted to increase dramatically this decade, with annual growth rates over 20 percent. Estimates videly, but the market is anticipated to expand from about $60B to $850B during that time. In the U.S. the number EV fleet vehicles is expected to expand from about 3 to 50 million. We will move up the adoption ladder quickly from the early adopter to the early majority customers. A number of factors are driving this change.
High gas prices
Lower maintenance cost of EVs
Expansion of vehicle types of options for customers
Government subsidies, rebates and other assistance at the Federal and State level.
Financing availability and new financial models
Added marketing and awareness by commercial EV fleet solution providers
The market is expanding and maturing rapidly. It’s really becoming a large and complex ecosystem. This is very much a summary overview.
Example of a commercial vehicle charging hub from pb Pulse
Companies
A wide range of companies with different capabilities, products and scopes of services operate to help fleet customers transition from ICE vehicles to EVs. Traditional fleet management companies like Merchants Fleet, energy companies that have gotten into the mix including bp Pulse, Shell Recharge Solutions and NextEra Mobility, charging network equipment and services providers like EVgo and ChargePoint, and vehicle OEM’s like Proterra, Tesla, Ford and Volvo. Finally, there are new entrants with fleet management, charging management, routing and vehical telemetry solutions to improve efficiency and operation of fleets. There are also new financing models like Inspiration Mobility. This is a partial list and its growing and evolving rapidly. The number of commercial EV vehicles is expanding rapidly at all levels from passenger vehicles, to light duty trucks, specialty vehicles all the way up to full size semi-trucks to specialized construction, earth moving and agricultural vehicles. The number of software and solution providers is also expanding rapidly.
Fleet Services
EV Fleet Services can include any or all of a wide range of services the following.
Vehicle Supply – needs assessment, scoping, procuring and managing the vehicles. Vehicle choice can be complex, depending on the duty cycle, charge times and locations, load requirements, driver training requirements and other factors.
Charging – the type, number and location of the chargers, depends on the vehicles, duty cycle and location of the vehicles
Grid Integration – how much power is needed and from where. What type of energy is available? Is power availability a limiting factor to EV Fleet adoption? How mission critical are the vehicles? Should there be back up power or a microgrid?
Management software – what are the requirement for fleet management, charging management, and other parameters? A wide variety of solutions exist to optimize usage of the charging and vehicle assets
Telematics – vehicle condition, route, performance and other parameters from the vehicle
Autonomy – especially in controlled access environments can autonomous vehicles change the duty cycle and asset utilization?
Financing- EV’s usually have a significantly higher up-front cost, but are much cheaper to operate over time. Charging as a Service, Vehicles as a Service and other models that smooth out the cash flow and reduce the upfront investment and risk for fleet operators can help expand the market for EV’s
Technical Integration Services – integrating all these pieces together, working with OEM’s, managing a project, making sure all the data flows well, promising a service level is key to success over time.
Challenges and Limitations
But there are obstacles. The rapid adoption of EV is causing constraints, especially as the growth accelerates.
Upfront EV costs are generally higher than traditional ICE vehicles. This represents a barrier for fleet operators that may have capital constraints or a high cost of capital. Braiding together all the savings, rebates, tax credits and other benefits is not always easy. EV Fleet providers are now offering charging and vehicles as a service. Traditional fleet companies are also reworking lease terms to lower the up-front cost hurdle.
The availability and breadth of EV Fleet vehicles is still modest. However, new models and OEMs are coming on board regularly.
Finally, power considerations are becoming a bigger problem. As more fleet vehicles, especially large trucks become electrified, the truck stops power infrastructure will need to be significantly upgraded. It could be that an average truck stop may require as much peak power as a 10,000 person town. These locations will need to be connected to transmission lines and have their electric service upgraded. This could take years. Some may opt out all together and develop a renewable energy microgrid, like this 25MW solar array concept.
These growing pains may be significant, but they are no doubt an indication of the rapid advancement of the industry taking place.