DETROIT, Dec. 23rd, 2022 | In November 2020, the Government of the UK made an announcement to put the UK on the frontline in the race towards carbon neutrality. They planned to phase out the sales of new internal combustion engine cars, vans, and pickups by 2030, new diesel-powered trucks by 2040, and lighter models by 2035.
They have also made a commitment of £1.8 billion to improve infrastructure and ensure a seamless transition from ICE to electric vehicles. Governments and organizations worldwide are taking similar measures to bring about this radical change and improve sustainability for our planet. In retrospect, the race towards adopting electric vehicles as mainstream transport and standard is on.
But what does this mean for fleet managers and regular car owners? We already know that fleet owner are major players in the automobile industry, making some of the most significant vehicle purchases. In this article, we cover the challenges fleet owners face in transitioning to EVs and make some suggestions on how best to manage the switch.
Many questions are raised about adopting and incorporating this technology in uncharted terrains. For fleet managers, these questions include:
When do I make the switch to EV?
The truth is there is no perfect time to change from internal combustion engines (ICE) to EVs. This is partly because regulations on transitioning to EVs and achieving carbon neutrality differ from place to place. In the US, electric vehicles account for only about 6% of the market share of vehicles in the 3Q22. This means electric vehicle usage is still in the fledgling stage.
Realistically, some factors should come into play in determining if you are ready to make the change.
The type and size of vehicles in your fleet
To determine if you want to make the switch, you will want to find out if the available options of electric vehicles can handle the same tasks as vehicles in your ICE fleet. If they are not available, do you know for sure when they will be available? You can only make the switch when the EVs can match the requirements of your current ICE fleet. When considering duties, you should also think in terms of the capability of handling an equal amount of load and the ability of the EV to complete an equal distance per charge with ICE vehicles.
A budget that gives maximum ROI
We often prepare budgets for the cheapest possible options. However, electric vehicles cost more to purchase. You also want to consider the operational cost of maintaining EVs in your fleet in relation to ICE options. You can make the switch when you are certain that everything balances out in the long run and keeps you profitable.
Putting these in mind, you should also consider that making the switch soon gives you an advantage and a sweet spot in the hearts of your customers who may be sustainability conscious.
How do I ensure my fleet is ready to support the electrification of vehicles?
Transitioning from ICE to EV is no small feat. It takes a lot of work, planning, and cost. If you are certain you want to make the switch, the best way to ensure your team is ready is by preparing a plan involving them. Start with including them in your conversations about the switch. Allow them to express their fears, and if you have to train them or employ other hands, do so on time. You'll be able to seek the service of a consultant to get your team together.
Which vehicles do I transition first?
There are vehicle types that are more suited for early-stage electrification than others. Before making the switch, you want to be sure that the right vehicle is first to make the switch. The type of vehicle you should consider first for electrification are those that operate in the daytime and already have a scheduled route and time they follow over short distances daily. Such vehicles could be last-mile delivery vehicles in your fleet. The advantage of switching them first is that they travel short distances, and you can plan for them concerning charger location. Also, they could be charged at night, when electricity rates are lower, and they move in the daytime without causing carbon hazards.
You can make next plans to also transition vehicles that are operated during working hours the most but with more idle time. The reason is that you can make infrastructural changes in the future, such as increasing the number of charge stations on your route. Since these vehicles have more idle time, they would need more charge cycles than those used for swift and definite movement in predefined paths. The last type of vehicles you want to consider switching to electric would be those with undefined, spontaneous, or very long-distance travel time.
Infrastructure needed to make the switch
Knowing the proper infrastructure needed to make the switch does not need to be complex. All you need is to come up with a strategy that answers:
How do I assess my infrastructure needs?
The first point of clarity should be figuring out the highest distance a fleet vehicle covers per day. Just to let you know, answering this would determine the infrastructure you need for charging EVs. You can figure this out once you know which vehicles you want to charge and how many you need to charge per time.
There are 3 EV charging levels. One level takes as much as a whole day, another takes 3 to 7 hours, and the last level takes only about 30 minutes. Also, you need to determine the route of your fleet and positioning charge stations based on the initial calculation of the EV level you are budgeting.
How do I plan and budget accurately for future infrastructural needs?
Keep in mind the vehicles you planned to make the switch to now and later. Also, consider the distance they would take and their routes. That way, you can assess the infrastructural needs. It would be best if you also went back to the expansion plan you have for your business and made the calculation adjustment as necessary. You can go ahead and consult the service of an electrification expert to help you with this plan.
When do I make infrastructure investments?
You can make infrastructure investments when you have determined the route, distance, and other factors that are costing you more than you can bear with ICE. It would help if you also considered switching to EV in those areas where the cost of purchasing and running an EV fleet would bring greater ROI and save cost compared to running on ICE.
Total cost of ownership/maximizing utilization
How do I ensure unit economics makes business sense?
Electric vehicles cost more to purchase than ICE. However, they cost less to maintain. Switching to EV would make sense if you have factored in the cost for both and found EV cheaper. At the moment, you should also consider the cost of training employees and installing infrastructure for EVs. Also, remember that switching to EVs is heavily incentivized.
When is the right time to make the switch as related to capital investment?
The right time is when you have structured a plan you find convenient. Feel free to switch when you have convinced yourself of the practicality and profitability.
How will I secure the capital to make the investment in a fiscally responsible way?
Currently, different funding options are available to make the electrification switch possible. You can get full ownership, outsource the financing or get a lease. You can discuss with energy finance services to handle the expenditure through an array of options.
When you have gone through the challenges and processes involved in transitioning your fleet to electric vehicles, you need to develop an action plan. It would be best for you to work with a partner to answer pertinent questions and guide you through developing and executing a project scope. We can help you address your concerns, balance sustainability, and business goals while you make the switch.
Reach out to us today to find out how.