Why is Fleet Electrification Planning Growing in Popularity?
Fleet electrification has been one of the primary topics in the transportation industry's discourse over the last few years—and for good reason. Climate change mitigation, new legislation, public policies, and technological improvements are all in the works. The question of whether commercial fleets will rely on electric vehicles (EVs) has quickly become less of an if and more about how soon?
For many, the answer is now.
Per a survey conducted by the Rocky Mountain Institute (RMI), 82% of large-fleet owners are currently in the process of electrifying 1. When it comes to ICE vs EV vehicles, more and more businesses are adopting EV fleets. But what does their fleet electrification planning entail? We’ll look at some of the top motivations, considerations, and constraints in the article below.
What is Fleet Electrification Planning?
Fleet electrification planning refers to the strategies companies are developing and their actions to support their gradual transition from depending on fossil fuels to operating EVs. As fleet managers expect to begin using EVs over the next decade, they need to start preparing now 2.
The planning involved with this effort is crucial because—unlike simply replacing vehicles at their end-of-life—electrification represents a comprehensive shift for every aspect of truck transport. Capital investments, infrastructure, personnel, energy costs, and more must be factored into equations when determining the right path forward for each company.
The industry hasn’t seen a change this monumental since converting from steam power.
Why are Companies Turning to Fleet Electrification?
The short answer is they have to.
Companies are beginning to electrify their fleets because they know the change is coming. Starting the process now and alongside everyone else will help ease some of the collective infrastructure and associated costs. With the right timing, they'll benefit from legislation like the Infrastructure Investment and Jobs Act, which dedicated $5 billion toward developing a nationwide EV charging network in early 2022 3.
But if the transportation industry waits too long to adopt EVs or does so without planning, the financial consequences could be catastrophic, given the investment required.
Planned vs. Unplanned Electrification Costs
RMI’s Steep Climb Ahead report from 2021 projects the following non-vehicle costs for planned electrification 4:
- Early stage (1-5 vehicles) – $2,600 to $13,000, not accounting for future charger needs
- Scaling stage (10-50 vehicles) – $13,000 to $65,000
- Full electrification (100+ vehicles) – $100,000 to $300,000
In contrast, the non-vehicle costs for unplanned, incremental electrification is estimated at:
- Early Stage (1-5 vehicles) – $2,600 to $13,000 if using public chargers
- Scaling stage (10-50 vehicles) – $26,000 to $130,000 (double that of long-term planning)
- Full electrification (100+ vehicles) – $260,000 to $1.3 million (a 260-430% increase)
Fleet Electrification Over Time
In their report, RMI states that electrification can result in significant cost savings. And other sources like Pacific Gas & Electric (PG&E), Fleet Maintenance, and Charged Fleet agree 5. That’s the good news.
But the costs of reaching that point are far from insignificant and are only exacerbated if the effort is left unplanned.
Fleet electrification efforts must occur over time to achieve the savings of RMI projects for planned strategies. Understandably, transformative change this significant cannot take place overnight. Drivers, technicians, and other staff won't be able to shut the lights off on trucks running petrol and arrive at rows of shiny new EVs in the lot or garage bays the next morning.
Much of the transition will reflect the early days of growing EV adoption for personal vehicles—a hybrid approach that requires using fossil fuels and EVs in tandem. And managing both simultaneously will likely reduce operational efficiencies and increase costs in the short term.
Who is Electrifying Their Fleets?
With 82% of fleet managers saying they're undergoing electrification now, nearly everyone is starting the process. Yet some of the largest fleets are making the most significant and press-worthy strides 6:
- Amazon – The eCommerce and delivery giant has announced plans to purchase 100,000 electric delivery vans from Rivian.
- DHL – Roughly 20% of the global logistics and shipping company’s fleet is now rated for zero emissions. DHL is striving for 70% of first- and last-mile delivery vehicles to run on “clean transport modes” over the next three years.
- FedEx – An earlier adopter of EVs, FedEx has set 2025 as the target for electrifying half of its parcel pickup and delivery vehicles.
What Does Fleet Electrification Planning Involve?
The transportation industry’s reliance on petroleum fuel is obvious, but when was the last time you stopped to consider how many sectors revolve around using internal combustion engines (ICEs)? Or how much of society's planning and infrastructure does as well?
When trucks need to refill on diesel or gas, they go to fueling stations. But they’ll eventually require charging infrastructure located at depots and along routes instead. What will energy costs be for partially or entirely electrified fleets? Will companies use the same fuel cards? What does that mean for EV fleet management?
Which vendors do you source parts from for repairs and vehicle fleet maintenance? New suppliers stocking EV parts will be needed—along with technicians knowledgeable about substantially different mechanical assemblies and configurations.
Fleet Electrification Planning involves all of these considerations and more. So let's explore some in greater detail.
The most apparent consideration for planning will certainly be the fleet vehicles becoming EVs. According to PG&E, the total cost of ownership for electrifying a 20-vehicle fleet is $2.76 million. This figure breaks down as follows 7:
- EV supply equipment (EVSV) subtotal – $450,000
EVSV capital expense – $280,000
EVSV maintenance – $200,000
EVSV residual – ($30,000)
- Capital expense – $2.33 million
- Operating expense – $450,000
- Fuel costs (electricity) – $680,000
- Insurance – $260,000
- Registration – $140,000
- Incentives – ($1 million)
- Low carbon fuel standard (LCFS) credits – ($550,000), only available in California
But note that PG&E’s analysis is based on the infrastructure incentives and energy savings their program provides. So, electrification efforts elsewhere may not benefit from comparable advantages, such as the LCFS credits.
PG&E also estimates that replacing 20 fleet vehicles with EVs will cost $2.76 million if done simultaneously but $3.89 million if done gradually over a decade. However, this cost doesn’t account for infrastructure and other expenses—only the vehicles 8.
Fleet depots will need to build their own EV charging stations to bring EV batteries back to capacity.
For example, testimony presented by the General Services Administration (GSA) to the House Committee on Oversight and Reform estimated that federal agencies only have 1% of the charging infrastructure it needs to support electrification at present. The GSA projects over 100,000 stations will be needed 9.
If commercial fleets are in a similar position, they'll likewise need to invest substantial capital. Moreover, the construction projects will also impact daily operations at depots for some time, so logistics must adapt accordingly.
Some of the best electrification news for transportation companies is that fleet charging costs are estimated to be substantially lower than current fuel prices—by as much as 37-44%. In some of the nation’s most urban areas, these savings could even double by implementing charge management systems (CMS) 10.
One of the more challenging factors that fleet electrification planning must account for is the routes trucks navigate. Fleet routing software has been available for some time, but it will soon have to consider where EV charging stations will be located.
Legislation passed in the last couple of years will help jumpstart the effort to build EV charging infrastructure across the country, but that will still take time to occur. It's also likely that commercial charging stations comparable to commercial fueling networks will be built. But as more stations are constructed, route planning will be in flux for a few years, and logistics will become more complicated.
The coming changes to fleet maintenance represent one of the clearest examples of how the transition to EVs will need to balance pros and cons.
Among the positives, maintenance for EVs is less costly and time-consuming than for ICE vehicles. Personnel won't have to worry about as many fluid changes as EVs don't rely on engine oil or transmission fluid. Similarly, EVs contain far fewer wearable parts that need replacement, which should decrease maintenance costs considerably. As a result, electric fleet vehicles will be able to spend much more of their time on the road and the job than up on lifts in the shop.
However, EVs are also a different platform. Mechanics will need time and resources to relearn some aspects of their trade. Further, fewer personnel may be needed to handle the maintenance demands, leading to increasing unemployment in the trade. Fleet managers will have to plan how to adapt their current workforce.
And as mentioned above, there are significant ramifications for parts suppliers that will need to stock different parts—more in the short term and less over time. Less maintenance also means lower revenues from sales, which can create a challenging ripple effect throughout the automotive supply chain.
Fuel Cards Today and Through the Electrification
Among the changes fleet electrification will bring, one thing will certainly remain constant: paying for fuel or charging.
The only change you have to make is paying at charging stations instead of the pump. Continue using AtoB as normal. As commercial charging networks begin emerging, fuel card providers will be able to negotiate better rates as they do for fueling networks now.
With enough other considerations in the fleet electrification planning mix, the steady efficiency that fuel cards provide will be welcomed, especially when they work hand in hand with your digital payment systems.
Contact us today to learn more about AtoB's fuel cards and how we can help add some resilience to your electrification efforts.
Charged Fleet. Electrified Fleets Could Save 37-44% in Energy Costs. https://www.chargedfleet.com/10148713/electrified-fleets-could-save-37-43-in-energy-costs
Charged Fleet. EVs Can Save 30% in Costs at Three Years, Study Says. https://www.chargedfleet.com/10155068/evs-can-save-30-in-costs-at-three-years-study-says
Federal Highway Administration. President Biden, USDOT and USDOE Announce $5 Billion over Five Years for National EV Charging Network, Made Possible by Bipartisan Infrastructure Law. https://highways.dot.gov/newsroom/president-biden-usdot-and-usdoe-announce-5-billion-over-five-years-national-ev-charging
Fleet Maintenance. Breakdown of EV maintenance expenses. https://www.fleetmaintenance.com/equipment/battery-and-electrical/article/21250369/breakdown-of-ev-maintenance-expenses
GreenBiz. What drives a successful fleet electrification strategy? https://www.greenbiz.com/article/what-drives-successful-fleet-electrification-strategy
Government Fleet. Report: Federal Fleets Concerned About EV Costs, Not Enough Charging Stations. https://www.government-fleet.com/10166149/report-federal-fleets-concerned-about-ev-costs-not-enough-charging-stations
Perillon. These 21 Companies Are Switching to Electric Vehicle Fleets. https://www.perillon.com/blog/21-companies-switching-to-electric-vehicle-fleets
PG&E. Calculating Total Cost of Ownership (TCO) for Your Distribution & Delivery EV Fleet. https://www.pge.com/pge_global/common/pdfs/solar-and-vehicles/clean-vehicles/ev-fleet-program/PGE_EV-Fleet_Total-Cost-of-Ownership_Distribution-Delivery.pdf
RMI. Steep Climb Ahead. https://rmi.org/insight/steep-climb-ahead/
1 RMI. Steep Climb Ahead.https://rmi.org/insight/steep-climb-ahead/
2 GreenBiz. What drives a successful fleet electrification strategy? https://www.greenbiz.com/article/what-drives-successful-fleet-electrification-strategy
3 Federal Highway Administration. President Biden, USDOT and USDOE Announce $5 Billion over Five Years for National EV Charging Network, Made Possible by Bipartisan Infrastructure Law. https://highways.dot.gov/newsroom/president-biden-usdot-and-usdoe-announce-5-billion-over-five-years-national-ev-charging
4 RMI. Steep Climb Ahead. https://rmi.org/insight/steep-climb-ahead/
5 PG&E. Calculating Total Cost of Ownership (TCO) for Your Distribution & Delivery EV Fleet. https://www.pge.com/pge_global/common/pdfs/solar-and-vehicles/clean-vehicles/ev-fleet-program/PGE_EV-Fleet_Total-Cost-of-Ownership_Distribution-Delivery.pdf; Fleet Maintenance. Breakdown of EV maintenance expenses. https://www.fleetmaintenance.com/equipment/battery-and-electrical/article/21250369/breakdown-of-ev-maintenance-expenses; Charged Fleet. EVs Can Save 30% in Costs at Three Years, Study Says. https://www.chargedfleet.com/10155068/evs-can-save-30-in-costs-at-three-years-study-says
6 Perillon. These 21 Companies Are Switching to Electric Vehicle Fleets. https://www.perillon.com/blog/21-companies-switching-to-electric-vehicle-fleets
7 PG&E. Calculating Total Cost of Ownership (TCO) for Your Distribution & Delivery EV Fleet. https://www.pge.com/pge_global/common/pdfs/solar-and-vehicles/clean-vehicles/ev-fleet-program/PGE_EV-Fleet_Total-Cost-of-Ownership_Distribution-Delivery.pdf
8 PG&E. Calculating Total Cost of Ownership (TCO) for Your Distribution & Delivery EV Fleet. https://www.pge.com/pge_global/common/pdfs/solar-and-vehicles/clean-vehicles/ev-fleet-program/PGE_EV-Fleet_Total-Cost-of-Ownership_Distribution-Delivery.pdf
9 Government Fleet. Report: Federal Fleets Concerned About EV Costs, Not Enough Charging Stations. https://www.government-fleet.com/10166149/report-federal-fleets-concerned-about-ev-costs-not-enough-charging-stations
10 Charged Fleet. Electrified Fleets Could Save 37-44% in Energy Costs. https://www.chargedfleet.com/10148713/electrified-fleets-could-save-37-43-in-energy-costs