Commercial electrification is the next big trend in the EV industry, spurred by government incentives and a growing interest in corporate sustainability. In fact, by 2040, Ernst & Young expects 15 million EVs to be part of corporate fleets in the U.S. Many companies are already taking advantage of the booming opportunities presented by electrification.
For instance, mail services like USPS, FedEx, Amazon, and more, are transitioning toward electrifying operations, including their fleets. In tandem, fleet electrification is taking storm across the U.S., such as Duke Energy’s first-of-its-kind, microgrid-enabled fleet, and initiatives including Seattle’s Fleet Electrification Program. EVs offer operating costs and life cycles that are unseen with conventional internal combustion engine (ICE) vehicles.
However, charging a commercial fleet of electric vehicles can be a challenge. For example, a fleet of a couple hundred electric trucks could require up to four times the power needed for a facility designed for diesel trucks. To meet the necessary power capacity, the facility upgrades would require careful planning, new technology, and collaboration with local utilities; finding chargers that are capex-efficient, reliable, and have strong software management capabilities is key.
Understanding EV Charging
The charging infrastructure must be cost-effective and convenient. Companies will naturally seek out facilities that allow them to deploy their fleet at the lowest incremental infrastructure cost possible. Because of this, they will often prioritize locations that offer financial incentives.
However, many fleet managers have little to no experience with EVs, leading to a variety of common misconceptions regarding EV charging, such as being too costly, time-consuming, or overwhelming for the electric grid. OEMs, solution providers, and fleets must work together to accelerate the installation of chargers for commercial vehicles.
Electrifying commercial fleets will require significant investments in EV charging infrastructure, which could be accompanied by supporting upgrades to the grid. The North American electrical grid is outdated, especially compared to European and Asian infrastructures, meaning the U.S. electrical grid needs grid innovation and superior infrastructure to make deployments possible.
In fact, EV solutions must be specifically designed for the North American grid, to allow for a commercial deployment opportunity based on location. For instance, most direct-current fast chargers (DCFC) require 480v input to operate; however, many sites are built around 208v/110v electrical systems. This means building solutions for the existing 208v service, as opposed to upgrading solutions for 480v equipment, which would heavily increase both the time and cost associated.
Ensuring EV adoption and the U.S. electrical grid’s functionality requires solution providers and local institutions to join forces to install chargers designed for the demands of the grid with increased charging networks.
ESG and Fleet Electrification
As the market for commercial electric vehicles continues to grow, many companies are looking to their fleets to drive business value and reduce environmental impact via environmental initiatives. In the U.S., the transportation sector generates 27% of global greenhouse gas emissions, according to Merchants Fleet. Electrifying fleets can lead to a variety of environmentally friendly results, including reducing tailpipe emissions, improving community health via reduced air pollution, decarbonizing, and meeting environmental-impact expectations, and more.
Aside from sustainability, electric fleets are also more efficient than ICE fleets. The electricity market is a highly regulated market that has more stability when compared to the fuel market. And as electricity costs do not vary as much as those of gasoline, fleet operators can better forecast budgets to operate their electric fleets.
For instance, according to The U.S. Office Of Energy Efficiency and Renewable Energy (EERE), the estimated scheduled maintenance cost for EVs totals 6.1 cents per mile, while a conventional ICE vehicle totals 10.1 cents per mile. At the same time, the annual service and repair costs for an ICE vehicle comes out to $2,020, while an EV’s yearly cost would be $1,220, equaling a savings of $800 per year.
Accelerating Commercial EV Fleet Adoption
Despite the barriers to electrifying fleets, numerous strategies can help to minimize deployment challenges and maximize the success of introducing electrification. First and foremost, companies should plan for infrastructure upgrades that align with the North American grid. These strategies will be unique to each industry, fleet size, and whether they require end-to-end electrification of their fleet, in-office, or in-home charging infrastructure. And although these strategies will be specific to internal operations, utilizing an EV solution that’s intentionally built for the North American grid will enhance any North American company looking to electrify their transportation.
Additionally, there are opportunities to leverage federal incentives in the U.S., mainly through the recent National Electric Vehicle Infrastructure Program (NEVI) Formula Program, which is helping to build EV chargers across 35 U.S. states in the 2022-2023 fiscal year, or the Alternative Fuel Infrastructure Tax Credit, which provides a tax credit for eligible alternative fueling infrastructure. However, without the right infrastructure to improve accessibility, these efforts won’t be maximized to their fullest potential.
From government incentives to a renewed focus on ESG, several trends drive fleet electrification. Every fleet — no matter the size — should be thinking proactively about an EV transition strategy to prepare for the evolution of EVs. From increasing brand reputation, to reducing operating costs, the business benefits of transitioning to EVs are limitless.
Aatish Patel is the President and Co-founder of XCharge North America, leading the charge to enhance the potential of electric vehicle adoption nationally by improving EV charger accessibility and charging capabilities. Before Aatish became a founding member of XCharge North America, he was an XCharge customer, working in hospitality, where he installed an EV charging station at one of the hotels he oversaw. Aatish united with XCharge and utilized his engineering and product development expertise to redesign their EV chargers in accordance with the North American grid infrastructure. Before leading XCharge North America, Patel received a B.S. in Mechanical Engineering from New York University and an M.A. in Management from Harvard. He can be reached at [email protected].