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Weekly blog by Emily Atkins
Fleet Managers Foresee a Mixed Electric Future
A new survey on fleet electrification has found that commercial fleet managers are working hard to increase the proportion of EVs under their management.
Most fleet managers (FMs) expect a significant increase in EVs to enter their fleets over the next five years. Close to half (42%) of those surveyed stated that 50% or more of their fleet would consist of EVs by 2030. And 80% intend for at least 25% of their fleets to be EVs in that timeframe. Nearly two-thirds (63%) of fleet managers specifically noted they had a low-carbon goal they needed to achieve by or before 2030.
These are findings from a study commissioned by WEX and conducted by Frost & Sullivan. The 2024 global survey, "The Commercial EV Transition: Global Insights on a Mixed-Energy Fleet Future", offers insights to help understand and implement the shift to electrification across Europe, North America, and the Asia-Pacific region.
The study found that the top three challenges facing fleet managers are fuel costs (67%), operational expenses (66%), and profit margins (59%). These challenges reflect the pressure on fleet managers to manage expenses and maintain profitability while transitioning to new technologies and sustainable practices.
The study also discovered that the larger the fleet, the more important the focus on decarbonization. From 14% to 23% of medium (50-99 vehicles) to very large fleets (500 plus) stated decarbonization was a cornerstone strategy, as opposed to 8% or fewer of small (5-49) to very small fleets (2-4 vehicles). Overall, reducing carbon emissions was the number one driver of fleet electrification for fleet managers.
Many organizations have set ambitious environmental targets to control their carbon footprints. For example, in the US, Amazon has already installed 17,000 EV chargers as it plans to integrate 100,000 Rivian electric vans. FedEx intends to convert its entire delivery fleet to EVs by 2040. Fleet operators see these as necessary moves that will both ensure a good public image and keep them compliant with government mandates.
The remaining top nine drivers for FMs are:
· Meeting decarbonization goals
· Cost savings
· Capitalizing on advancements in battery technology
· Brand image/reputational risk
· Declining EV buying/operating costs compared to ICE
· EV charging costs are lower than ICE fuel
· Ability to take advantage of expanding of charging network
· Competitive advantage
· Government policies
According to the survey, high upfront cost was the top challenge to adopting EVs as part of a fleet. A substantial upfront investment may pose an obstacle to acquisition. However, that can be counterbalanced in the long term by savings in charging, operating, and maintaining EVs.
“To fully benefit from the high-value potential of electrification, it is crucial to make informed decisions based on energy demand predictions,” says Gideon van Dijk, founder and CEO of Chargetrip, a range prediction and EV routing platform company.
“By understanding the energy demand profile of your existing fleets, you can optimize your future mixed-fleet configuration.”
According to van Dijk, prioritizing routes for electrification, selecting appropriate vehicle types, determining battery capacity needs, scheduling overnight charging, and minimizing ad hoc charging costs are key considerations for FMs. Managing all these parameters at the same time requires a sophisticated and nuanced approach.
“The planning complexity for fleet managers increases substantially when you add EVs to your fleet: it’s not just optimizing vehicle utilization anymore but also optimizing charger utilization,” said Sarah Booth, director of strategic business operations at Sawatch Labs, a WEX company that provides fleet electrification analysis.
"The study demonstrates that there is still high ambition to integrate EVs into fleet operations, not just to meet sustainability targets but to enable more cost-effective operations. However, achieving this transition presents significant challenges," said Jose Pereira, director of Frost & Sullivan's Mobility Advisory practice.
Pereira added that developing an EV adoption roadmap requires balancing the initial investments in vehicle and charging infrastructure costs against the operational savings from lower electric fuel costs, reduced service requirements and extended vehicle service life, as well as improved driver satisfaction and well-being from quieter and smoother vehicles.
Where are you at in the EV adoption process for your fleet? Stay tuned to this blog as we will explore in more detail how fleets can plan for EV adoption.
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Emily Atkins
President
Emily Atkins Group
Emily Atkins is president of Emily Atkins Group and was editor of Inside Logistics from 2002 to 2024. She has lived and worked around the world as a journalist and writer for hire, with experience in several sectors besides supply chain, including automotive, insurance and waste management. Based in Southern Ontario, when she’s not researching or writing a story she can be found on her bike, in a kayak, singing in the band or at the wheel of her race car. LinkedIn: https://www.linkedin.com/in/emilyatkinsgroup/