Electric vehicles are growing in popularity among citizens who want to do their part to improve the environment, save on gas costs, and enjoy easy cost-effective maintenance. They’re the perfect solution for individuals, but can fleets enjoy the same benefits from electric vehicles? It’s hard to imagine changing a business’s entire structure-- and switching to electric would change very much about the fleet business, from gas budgets to maintenance practices. Is it feasible for fleets to switch over to electric? This article will break down what is involved in pursuing fleet electrification.
Introduction to Fleet Electrification
The Future of Transportation
Let’s first define what an electric vehicle is.
Battery electric vehicles (BEVs) are fully electric. They don’t contain a combustion engine and do not require gas or diesel. They have zero emissions and are powered by onboard batteries. These batteries are charged by plugging into an electrical outlet or charging station.
The cost of purchasing a battery electric vehicle is generally greater compared to a similar combustion engine vehicle. It requires a high capital outlay to purchase battery electric vehicles (before rebates).
But what is fleet electrification?
What is fleet electrification anyway? Fleet electrification means replacing your fleet of ICE (internal combustion engine) vehicles and replacing them with BEVs. While going through the fleet electrification process, your fleet may experience several logistical challenges. This will vary depending on your industry, the area you operate in, and the overall size of your fleet.
Challenges in Fleet Electrification
Change isn’t without its challenges, of course. While each fleet making this change will experience a unique set of challenges depending on their business, below are some of the most common challenges shared by fleets who went through the fleet electrification steps.
Initial Cost
We mentioned earlier the sticker shock some fleet managers might experience when pricing out new electric vehicles compared to ICE options on the market. There’s no denying that electric vehicles are the most expensive out of these options. When faced with this initial cost keep in mind these things:
- Research government subsidies and rebate options that reward businesses for making sustainable choices, such as purchasing electric vehicles.
- Electric vehicles, while having an upfront cost, don’t need the more expensive fuel option in the long run offering long term savings for the fleet businesses that operate using this technology.
When looking at the initial costs, make sure to look at the full picture and research what programs your fleet business can apply for.
Needed Infrastructure
Depending on your service area, you may or may not need to consider where your fleet will charge. Electric vehicles are growing in popularity, but different parts of the country are adopting this technology faster than others. You might be operating in an area where charging stations are easy to find for your drivers, or they might be few and far between if they are even there at all. When considering fleet electrification, determine whether your business will need the infrastructure for charging. If there are no locations for your fleet to charge nearby, you might need to consider adding one on-site.
As electric vehicles continue to be added to the road, fuel charging stations will pop up as well. If you’re waiting until this technology gets more popular in your area, keep an eye out for new charging stations in your service area.
Needed Training for Drivers
At the end of the day, those who will be most impacted by your decision to switch to electric vehicles are the men and women driving the trucks for your fleet. Make sure that your drivers understand how and where they are expected to charge these new vehicles. Will they be charging them on their route or on-site at one of the charging stations your business built?
Also, keep in mind that for many of these drivers, this might be their first time operating this kind of vehicle. Be sure to field any of the questions or concerns so that they feel comfortable charging and driving your new vehicles.
The Importance of Fleet Electrification Strategy
There are four considerations you should keep in mind when developing your fleet electrification strategy.
No. 1: Understand Your Needs
Every fleet is different, and you need to make the transition to EVs manageable for your business. Answer these questions before you make the switch to better understand your business’s needs:
Do all of your vehicles need to be fully electric? If not, which ones should you switch?
Is switching to EVs a viable option for you operationally and financially?
How many electric vehicles do you need? When do you need them?
Which EV models are available in your market, and do they meet your needs?
No. 2: Financial Considerations
Electric vehicles are naturally more expensive than ICE vehicles – they can cost 30% to 40% more. While some potential rebates and incentives can offset those costs, and fuel savings help in the long run, you must consider the financial effects of switching to electric vehicles. Here are some questions to consider:
What is your budget? Include money for the vehicle, charging infrastructure, software and tools, and driver training.
What government incentives and rebates are available to offset your costs?
No. 3: Battery Range
The range of an electric vehicle is determined by its make and model. Of course, fleets vary widely in how far they travel. Some can drive across the country, while others are local to their cities and neighborhoods. There are electric vehicles for different kinds of fleets. Some EVs have batteries that last over 200 miles, and others have short-range batteries better for neighborhood fleets. You’ll also need to consider where your fleet will charge the vehicles. Usually, fixed, urban environments are best for EV fleets.
No. 4: Getting Support
Everyone in the business should be involved in switching over to electric vehicles, from investors to drivers. To get support, it may be best to detail the total cost of ownership, the environmental benefits, how it will help the fleet’s operations, and how you plan to implement these vehicles. If everyone is involved from the beginning, you will likely have more support as the process continues.
Benefits of Fleet Electrification
Lower Fuel Costs
In the past year, fuel costs have been an exceptionally high point of concern. They’ve been hitting record highs and hurting fleet businesses more than anyone. However, fleets with electric vehicles have little to worry about when it comes to fluctuating gas prices. The question remains, is fueling with electricity cheaper than fueling with gasoline? AMPLY reports that in 22 metros, charging light-duty vehicles with electricity is 44% cheaper than fueling with gasoline. It’s 43% cheaper for medium-duty vehicles and 37% cheaper than diesel for heavy-duty fleets. Considering that some fleets will spend 30.4% of their revenue on fuel in 2022, this would be a massive improvement for the industry.
Lower Maintenance Costs
It may also surprise you to save money on maintenance by switching to electric vehicles. Electric vehicles have fewer mechanical parts than gas-powered vehicles. In fact, electric vehicles cost up to 22% less in maintenance and repair than their gasoline counterparts. The average maintenance cost for an electric vehicle during the first three years is $77. For a gasoline vehicle, that number is $228. You’ve likely noticed the rise in maintenance expenses in the past several years. There’s no better time than the present to invest in a vehicle with fewer mechanical parts that need maintenance.
Employee Satisfaction and Retention
Having a fleet of electric vehicles can help with employee retention. Many commercial fleets who operate electric vehicles report enhanced fleet metrics, like improved performance, high levels of employee satisfaction, and better retention.
Drivers of electric vehicles who are often in delivery situations enjoy three main benefits: elimination of exhaust fumes, a smooth and quiet ride, and privilege of operating bleeding-edge technology. With hiring and training costs going north of $50,000 per employee, retention has a big impact on a company’s bottom line.
Incentives and Tax Credits for Purchasing Electric Vehicles
Subsidies, incentives, and tax credits can make switching to an all-electric fleet even more appealing. The United States Federal Government, and a number of state and local governments, provide tax credits for the purchase of electric vehicles.
In addition to utilities and private organizations, some states and local governments offer electric vehicle incentives such as vehicle or infrastructure rebates, special low-cost charging rates, vehicle registration fee reductions, vehicle lane exemptions, and loans for electric vehicles. To get a detailed list of tax credits and incentives available in your region visit the United States Department of Energy’s Alternative Fuels Data Center.
Electric vehicle tax credits vary based on vehicle model but some buyers receive up to $7,500 in tax credits for purchasing an electric vehicle. Local and state incentives may also be added to this.
Sustainability Benefits
Your drivers are on the road every day working hard to service your area and industry in a quality and timely manner. ICE vehicles are also releasing carbon emissions into the atmosphere that add up over time while your fleet drivers are on the road. And across your entire fleet, these emissions add up fast! The environmental impacts are obvious for big and small fleets alike. As our country moves toward green energy and sustainability practices, early adoption of such technologies looks good to your clients and is generally a good business practice.
Long Term Savings for Your Fleet
While the environmental impacts could be enough of a benefit, the good news as a business owner is that sustainability pays off in the long run. One of the greatest costs for your fleet business is how much diesel or gasoline costs your drivers. Imagine that your business wasn’t victim to rising fuel costs or even had to worry about fuel costs for that matter! While the initial investment in the new greener technologies might give some fleets sticker shock, it’s important to keep in mind there is a reason many fleets have already gone through the fleet electrification process. Savings over the years is one of the most significant factors to why these businesses opt to make the change.
Fleet Electrification: The Way of the Future
As fleet managers, it’s important to focus on the road ahead. Undoubtedly, electric vehicles will continue to grow in popularity in the coming years as our country advocates for sustainable business practices. Fleet electrification ensures that your business stays up to date with the latest technology on the market. While also lessening the environmental impact your business will have on your community.
Your team deserves the best technology to help make their jobs easier and less stressful. Having end-to-end software for your fleet is another way to ensure you have the best technology on your side. Learn how our products can help service your fleet and support your drivers when you schedule a demo or contact us.
FAQs
What are the key benefits of fleet electrification?
Fleet electrification helps keep the air cleaner because by reducing the release of harmful gasses. It also saves money in the long run because electricity is often cheaper than gasoline, and electric vehicles usually need less maintenance. Additionally, electric vehicles contribute to fighting climate change by producing fewer harmful greenhouse gasses.
What are the major challenges in fleet electrification?
The major challenges in fleet electrification include the higher initial cost of electric vehicles, which can be a barrier for some companies or organizations. Finding enough charging stations and making sure they're conveniently located is another challenge, as it can take longer to charge an electric vehicle compared to refueling a gasoline-powered one. Lastly, there may be concerns about the range of electric vehicles, meaning how far they can travel on a single charge, which could be a problem for fleets that need to cover long distances without stopping to charge.
How can telematics and fleet management software aid in EV management?
Telematics and fleet management software can help with electric vehicle (EV) management in a few important ways. They can track and provide information about the EVs' performance, like how much energy they use and how far they can go on a charge. This helps fleet managers plan routes and schedule charging stops efficiently. Additionally, these tools can send alerts if there are any issues with the EVs, making it easier to keep them in good working order.
What are some common fleet electrification best practices?
Some common fleet electrification best practices include carefully choosing the right electric vehicles (EVs) for the specific needs of the fleet, considering factors like range and payload capacity. Setting up a good charging infrastructure with reliable and convenient charging stations is also important. Additionally, training drivers and maintenance staff on how to properly operate and take care of EVs can help ensure they are used efficiently and last a long time.
How do government policies and incentives impact fleet electrification efforts?
Government policies and incentives play a big role in fleet electrification efforts. They can provide financial benefits or discounts for using electric vehicles, which can make them more affordable for companies. Additionally, policies might set rules or goals to encourage the adoption of electric vehicles, helping to reduce pollution and support a cleaner environment. These incentives and rules can motivate businesses to switch to electric vehicles and contribute to a greener future.
What are the long-term cost savings of fleet electrification?
Fleet electrification can lead to long-term cost savings in a few important ways. First, electric vehicles (EVs) usually cost less to run because electricity is cheaper than gasoline. Second, EVs often need less maintenance compared to traditional cars, which can save a lot of money over time. Lastly, as technology improves and more people use EVs, they may become even more affordable and cost-effective in the long run.
