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What is driving fleet owners to electrify?

UPS says the business case and the growing preference for EVs from cities and national governments will help adoption reach tipping point

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An inadequate charging infrastructure remains one of the barriers to EV adoption
An inadequate charging infrastructure remains one of the barriers to EV adoption

Environmental benefits and reducing the cost of ownership are the main motivators driving commercial fleets to electrify, according to a new survey by logistics company UPS and intelligence firm GreenBiz.

 

The Curve Ahead: The Future of Fleet Electrification, which identifies the drivers and barriers to electrification, as well as strategies to move the commercial electric vehicle market from niche to mainstream, reveals that 83 per cent of large businesses surveyed cited sustainability and environmental goals as the top motivation.

 

A lower total cost of ownership – factoring in both direct and indirect costs and savings over the life of the vehicle – is the second biggest driver, cited by 64 per cent of respondents.

 

Lower maintenance

 

In addition to the fuel savings, electric vehicles (EVs) typically require less maintenance than traditional internal combustion engine vehicles, which means lower maintenance costs.

 

Despite an appetite for electrification, many fleet operators face challenges. Fifty-five per cent of respondents cited the initial purchase price of electric commercial vehicles as the top barrier.

 

Forty-four per cent view inadequate on-site charging infrastructure as a barrier and 92 per cent advise their facility is not “very well equipped” to accommodate commercial charging needs. Yet the study also found less than half of the companies surveyed are working with governments or utilities to address charging infrastructure.

 

“The challenges of cost and infrastructure requirements can be daunting, but we’ve begun to see solutions emerge,” said Scott Phillippi, UPS senior director of automotive maintenance and engineering.

“Continued industry collaboration will be critical to accelerate fleet electrification across a wide range of use cases”

He added: “In the US, we recently ordered 50 electric-powered delivery trucks that we anticipate will be at cost parity with conventional diesel-powered vehicles. And in London, we were able to find a solution for our charging needs through a collaboration between government and private organisations.

 

“The business case, combined with growing preference for EVs from cities and national governments, will help us to reach a tipping point to large-scale EV fleet adoption.”

 

Fleet managers and industry experts interviewed suggested strategies to overcome such challenges, including starting small. Instead of undertaking a large-scale fleet overhaul, many companies will prioritise electric options when replacing vehicles and even consider electric leasing options to mitigate the initial purchase price.

 

Converting from internal combustion engines to electric depends on specific vehicle uses, the size and distribution of fleets across regions, the costs of electricity and access to charging infrastructure.

 

“Despite the complexity of transitioning commercial fleets to an electric future, the vehicle technologies and options to upgrade infrastructure are quickly improving,” said Paul Carp, GreenBiz Group’s director of research and senior analyst. “Continued industry collaboration will be critical to accelerate fleet electrification across a wide range of use cases.”

 

Working with manufacturers

 

As the market for electric commercial vehicles matures, 70 per cent of companies report working closely with vehicle manufacturers and suppliers to identify the latest electric vehicle technologies and features.

 

UPS is working with commercial vehicle manufacturers such as Arrival, Tesla, Thor Trucks and Workhorse, providing data and performance feedback to help foster product availability and create fleet solutions that fit its unique needs.

 

UPS also works with manufacturers, governments and utilities to leverage innovative technology, such as smart grid charging in London that enables the company’s electric-vehicle fleet to charge without an expensive power supply grid update.

 

The project, made possible by engaging UK Power Networks, Cross River Partnership and UK’s Office for Low Emissions Vehicles, is an example of how collaboration can overcome vehicle electrification barriers.

 

The research findings will be explored in depth at the GreenBiz Verge conference in Oakland, California on 16 October.

 

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