The future of EV adoption & considerations to get started
February 02, 2023
Sustainability efforts and climate change goals are accelerating electric vehicle (EV) adoption across the industry. It is also being propelled by increased consumer demand and significant Original Equipment Manufacturer (OEM) investment. The world's top OEMs are planning to spend almost $1.2 trillion through 2030 to develop and produce millions of EVs, along with the batteries and raw materials to support that production, according to a Reuters analysis.
EV adoption is a complex technological shift but taking incremental, robust steps will position your fleet for a successful, larger-scale transition.
Fleet EV adoption progress, model availability, and investments
EV sales in North America have risen from 1.8% in 2019 to 6.7% in 2022, which is partly due to an increased model availability. In the United States (U.S.) alone, light-duty EV models are projected to reach 187 in number by the end of 2025. On a global scale, model availability for zero-emission trucks and buses is forecasted to increase by over 25% from 433 models in 2020 to 544 models in 2023.
The EV transition may be more challenging for heavier fleets (class 3 and above) due to the lack of vehicle models currently available. However, incentives in the Inflation Reduction Act (IRA) in the U.S. and Incentives for Medium-and-Heavy-duty Zero-Emission Vehicles (iMHZEV) in Canada are expected to make it more accessible for heavy-duty fleets to electrify. Here is a snapshot of production targets for some commercial EV models through 2030:
OEMs are rapidly innovating and transforming their supply chains for greater flexibility and efficiency in making technological advancements in the EV space. They have heavily invested in new plants, created new divisions, and have set ambitious goals to convert most of their vehicles to EVs. For example, Toyota invested US$2.5 billion in 2022 to expand its newest North American plant to support battery electric vehicle (BEV) battery production. Further, General Motors has pledged to stop producing internal combustion engine (ICE) vehicles by 2040 and Ford has created a new “Ford Model e” division for electric vehicles.
In 2022, the U.S. passed the 5% tipping point, which indicates the start of mass EV adoption. The EV adoption forecast is for Canada to reach this tipping point in 2023.
How OEM production delays are impacting electrification targets
Analysts estimate that EV production delays will continue until 2024. The lack of vehicle production has resulted in limited quantities being available for fleets and OEMs postponing dates for the introduction of new models.
As fleets face acquisition challenges, with some EVs taking longer than anticipated to become available for orders, electrification targets may get pushed back. A sustainability goal to transition an entire fleet by 2030 may be achievable, but this would require starting the process now and being both proactive and flexible.
If you’re trying to have a more green-friendly fleet, hybrid vehicles are a step in the right direction. Consider these 3 steps:
- What EVs do you want?
- If those EVs aren’t available, what other EVs could fit the bill?
- Is there a hybrid option?
If you have an electrification target, you may want to consider an additional step given the challenging acquisition environment: what data can you bring to your executive team to explain why you can’t meet your fleet electrification target?
You should factor in current market conditions, their impact on the availability of EVs and undertake contingency planning for when you’re unable to get the full allocation of your first choice or unable to meet initial goals. It is important to self-assess your own fleet, as it pertains to what is available in the market and what EVs are best suited for your fleet.
Benefits of EV adoption: achieving sustainability goals and lowering total cost of ownership
The two main drivers of EV adoption for fleets include:
- Meeting sustainability goals
The best way to achieve sustainability goals and tackle climate change is by gradually transitioning to vehicles with no tailpipe emissions (zero-emission vehicles/BEVs). This will reduce greenhouse gas (GHG) emissions, improving the air quality in the communities where your fleet operates.
Governments also continue to influence EV adoption. With anticipated regulations looking to ban the sale of ICE vehicles, stricter Corporate Average Fuel Economy (CAFE) standards, and policies requiring companies to report the use of ICE vehicles - the sooner you start to electrify your fleet, the more prepared you will be to act when regulations come into effect.
EV adoption also involves cross-functional engagement across the organization. The process of transitioning to EVs will involve coordination with several key groups to pilot, test, and learn how EVs fit into your fleet. However, establishing a thorough and complete plan is what is going to help your organization to attain sustainability goals.
- Achieving lower total cost of ownership
Advances made in battery technology, as well as significant fuel and maintenance cost savings, are reducing the total cost of ownership (TCO) for EVs.
TCO parity is expected to be reached in 2025 for light-duty vehicles and in 2027 for medium-and-heavy-duty vehicles (MHDVs). MHDVs across all classes are projected to be cheaper on a cost per mile basis as of 2027.
Considerations for EV adoption
The fleet electrification process is complex. Successful fleet electrification requires a combination of readiness factors to be met. Beyond purchase price considerations, you will have to think about a charging strategy, a change management strategy for introducing EVs to drivers, pilot driver selection, and learning the capabilities and limitations of these vehicles. You will also want to consider accessing incentives and optimizing fleet performance with a telematics solution.
A charging strategy should contemplate depot charging but know this is a significant undertaking from both a financial and infrastructure perspective. If your company allows home charging, consideration should be given to whether the company or the employee will be the owner of the home charger. Additional consideration should be given to managing reimbursement for drivers who charge EVs at home and ensuring that they are taking advantage of off-peak electricity rates.
As you begin or advance your fleet electrification journey, you should consider implementing policies that favor EVs during fleet renewal cycles. Setting EV quotas is one of the most prominent, scalable, and cost-effective strategies to increase the adoption of EVs. For example, if you are looking to gradually transition your fleet and plan to replace x-number of vehicles, you can set a fixed percentage of the order to be EVs.
Finally, pilots are critical for early adopters of electric vehicles. They provide you with an opportunity to create and learn from a workable fleet electrification strategy, before committing to transition at any scale.
Simplifying your EV journey
Element Fleet Management is strategically positioned to lead the industry with our global Arc by Element program, which is designed to guide you from piloting your fleet to full scale electrification. Element’s expertise working with governments, OEMs, and clients worldwide will be invaluable in supporting your goals to transition to EVs and reduce GHG emissions.
Our dedicated team of EV experts is here to help you to develop an EV conversion strategy for your fleet, while ensuring that the process is simplified and seamless. We continue to stay on top of rapid innovation and to collaborate with best-in-class suppliers in charging and infrastructure, to meet your unique fleet needs.
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