The shrinking barriers to EV adoption
July 11, 2024
Transitioning commercial fleets from internal combustion engine (ICE) vehicles to electric vehicles (EVs) has long been identified as a great opportunity for businesses to meet their sustainability goals by reducing their carbon footprints. Standing in the way of EV adoption though have been the traditional barriers of high upfront vehicle cost, range anxiety, and a lack of charging infrastructure.
For those pushing for more sustainable options in the fleet space, there have been promising recent advancements in technology and infrastructure that have eroded these three main challenges. Challenges that were previously viewed as insurmountable barriers are now seen as mere obstacles that can be overcome with forethought and commitment. This means full or partial fleet electrification is now increasingly within reach for many organizations.
With that in mind, let's explore how traditional EV adoption has evolved to its current state.
High upfront vehicle cost
Historically, higher upfront costs associated with EVs have been the biggest deterrent for commercial fleet use cases. This is why the recent global trend in EV cost reductions could open new doors in this area. Some of the notable EV models reducing their purchase price are:1
- Ford Mustang Mach-E - reduced by $8,100.
- 2024 Chevy Blazer 2LT - reduced by $6,520.
- Nissan Ariya - reduced by $3,600.
One of the biggest reasons behind this universal vehicle price reduction trend is battery technology advancements. Ever since the first EVs rolled off the assembly line, their price point was tied almost directly to how costly it is to produce the battery. Expensive, early-model lithium-ion batteries translated into expensive early-model EVs.
According to the U.S. Department of Energy (DOE), EV battery pack costs have decreased by nearly 90% since 20082. Today, EV manufacturers can produce longer-lasting batteries for much less than their earlier counterparts. A combination of lessening demand and drops in price for lithium iron phosphate (LFP) cells has spurred the recent battery cost decreases3. This cost-efficiency is reflected in today’s EV sticker price.
All indications are that lithium-ion battery costs will continue to drop. According to research from Goldman Sachs, battery prices are expected to decline by 40% between 2023 and 20254.
Other factors contributing to EV price reductions are increased competition among automakers and economies of scale. For example, a push to standardize and simplify parts and improve parts integration has moved the needle on scale and made design and manufacturing more cost-efficient5. It is also worth noting the specific price reductions of the models previously listed all came around the same time Tesla announced aggressive price cuts for their Model Y, Model X, and Model S earlier in 2024.
Range anxiety
Range anxiety is the driver’s fear that an EV will not have enough power to reach its destination. It has long stood as a major concern for potential EV adopters. However, the same technology advancements in lithium-ion batteries that have made EVs less expensive have also given them expanded range. In 2024, the number of EV models that can go 300 miles on a single charge rose to 30, which represents a 500% increase in just three years6. Some of these models include:
- Ford Mustang Mach-E – 211 to 314 miles
- Volkswagen ID.4 – 215 to 324 miles
- Tesla Model 3 – 220 to 334 miles
- Ford F-150 Lightning – 230 to 320 miles
- Tesla Model Y – 303 to 330 miles
- Chevy Silverado – 380-400 miles
These numbers are impressive when you consider that the average personal light-duty vehicle in North America covers only 43 miles per day7.
Research on driver attitudes appears to prove the adage that ‘monsters live in the dark.’ As driver exposure and vehicle range simultaneously climb, consumer range anxiety falls. According to a study by Cox Automotive, the percentage of consumers who cited low vehicle range as a concern dropped for 47% in 2019 to 37% in 20218. This continual drop in range anxiety on the consumer side is also impacting commercial fleets. Based on data from select sales fleet clients, Element has found that 96% of driving days for EVs cover fewer than 200 miles which falls well within the range of a single charge.
Lack of charging infrastructure
The availability and accessibility of charging infrastructure have been critical barriers in EV adoption. When it comes to accessing charging infrastructure, there are three options available for EV drivers:
- Public charging stations: Where drivers utilize the growing network of public charging stations for convenient access to charging facilities.
- Depot and Workplace Charging: Charging stations installed at an organization’s premises for dedicated access to charging.
- Home charging: For fleets with employees who take vehicles home.
For fleets considering electrification, home charging is the preferable of the three options. It ensures that the employee can begin each day with a full charge and recharge again overnight. Private on-premises charging would be the next-best option, as the organization can control both accessibility and cost factors associated with charging the vehicles.
Reliance on public charging stations is the least ideal from a commercial standpoint. There is no guarantee that drivers will be able to access a charger when needed. Even if they do, the cost of public charging will be noticeably higher than the other two options.
That said, the growth rate of public charging stations across the United States is striking. According to the DOE, EV public charging stations have more than doubled since 20209. The total jumped from 29,000 in December 2020 to more than 61,000 by February 2024. Today, approximately 64% of Americans live within two miles of a public charging station.
Why an EV program might be right for your organization
While there has been measurable movement in all three of the traditional challenges to EV adoption, it should be noted that they still exist, and there is still a way to go. Regarding vehicle cost, for example, some light-duty EV models are nearing the point of cost-parity with ICE vehicles, although most are not there yet.
However, this is not to suggest that ‘wait and see’ is the recommended course of action. Many forward-thinking organizations are launching EV programs to convert a small percentage of fleet vehicles to EVs to test the waters. Getting started with an EV program is an excellent way to gain quantifiable, real-world data on the benefits of EV adoption, and ease drivers’ concerns by giving them practical experience behind the wheel.
So, while today might not be the time for full-scale EV fleet adoption, it very well may be the right time to take the first steps in that direction. Contact Element Fleet Management’s team of trusted advisors today to learn more about how an EV Program can benefit your organization.
Sources
1 Car Companies Cutting EV Prices as They Try To Compete With Tesla - Newsweek
2 DOE: Battery Pack Costs Decreased 87% Since 2008 (insideevs.com)
3 EV, energy storage battery prices set to fall more, report says | Reuters
4 EV Battery Prices Dropping A Lot This Year & Next - CleanTechnica
5 Reducing the Electric Vehicles Manufacturing Costs | BCG
6 The Long-Range EV Boom Has Arrived - Bloomberg
7 What is EV Range Anxiety and How can we Overcome it? | Geotab
9 Electric Vehicle Charging Stations Across the US | Pew Research Center
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