5 reasons to transition your fleet to electric vehicles
October 31, 2024
If you’re looking to help support the economy, lower fuel costs, and reduce emissions, you may be considering the benefits of switching your commercial vehicles from traditional fuel powered vehicles to electric vehicles (EVs), or plug-in hybrid electric vehicles (PHEVS).
5 fleet trends driving the shift to electric vehicles
There are several EV trends driving fleet electrification, ranging from government incentives in renewable energy to growing interest in corporate fleet sustainability.
The International Energy Agency (IEA) projects that because the Corporate Average Fuel Economy Standards for 2024-2026 will enhance fuel efficiency, it will boost light-duty EV sales. California's Advanced Clean Cars II regulations, adopted by 12 states and Washington DC, aim for 100% zero-emission vehicle sales by 2035, affecting about one-third of US light-duty sales.
For fleets, this means a strategic shift towards more electric options. Additionally, the US Environmental Protection Agency (EPA) set emissions standards for 2027 and beyond that are expected to push electric vehicle sales to around 70% by 2032, influencing both light-duty and heavy-duty vehicle strategies. This shift towards standardization and reduced costs will be crucial for fleet operators adapting to new regulations and market demands.
Discover five trends driving the switch to electric or hybrid fleet vehicles.
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EV battery costs have fallen ~ 90% in the last 15 years
- Batteries account for 30-35% of the cost of an electric vehicle. Improved manufacturing, increased production volume, government incentives, and improvements in battery technology/chemistry have all contributed to the decline in price.
- Since the 2022 Inflation Reduction Act (IRA) passed in the U.S., the federal government aims to speed up a domestic production of EV batteries that could lower the price per kilowatt on battery packs.
- As EV battery prices drop, these lower costs are expected to reduce the total cost of ownership (TCO). This will help bring about cost parity with ICE vehicles for many light-duty vehicle use-cases.
The drop in EV battery prices makes it that much easier for you to reach your sustainability goals. Use EV-inclusive Total Cost of Ownership (TCO) tools to find early opportunities to electrify your fleet. Look for places where operational costs are similar between ICE vehicles and EVs. This will help you be more cost-efficient during early fleet electrification and show you how to adopt EVs on a larger scale.
Element’s EV-inclusive TCO tools include several features:- Life cycle cost analysis (LCCA) model
Covers charging costs like infrastructure, fuel and battery capacity. - EV fleet library
Helps you decide which EV makes and models are right for you. - Sustainability model
Suggests the best replacement vehicles and estimates both financial costs and emissions.
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Government initiatives continue to influence EV adoption
- A mix of rules and incentives in Europe, China, and North America is speeding up EV adoption. BCG notes that Europe’s 2050 emissions mandate for light-duty vehicles also plays a key role.
- 20 countries have plans to phase out internal combustion engine (ICE) vehicles between 2035-2040. Many others have introduced varying measures of phase outs as well.
- In the United States (U.S.), the California Air Resources Board (CARB) has made rules for high priority, state and local government fleets to phase out ICE vehicles.
- Stay up to date on the new rulings by the IRA in 2024 that provide a new non-refundable federal income tax credit (“45W credit”). This is available for qualifying purchases of commercial clean vehicles placed in service from January 1, 2023, through December 31, 2032.
Ensure that you evaluate all possible incentives that can help to reduce the investment required to electrify your fleet. Element Fleet Management looks at available federal and state or province incentives. This helps clients take advantage of opportunities across North America. -
EV sales and fleet driver satisfaction are still growing
- EV sales are still on the rise with more models to choose from and prices dropping. There was a 50% growth spurt in electric vehicle sales last year. It is important to understand how to account for further growth and how it is calculated in the long term.
- Model availability is expected to grow in all classes. While there are less than five truck or van EV models today, model availability is expected to significantly expand by the end of 2024.
- By 2029, the U.S. market for PHEVs is projected to achieve unit sales of 359,800 vehicles.
Test electric vehicles for a deployment program first on a small scale. This will help you get ready for transitioning to full fleet electrification, which will be easier when your TCO parity is reached for your relevant vehicle classes.
You will see an increase in driver satisfaction because EVs have great handling and smooth acceleration. Improved driver experience leads to increased driver retention and less employee turnover. -
EV fleet charging happens most often at home or in workplace settings
- There are 3 types of EV charging: home, depot or workplace, and public charging. Over 80% of charging is done in a private setting.
- The U.S. Department of Transportation states that the number of public chargers has doubled since 2021 and an extra $521 million in federal funds has been allocated to build more. This funding will help increase EV public charging stations in 29 states through the National Electric Vehicle Infrastructure Formula Program (NEVI), expanding infrastructure in 29 states.
- Canada has updated its needs for Decarbonization Programs and estimates that the number of EVs will grow to 5 million by 2030 and 21 million by 2040. This will require the installation of 40, 000 new ports for each year in the next decade and a half. The Natural Resources Zero Emission Vehicle Infrastructure Program (ZEVIP) has been extended to help fund charging infrastructure with an additional $500 million injection.
Make sure to include home, depot or workplace charging in your plans based on your use-cases. For longer routes, public charging is also an option. Infrastructure is growing as charging stations increase over time. -
Corporate fleet sustainability continues to drive fleet electrification
- Light duty vehicles account for most transportation emissions (57%) and medium/heavy duty vehicles account for 26%.
- Corporate fleets under two advocacy organizations, the EV100 and the Corporate EV Alliance, have pledged 100% zero emission light duty vehicles by 2030.
Review your sustainability goals and involve stakeholders early on to gain the necessary internal support.
How you can get started today
No matter where you are in your EV journey, by following our recommendations, you can begin the steps towards a successful EV fleet transition.
Ready to transition? Contact us now to start your electrification journey!
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