As countries and companies around the world begin making moves to address climate change, one of the steps many are taking is to move towards an electrified future. The days of the gasoline/combustion engine are beginning to wain and OEMs are answering the call. And with states like California putting EVs on the map, what are trucking companies to do to prepare for an electrified future?
Your Acquisition Strategy
Fleet managers considering investing in electric vehicles need to first establish a game plan and focus on a long-term strategy. Rash actions not based on a comprehensive review could result in big losses if fleets don’t invest in new technologies wisely.
While many trucking companies have already began investing in electric vehicles (EVs) and charging equipment as part of a phased adoption program, it takes more than throwing money at something to make it successful. It is important to consider that electrifying a fleet doesn’t just involve truck drivers and technicians, it should involve every aspect of an organization, from fleet manager to back office accountants.
Commercial motor vehicles represent a paltry three percent of all registered vehicles in the United States, yet they play an outsized role in influencing vehicle technology trends. As a result, trucking companies will have a big impact on how the industry adopts and utilizes EVs.
Yet, there are bumps in the road. For example, most trucking companies with large fleets may not fully understand the costs or what is required to make the switch. Generally, when you look at how a trucking back office does their job, they are tracking gas and diesel vehicles nearly 100% of the time. How will they adapt to EVs?
How to Calculate EV Costs
When you consider that EV rigs will not use fuel cards, it becomes a little harder to figure out how to calculate consumption costs. The fact is, truck OEMs are not yet building in electric meters, so trucking companies will have to use a third-party solution, much like a telematics or ELD solution, to track kilowatt hour usage.
Another consideration should be up-front costs. While EVs are cheaper in the long-term, they cost more up-front. And while those up-front costs are sure to drop as OEMs begin building to scale, they are still an important consideration fleet managers must evaluate as they think about investing in EVs. Your best bet is to work up a comparison chart looking at EV energy and maintenance costs compared to their internal combustion counterparts.
There are challenges in getting top brass to see the EV logic, however. If a fleet manager wants to invest in EVs, which are more expensive, what must they do to show that lower long-term operating costs will make up for higher up-front costs? Without having processes already in place to parse through this data, no doubt it will be very difficult for fleet managers and accountants to figure it out.
Your best bet is to work with OEMs and vendors who work with EVs day-in and day-out. These operators will already have the sales information ready and it should be easy for them to provide you with the materials you need to make the case to company executives and other high-level decision makers.
A Closer Look at Infrastructure
It is all well and good to want to invest in EVs, but there is an entire separate electric infrastructure that must be built or invested in to support your new vehicles. You need to take a moment to ask the right questions about the potential transformation. Consider the following:
- How much charging infrastructure will you need for the exact number of EVs you plan on purchasing?
- Who will you contract out to build it or will you build it in-house?
- How will you pay for construction?
- Will you use an overhead budget, capital fund, or get outside financing?
- When it comes to amortization or depreciation of assets, how will your operation complete their forecast?
- Will you require a large charging depot with its own sub-station?
When it comes to installing EV infrastructure, you must ask yourself a lot of questions and complete your due diligence to make sure you are making the investment that is right for your company. Still, most large fleet operators and others within the organization may not be well equipped to find answers to these questions. And when you are trying to demonstrate value of a potential investment, you must make sure your data is in order.
Try a Little Experimentation
Have you considered some small experimentation with electric technologies? These are new technologies, so it is easy to get the help and support you need to experiment without making horrible mistakes along the way. Even more, executive boards on trucking companies around the country should understand that this may initially be a bumpy ride.
The best way to get prepared is to do your research. Study the electrification issue as much as possible and learn what you can about state and municipal regulations governing the technology. Study up on tax breaks and consider special deals from OEMs. As companies roll out these products, there will likely be incentives built in to spur adoption.
Experimentation allows you to take an incremental approach at the outset. Why is this important? Because if you are incremental about your rollout, it will cost you more in the long run. When you are ready to take the plunge and make big investments, it is vital you take a long-term view so that you do not wind up with redundant investments or a poorly optimized vehicle/charger setup.
Another vexing question will come in the form of energy supply. After all, if you have all these EVs pulling power, where will it come from? Everyone knows where to get oil and gas, but can your local grid handle the power drain from a fleet of EVs? You may need to work with local officials to ensure you stay in compliance with local regulations, but you must do it if you want to adopt an EV strategy the right way.
Acquiring Your Energy
Energy acquisition is one of the most vexing problems companies will deal with as they embrace an electric future. The big question is whether there is enough energy to account for trucking companies to move to electric vehicles.
Consider the sources. Energy usage is managed and regulated by each of the 50 states. Each state has their own regulatory setup, commissions, utilities, and other entities, all of which oversea energy infrastructure. In the end, it would be up to these state agencies and their partners to set up charging station infrastructure and get the grid updated as needed to support them.
Take a rural truck stop as just one example. It would cost significantly more to provide electric charging infrastructure to a rural truck stop. Few states have plans of outfitting rural truck stops, but if the interstate charging network is well planned, EV rigs will be able to get where they need to go without relying on rural truck stops.
Some have suggested wind and solar farms, but they require significant capital investment and urban planning. When it comes to trucking companies working in city and urban areas, there may be challenges involved with getting utilities and regulatory bodies to agree to major investments, especially with local government coffers depleted due to the Coronavirus shock.
Proper Planning is Key
Fleets who want to invest in EV technologies will need to start by setting up a transparent budgeting process. It will be vital to track all EV costs over the lifetime of the vehicles being purchased. This is the only way you will be able to figure out accurate cost of ownership data.
Consider investing in technologies that help you manage your charging solutions. There are even vendors out there that provide “Charging as a Service.” Make sure you sit down with all your department heads to develop a proper, cross-organizational long-term plan for EV investment. A feasibility study would be the best way to start.
Once you have set up your long-term plan, identify your routes. When do you think vehicles will need time to charge? Optimizing charging times will be critical to keeping costs low. Engage with local officials and make sure to have all your data points and research up to date and accurate.
As you take the plunge, make sure your installations are futureproofed. The last thing you want to do is invest in EV technology that is obsolete the moment you sign the dotted line. As long as you take care and keep your long-term goals in mind, you won’t go wrong with your EV investment.