The Goals and Questions to Consider When Considering Electric Vehicles

There continues to be significant conversation and, consternation, in the trucking industry as it contemplates how to shift to a future with more automation and various propulsion options for their trucks. As the technology develops and evolves, there are many factors influencing the changing of the guard from internal combustion engines (ICEs) to lower and zero emission vehicles (ZEV).

In two previous pieces, our colleagues from Scopelitis, a transportation industry analysis firm, looked at how EPA commercial vehicle emissions standards are changing the industry, and how regulatory changes are accelerating electric truck adoption.

It’s all enough to make your head spin – and hurt. Whether it’s new engines being introduced to the market, more aerodynamic solutions, legislative and regulatory changes at the federal and state levels, incentives, charging needs and options, fleet operational needs, or the volatility of the energy market and what to do in the secondary market, all of these are questions that fleets are trying to understand to better inform their decisions regarding their future with ZEVs.

Behind labor, fuel is the largest cost center for trucking companies, representing 28.5% of the average marginal costs per mile. Having an effective fuel management strategy is critical to the success of fleets and as they consider the future. It is important to understand where the alternative fuel market is headed. It is very likely that ZE trucks will dominate future freight flows on highways in the United States, with the chart below offering projections through 2050 for the phasing out of ICEs and the transition to battery electric (BEV) and fuel cell electric vehicles (FCEV) in medium and heavy-duty trucks.

As fleets start their plan and journey to lower emissions and ZEVs, they need to have a clear understanding on how the landscape is evolving, and how to adapt.  They also need to develop clear goals and objectives and conduct due diligence to explore the options that best suit their needs. Several key factors need to be on the table as a part of this effort.

First and foremost, operational considerations top the list. When mapping goals and objectives and looking at alternative fuel options, a couple of factors need to be fully explored:

• Routes and duty cycles – How far do your vehicles travel? Are they dedicated vs irregular routes? How many hours per day are they operating? What commodity types and payloads will they haul? What are the vehicle uptime and reliability needs? How do we calculate and predict maintenance and repair costs? How are drivers managed and dispatched? And, how often do trucks return to their home terminals? To name a few.

With respect to the fuel options, several key issues need to be vetted and understood by fleets:

• Energy needs and impacts – What is the fleet’s energy demand? What is the cost and volatility of the energy source? What is the range of the vehicle fuel source and does that fit your operational needs? Where is the energy source coming from (public versus private)? How will their energy be provided and what are the utility’s plans for expansion? How technically mature is the technology? How “green” is the energy source – from both “well” to wheels and “tank” to wheels? How and where vehicles will be refueled or recharged, and the charging/fueling time?

A critical point to reinforce for fleets is infrastructure capacity and the capabilities of the power grid. The industry has relied for many years on diesel fuel as its primary vehicle propulsion option, and as a result the fueling infrastructure is pervasive and available practically wherever and whenever it is needed. In the new world of alternative fueled vehicles, this will not be the case for quite some time.

It will take many years to build up the infrastructure necessary to support different fueling options, and this is a critical consideration for fleets as they ponder their path forward. Below is an example of the projected ZEV infrastructure demand needs by states by the year 2050.

Amidst all these questions, there is one fact that will drive this conversation in the coming years: states and the federal government have committed to lowering emissions through the use of ZEVs. In fact, in 2022, the United States signed a global memorandum of understanding committing to 100% of truck and bus sales being ZEVs by 2040. Zero emissions vehicles will play a significant role in the future of trucking. It is important that fleets engage now with vehicle makers, utilities, and other stakeholders as part of their plan development.

Fleets also need to have a keen and thorough understanding of the regulatory and incentive options that are both necessary and available to develop an equipment transition plan to lower emission through ZEVs. The Bipartisan Infrastructure Law and the Inflation Reduction Act, enabled the development of many new regulatory and program requirements  to facilitate alternative vehicle adoption, and more specifically electric vehicles. Grants and other incentives to fleets, OEMs, and infrastructure providers are also being made available.

Additionally, the EPA and many state agencies are moving forward with their own requirements and incentives to speed adoption of lower emission vehicles and ZEVs. Understanding the various rules and incentives are critical to developing timing, total cost of ownership and return on investment calculations.

Lastly, fleets need to collaborate with their customers and shippers. There is a hyper-focused emphasis in the US and across the world on the environment and sustainability. Many shippers are asking their fleet providers what steps they are taking to reduce their emissions and are looking to partner with their fleets to not just deliver best in class, on-time service, but also to do so in an environmentally friendly way. As evidence of this significant shift towards sustainability, the Climate Pledge to reach net-zero carbon emissions by 2040 now has 421 signatories in 55 industries and 39 countries worldwide and includes commitments by many of the largest global companies.

As fleets conduct their due diligence and develop their plans to move towards alternative-powered and ZEVs, before making a significant financial and operational commitment they should consider starting on a small scale and contemplate first deploying multiple options in a testing capacity. This will help gain experience on the real-world operational and cost impacts, as well as implications to its existing personnel and identify where additional skills may be needed.

This testing experience also can be matched against the regulatory environment and timeline to inform the equipment transition plan, what incentives options are available and when, and the financial implications to the fleet.

What is important for fleets to know is the time to act is now. There are many resources available to help fleets understand and plan for the transition, both government and private, and they should take advantage of these resources to help them in their journey. One such resource is the North American Council for Freight Efficiency (NACFE), who works to drive the development and adoption of efficiency enhancing, environmentally beneficial, and cost-effective technologies, services, and operational practices in the movement of goods across North America. The American Transportation Research Institute (ATRI) also has several research reports that provide trucking companies with resources and education as they contemplate and plan their path forward.

Are you looking to revamp your fleet or enhance its operations with sustainability-focused initiatives? Contact us to speak to our team about how Trimble can help.