3 trends forecasting fleet electrification from VERGE 18
During my first VERGE conference in 2013, I attended a session called "Electrifying Fleets," where the discussion centered on the "compelling cost-saving opportunities" that fleet managers could anticipate from electric options. Since that time, fleet electrification has made significant progress, and that evolution was reinforced both during the latest VERGE event last month in Oakland, California, and by a recent GreenBiz research project conducted in partnership with UPS.
Here are my top three takeaways about fleets from VERGE 18:
1. Fleets will follow the path of renewables
I spoke to Peter Harris, director of sustainability at UPS Europe, about the logistics and delivery company’s journey to expand its electric fleet in central London from 52 to 170 electric vehicles. He described the challenges, particularly regarding infrastructure upgrades to the local utility distribution network, and made a keen observation about the state of the fleet electrification market.
When asked if there was a turning point in the market for widespread fleet electrification, Harris said, "It’s definitely coming — there’s no question about the direction of travel. It’s a similar trajectory to what we’ve seen over the past decade with renewable energy technologies like wind and solar."
Beyond the parallels in technology improvements, fleet electrification likely will happen in waves based on the favorableness of market conditions. The states and regions with more aggressive policymaking, incentives and utility offerings will shift the economics of fleet electrification to improve the business case across a range of use cases.
In the renewables industry, the battles initiated over federal tax credits and in a handful of state public utility commission proceedings. But now, the economics of renewables have won, and the floodgates are open. Most of the experts I interviewed anticipate a similar — if not even more expedient — shift across commercial fleets, largely based on battery technology improvements, subsequent vehicle cost declines and likely state and national policies worldwide.
2. Demand for electric trucks is rising
The market for electric fleets is still nascent, as it was with renewables a decade ago. However, a number of major OEMs, large buyers and some state policymakers have signaled a strong demand for electric vehicles and trucks. Call it the Elon Musk bump: A year ago, Tesla announced its all-electric semi-trailer, and dozens of companies immediately lined up to pre-purchase a truck that doesn’t exist yet.
At VERGE 18, leaders from UPS, Walmart and companies such as Sysco shared lessons from their experiences in fleet electrification. The invite-only Fleet Electrification Summit during the event assembled 100 representatives from a diverse set of stakeholders including fleet managers, cities, utilities, OEMs, policymakers, service providers and NGOs.
Two factors that this group believe will be crucial for adoption: longer-term advocacy efforts and innovative financing to support the infrastructure investments required for the transition.
As the market for electric trucks matures, we can expect similar industry groups to mature while helping to advocate and provide valuable resources. At VERGE, we heard from leaders of organizations such as the North American Council for Freight Efficiency (NACFE), BSR, CALSTART and others at the forefront of electric vehicle advocacy and policy. I also interviewed leaders from the Edison Electric Institute (EEI) and the Low Carbon Vehicle Partnership, a United Kingdom-based public/private partnership that convenes 200 leading businesses focused on clean vehicle deployment.
3. Utilities should (and will) be willing partners
One major difference between the adoption of renewables and the fleet electrification will be the role of the utility — many are already positioning themselves as key stakeholders in achieving scale for electric vehicles. In contrast, most utilities initially saw renewable energy as a threat to their business model.
From the perspective of most electric utilities, tangible benefits are associated with promoting electrification. With the proper regulatory structures in place, utilities can fund and potentially capitalize investments made in upgrading electric charging infrastructure. Furthermore, some utilities are advocating for "make ready" equipment installations that support plug-and-play models where customers more easily and affordably can connect to the power grid.
Effectively, utilities see fleet electrification in their best interest and even more so when they are able to make a solid rate of return on their investments. At VERGE 18, utilities including PG&E, ConEd and several smaller players said they’re hopeful that electric vehicles will help them increase grid reliability while offering valuable services to their customers.
How long will it take until we reach the tipping point in fleet electrification? What are the current use cases that make sense? What steps will be necessary to accelerate fleet electrification?
For answers to those questions and more, download the GreenBiz and UPS "Curve Ahead: The Future of Commercial Fleet Electrification" report.