Forever taking the fossil fuels out of delivering goods, from the long haul to the last mile, can go a long way toward reducing carbon emissions on a meaningful scale. What is attracting more companies to pursue electric fleets, and what's holding back more of them from ditching the diesel?
“We're seeing almost every day, it seems like, new product announcements, partnerships, joint ventures, significant investments being made,” said Ben Sharpe, senior researcher at the International Council on Clean Transportation, speaking at the VERGE Electrify virtual event.
Legacy big-rig makers including Volvo, Daimler, Cummins and Peterbilt are aggressively bringing electric vehicles to market, as are a wide range of startups such as BYD, Proterra, Orange EV and GreenPower. Meanwhile, one of the Biden administration's earliest big announcements this year was its goal to electrify federal fleets.
Yet it’s still early days, with less than 1,000 electric trucks and buses being sold today, making up about 1 percent of the market for zero-emission commercial vehicles, Sharpe said. Transit buses are leading the way, with more than 10 percent of those purchases being zero-emission vehicles.
"So for us, that's very exciting," he added. "Transit buses tend to be kind of the beachhead market where you see alternative fuel and advanced technologies kind of first hit the commercial vehicle space," and their technologies are likely to trickle into trucks.
To understand the carrots and sticks to electrification for those in the logistics business, it's helpful to ask an early EV adopter that happens to hold about 30 percent of the market share for U.S. same-day deliveries. FedEx began embracing electric vehicles about a decade ago. The company plans for half its vehicles to be electric by 2025, reaching 100 percent by 2040.
"We've been in the space since 2010 and put in a tremendous amount of research," said Russ Musgrove, managing director of FedEx Express. "We have millions of electric miles, and we made a conscious decision that we can’t keep waiting forever."
There are advantages to being an early adopter.
The initial charging infrastructure has been relatively simple to establish, enabled by partnerships with ChargePoint and others, he added. Now, FedEx is readying for significant infrastructure and construction projects.
"One of the lessons learned as we went from science project to scaling was that ... it's one thing to put a new charger in your garage," Musgrove said. "It's another to take a warehouse and convert 45 or 100 vehicle positions, basically by building a subdivision in the building."
Despite the setup challenges ahead, Musgrove found that going electric makes sense to FedEx in terms of the total cost of ownership. "Now, if you can control the miles, you control your fleet, and you're in a hub-and-spoke type of scenario, the [total cost of ownership] on this is off the chart," he added.
Word of mouth
With that said, Sharpe described a tension within the fairly conservative, competitive, low-margin business of trucks. The speed of EV adoption therefore will be dictated not only by the speed of policymakers but also the industry's acceptance of new technologies, he said.
In order for the large-scale, electric-truck transformation to happen in the coming decades, trucks need to perform their mission well and provide value. Charging infrastructure needs to be reliable and proven, too, and good news needs to spread by word of mouth in the industry, he added.
Rich Mohr, vice president of fleet solutions at ChargePoint and a former chief technology officer at Ryder, already sees that happening. "The drivers love the vehicles; the feedback has always been extremely positive," he said, noting the appeal of features such as regenerative braking and one-pedal driving.
"Most of the conversations I was in at Ryder had more to do with how is the driver using that vehicle, and less about the vehicle itself around what it can do. And that's a big change in the industry, especially in the last-mile space and the final-mile space."
Musgrove underscored that well-engineered EVs please FedEx delivery drivers, and the fact of the underlying technology is almost a side note. "I like to tell people, the fact that the vehicle is electric is not relevant to the fact that it's a good truck, and the drivers absolutely look at it that way. ... I will say that experience from the driver-use perspective has [received] extremely high marks, higher than any of the other vehicles that we have globally."
Trucking fleets, particularly in North America, are primarily made up of small businesses and owner operators. Plus the vast majority of small fleets serve small operations such as flower shops, restaurants and small farms, Musgrove added.
Sharpe described support, incentives, funding and education for contractors and independent operators as crucial for driving EV adoption.
E-buses and e-trucks for last-mile or "middle-mile" delivery offer a number of significant benefits to those players, who tend to have fixed routes that ultimately return to a home site for parking and refilling, according to Mohr. Within smaller fleets, for example, drivers might even bring the work van or pickup truck home and charge it overnight.
"It really goes under the radar a lot that there's a heck of a lot of energy and a heck of a lot of drivers that bring their vehicles home at night, especially on the van side," he said, describing ChargePoint's offerings for them. "We do reimbursements for employees with their electrical bill at home to make sure that they're getting paid for their energy."
The benefit for larger companies involved is that it doesn't require figuring out how to deploy megawatts of charging, Mohr added. "Electrification for (the) last mile can be simple, as long as you think about how you're going to energize your vehicle and how you're going to get that visibility and access control around your fleet."
At an even smaller scale, in terms of vehicle size, electric bikes and scooters can provide another layer for the last mile of deliveries from distribution hubs to doorsteps. FedEx is spending hundreds of thousands of dollars on e-bikes around the world, which could expand to a million dollars by the end of 2022, Musgrove said. "At the end of the day, where they make sense from a productivity perspective, they're actually a very efficient way to deliver packages for cities," he said.
However, it takes special work with cities to make delivery bikes feasible on sidewalks or roadways.
The utility factor
Less than a month ago, FedEx was doing small EV pilot programs without infrastructure problems. Yet moving forward with scaled-up infrastructure is proving to be more challenging, Musgrove said. For a utility, housing 10 EV chargers in one building looks a lot different than hundreds of charging stations.
Among the more than 3,300 U.S. utility companies there is a variety of support, or lack thereof, for scaling electric vehicle infrastructure. Musgrove said that keeps him up at night. For example, public utilities commissions have expressed hesitancy about giving their customers with EV fleets a "free ride" that other customers subsidize.
Electric has been one of the simpler technologies, compared to some of the changes in the diesel fleets over the last 20 years.
"Now granted, [a] utility is going to charge us in different ways," Musgrove said. "But the reality is, there are advantages to being an early adopter. We're already in a perfect position because of our defined routes to make electricity work for us. Now, it's about finding ways to make the utility understand how valuable we can be as a customer buying the product, basically from here forward for the foreseeable future, and then working with us to offset that utility infrastructure."
Other challenges for fleet leaders on an electrification journey include the perceived complexity of coordinating charging systems with a utility, said Mohr. He tells customers to learn locally and deploy vehicles that make sense for their business. Also, ask questions and learn from companies that have been early on this path to electrify, such as: What is the utility access like? What do grants incentives look like? What type of charging is needed? What does vehicle visibility, access and control look like? What’s the right vehicle for the operation?
"But those are the things that companies run into when they attempt to adopt any new technology," Mohr said. "Electric has been one of the simpler technologies, compared to some of the changes in the diesel fleets over the last 20 years."
Revving up policy
In addition to favorable cost of ownership, every speaker noted policy's great power to accelerate change. Last year California pioneered a sales requirement for manufacturers to bring zero-emission trucks to market, which other states are likely to replicate. Incentive funds can help to make the business case too, said Sharpe, who hopes to see national regulations emerge to spur EV fleet adoption. He also noted how cities and municipalities provide additional incentives, such as preferential access for electric trucks at certain times of day, parking benefits and even low-emission zones, although the latter have social equity challenges.
Cities that work with utilities can provide additional impetus for would-be corporate EV adopters, Musgrove added. "We're going to be everywhere but whether we go to your city next depends on what's on the table to help get us incremental payback on that investment, which is significant," he said.