The Time is (Still) Now for Fleet Electrification

Last year, the energy transition think-tank RMI produced a new fleet electrification analysis under the title, "It’s Never Been a Better Time to Electrify Your Vehicle Fleet." Despite the abrupt change in federal electric vehicle policy under the new U.S. administration, the attraction of fleet electrification continues to grow, with an assist from innovators in the EV charging space.

The state of fleet electrification, with or without federal incentives

While electrifying heavy-duty Class 8 trucks is still a work in progress, commercial-ready electric pickups, vans, box trucks, and other light- and medium-duty fleet vehicles were already pouring into the market when RMI produced its fleet electrification report in October. “Across a range of scenarios, it’s cheaper to own and operate light- and medium-duty electric vehicles than gas-powered vehicles, making a strong business case that now is the time for private and government-owned fleets to make the switch,” RMI summarized, taking note of the economic benefits of electrification.

RMI based its conclusion on total cost of ownership, a commonly used calculation that provides buyers with insights into fuel, maintenance and other long-term costs beyond the upfront price of a vehicle. Even if the sticker price is higher, electric vehicles often have a lower total cost of ownership because they don't need gas or oil changes, and buyers can take advantage of federal and state tax credits. 

An updated RMI analysis released in February takes into account the possibility that the federal EV policy shift could include the elimination of tax credits for commercial EV fleets and chargers. It found the total cost of ownership for EV fleets will increase if the federal tax credits are unavailable. Without tax credits, electric options exceed the cost of equivalent fossil fuel vehicles in categories including commercial delivery and construction, the analysis found. 

The U.S. federal government has yet to announce any policy changes or rollbacks on commercial EV tax credits, meaning the earlier RMI analysis holds true for the time being. In the meantime, innovators across the electric vehicle space are also working to address other barriers that can hold fleet managers back from choosing electric. 

More EV charging stations, without the added expense

One potential obstacle that fleet owners need to consider is whether or not their vehicles can recharge at their own depot, or if they will need to use public charging stations.

For depot charging, the cost of installing new charging stations can be a further obstacle. One workaround is already appearing in the form of modular, drop-in charging stations that include a battery energy storage feature. Instead of incurring the expense of digging new trenches and installing new electrical infrastructure, a charger-plus-storage station can be connected directly to the local grid.

The California startup ElectricFish is one such example. Its charging software is also tailored to enable consistent, reliable use even in areas where grid resources are weak or strained.

Faster throughput for more EVs

Charging time is another potential obstacle to fleet electrification. Even with today’s fast-charging technology, a busy fleet depot could find itself backed up with EVs waiting to recharge.

The leading U.S. utility and power generation stakeholder American Electric Power has partnered with the Korean firm EverCharge to offer a solution. In an announcement last summer, AEP and EverCharge announced a new collaboration with AEP’s Public Service Company of Oklahoma (PSO) branch, aimed at stimulating fleet electrification uptake.

Under the arrangement, the Oklahoma branch has designated EverCharge as its preferred charging partner. The company, which is part of the Korean conglomerate SK Group, has developed an EV charging station system that reduces the need for expensive electrical upgrades while maximizing the use of available space. According to EverCharge, its “SmartPower” system can provide for up to 10 times the number of stations compared to conventional EV chargers.

EverCharge is not a household name in the U.S., at least not yet. If American Electric Power is satisfied with the results of the Oklahoma collaboration, though, the program could expand further across the utility’s service territory, which includes 5.6 million customers in 11 different states.

Aside from the potential for bottom line benefits, the EV charging partnership is also supported by American Electric Power’s decarbonization goals. The utility has committed to a five-year $43 billion upgrade plan toward the goal of reducing carbon emissions 80 percent by 2030, compared to a 2005 baseline.

The extra benefits of home EV charging

New solutions are also cropping up for fleet managers who enable their drivers to recharge at home. The use of EV batteries for home emergency backup power is already commonplace, and the next level is to enable EV drivers to participate in the “VPP economy.”

A VPP, or Virtual Power Plant, is a grid management tool that utilities deploy to avoid strain on the electric grid. A VPP typically provides time-of-day incentives to encourage ratepayers to shift their electricity demand to off-peak hours. Some VPPs are also beginning to offer EV drivers the opportunity to sell their excess battery capacity back to the grid during peak periods when rates are high, enabling the driver to pocket the difference when recharging at lower off-peak rates.

General Motors is among the automakers pursuing the VPP economy as a pathway for accelerating EV uptake among individual car owners and fleet managers alike.

Last week, GM announced that its GM Energy branch is supporting a VPP pilot project under the wing of the Northern California utility PG&E, offering up to $4,500 in incentives toward GM’s VPP-compatible home charging equipment. The automaker’s bidirectional EV charging technology enables the vehicle to function as a backup generator, and GM anticipates that routine grid balancing tasks will also emerge as the VPP movement continues to grow.

Regardless of the future of federal tax credits, the fleet electrification movement will also continue to grow. The current federal position on EVs could slow down the pace of change temporarily, but in less than four years a new president will occupy the Oval Office, and innovations moving ahead in the meantime may bring fleet costs down even sooner.