Joseph leads the North America business of ev.energy, a global provider of electric vehicle (EV) charging software.
The Paris Agreement calls for the world to reduce global greenhouse gas emissions by 45% by 2030 to keep global warming at or below 1.5°C and avert the worst impacts of climate change.
Much of the focus of the world’s—and America’s—emissions reduction efforts are understandably focused on transportation, the second-largest contributor to climate change globally, and here in the U.S., the number-one source of GHG emissions. Indeed, the Biden Administration has set a target of 50% of new vehicle sales to be electric by 2030, and earlier this month the EPA proposed new standards that would force 67% of new light-duty vehicles and 50% of medium and heavy-duty fleet vehicles to be electric by 2032.
The Covid-19 pandemic gave us a glimpse of what the world could look like with fewer cars on the road and cleaner air to breathe as people stopped commuting and many businesses were forced to close. In areas with tight lockdowns, road transportation levels declined as much as 50% to 75%, leading to increases in air qualities across cities and entire regions; for example, Southeast Asia enjoyed a 40% reduction in harmful airborne particles from traffic during 2020.
The Promise Of Electric Fleets
The good news is that a rapid increase in EV sales since 2020 could help to sustain at least some of this decarbonization and air-quality improvement: Global EV sales grew by 55% last year. However, research by McKinsey found that passenger EVs outsold commercial EVs by three to one, showing that businesses are behind consumers on transport electrification.
Commercial vehicles, from buses to taxis to ride-hails to delivery vans to government vehicles, are known as “fleets” and hold a special promise for the world’s transport electrification and decarbonization goals. In fact, the World Economic Forum notes that electrifying fleets would accelerate the current trajectory of electrification by three to four times over the course of this decade, and that electrifying urban fleets would mitigate more than 70% of CO2 emissions in cities while reducing overall urban air pollution by 50%.
Three Steps Toward Fleet Electrification
With the Inflation Reduction Act offering companies tax credits of up to $40,000 per EV above 14,000 pounds, the time has never been better for businesses and governments to electrify their fleets. Here are three steps they can take:
1. Start small.
Fleet electrification takes time and is best done in phases. Local pilots can help companies learn the fundamentals of EVs, such as vehicle range and charging options, while helping to gain employee buy-in.
Domino’s is a great example of a company that has been on an electrification journey. In 2019, it launched an e-bike delivery program in four U.S. cities before later expanding to 24 international markets. And in 2022, Domino’s announced it would be rolling out 800 electric delivery vehicles to help meet its 2050 net-zero target.
To get started, identify the vehicles in your fleet that would require the lowest cost or effort to electrify. For smaller businesses like a bakery or restaurant, this could be a delivery bike or moped that can be retrofitted and easily charged with a 110V outlet to make local deliveries. Governments may want to start with light-duty passenger vehicles that can be easily served by a 240V charging station in a parking lot and even charged at employees’ homes overnight. Other businesses that operate on a contractor model (as many ride-hail companies do) can start by helping their contractors secure financing for an EV and helping them claim available federal and local tax credits to minimize upfront costs.
2. Carefully consider the right partners.
In 2019, Amazon entered into a partnership with Rivian, purchasing a 20% stake in Rivian and placing an order for 100,000 of its electric delivery vans. Amazon was initially able to place a big bet on electrification not only due to its healthy balance sheet, but also due to the exclusivity of its arrangement with Rivian, although that agreement may change.
Not every business is able to commit to taking tens of thousands of orders, but to get started, I suggest business leaders think about both sides of fleet electrification (vehicles and charging) and begin to map out potential automotive and charging partners. The right automotive partner could be a local dealership with EV inventory or even EV leasing companies. To ensure fleets can charge where they need to, look for installers that can install charging stations at your local depot or offices, while purchasing public charging plans from public networks.
3. Turn your attention to charging.
The first step to building out a charging solution for your fleet is to reach out early to your local utility to understand the grid interconnection and permitting process. Businesses sometimes get caught out by complex and time-intensive applications to get the extra voltage they need to power EV charging stations at their depot or offices. Some startups offer a shortcut around the red tape by selling a high-voltage charging station powered by a battery that charges up slowly using the existing grid interconnection, but can power vehicles quickly when they are plugged in.
You may want to reduce the total cost of ownership by working with your local utility to enroll in programs that offer savings for grid-friendly charging. For example, on the West Coast, utility Pacific Gas & Electric plans to pay $2 per kWh when people participate in vehicle-to-grid export. (Disclosure: My company also offers grid-friendly charging programs.)
Fleet electrification can help with meeting our greenhouse gas emissions targets while ensuring an equitable energy transition. Pioneers such as Amazon and Domino’s have already begun charting the way, and as governments and utilities play their part in helping to make the transition to electric fleets easier, now is the time for businesses to consider how to electrify their fleets.
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