Electrifying Commercial Fleets
Until fairly recently, fleet electrification was primarily limited to passenger or light-duty vehicles—but that’s quickly changing.
On the one hand, customers and regulators alike are demanding that commercial transport companies reduce their greenhouse gas emissions. On the other hand, fleet operators are realizing that electrifying their fleet will dramatically cut operating costs in the long run. Long-term viability in transportation depends on transitioning to clean energy—and electrification is the key.
Nevertheless, the transition to fully-electric fleets will be challenging.
As with passenger cars, the main obstacles to commercial electrification currently include:
Initial capital cost
Utilities, regulators, manufacturers, and their suppliers—as well as charging equipment manufacturers and installers are coming together to map out the strategies needed to overcome those obstacles.
Addressing Some Key Concerns
The purchase cost of new diesel semis ranges from $99,000 at the low end to $200,000+ on the high end. The list prices for electric semis from Freightliner, Volvo, Kenworth, and Peterbilt range between $400,000 to $500,000. While federal and state, incentives combined with regional utility rebates will ease a little of the pain, it's still a major capital expense today.
While upfront costs may be one of the main barriers to commercial fleet electrification, looking a little ‘farther down the road’ reveals a clear cost benefit for electric vehicles.
Electricity is cheaper than diesel. As of this date (2.13.2023), the national average cost for diesel fuel is $4.54 USD/gallon. Since diesel trucks average 6.5 miles per gallon, the average diesel fuel cost is around $0.69/mile.
Most manufacturers estimate that electric semis consume between 2 and 2.5KWh per mile. Electric rates vary based on region and charging times, but electricity pricing currently averages between $0.168 in the U.S. As such the cost to run electric trucks can be between $0.067/mile and $0.084/mile.
Electric rates are also less volatile than gasoline/diesel rates, making it easier for fleet operators to predict fuel costs over time.
And finally, electric trucks typically require less maintenance than conventional vehicles. (According to a recent ChargedFleet.com study, unplanned repair costs for electric commercial vans are 22% lower compared to internal combustion engine equivalents after three years on the road.)
Image courtesy Auke Hoekstra
“The biggest challenge to deploying those electric trucks will be finding the power to charge them."
Dave Mullaney, Principal, Carbon-Free Transportation, RMI.
A recent study conducted by the American Transportation Research Institute found that fleet electrification will require a significant percentage of the country’s current electricity generation. For example:
Domestic long-haul trucking would consume more than 10% of the electricity currently generated in the U.S.
An all-electric vehicle fleet would boost that demand to over 40%.
As a result, some states will need to generate up to 60% more electricity
Local utilities will, naturally, have a critical role to play in fleet electrification by providing the energy, infrastructure, and programs required. Many utilities already are already reaching out to the fleets in their territory that may require additional charging infrastructure investment.
Fleet owners need to work closely with their local utility, ensuring they have a thorough understanding of their total load profile, and whether there is any flexibility in their charging needs—such as the ability to shift the time of charging.
Armed with that information, utilities can:
Develop an optimized rate plan
Assist with the implementation of EV charging infrastructure
Facilitate on-site energy generation and storage
In addition to generating the energy required, utilities have to distribute it to where trucks need to charge.
“The energy needed to support electric semis is enormous, from a generation perspective. However, it is the transmission and distribution angle that makes this challenge daunting for utility planning.”
Will Sierzchula, Managing Consultant at Guidehouse
Supporting and Supplementing the Grid
Access to a stable and reliable energy source is critical to fleet electrification. As fleets evaluate investing in vehicles, technology, and infrastructure to decarbonize their operations, grid reliability will be a critical factor in their decision-making process. Integrating on-site generation and storage into their electrification strategy is an obvious solution.
The development and integration of microgrid and EV technologies facilitates the adoption of distributed renewable energy resources. Integrating renewable energy improves grid reliability.
Microgrids (combining energy generation such as solar or wind and storage) are a highly effective and scalable asset for electric fleets. Installing fleet EV charging stations within a microgrid gives fleet owners the ability to draw and store electricity during low usage periods—and then sell excess stored electricity back to the grid when usage and rates increase dramatically The result is increased resilience, lower operating costs, and reduced greenhouse gas emissions.
Charging Infrastructure for the long haul
Like most EV owners, range and charging infrastructure are key concerns for fleet operators.
Currently, most fleet operators need to rely on charging stations installed on their own premises, which limits range. Small electric trucks and vans usually can travel between 200-500 miles on a single charge. That may be sufficient for local and regional routes, but it clearly won’t work for longer hauls.
“There are several levels of size, route, and purpose, that so far show electrification makes a lot of sense for fixed and short-haul, medium-duty carriers, but not yet for the cross-country haulers.”
Dave Schaller, Engagement Director, North American Council for Freight Efficiency
Heavy-duty tractor-trailers present a much greater challenge. They require a vast amount of energy to complete long-haul routes. For example, a 300-kWh battery in a semi can go approximately 150 miles before needing to recharge. Recharging at a 300-kWh fast charger takes approximately an hour. By comparison, most diesel engines, equipped with 2 150-gallon fuel tanks, can travel approximately 1,800 miles between fuel stops, with fueling taking only 20 minutes or so.
"Overwhelmingly, infrastructure is slowing us down in terms of EV deployment. Siting, permitting, construction delays – all that means current lead times are measured in years, not weeks or months."
John O’Leary, President & CEO, Daimler Truck North America
The electrification of commercial fleets requires considerable investment in new charging infrastructure, both private and public. Going forward, both battery size and charging speeds need to increase for long-haul tractor-trailers. With battery packs for long-range electric trucks expected to be in the hundreds of kilowatt-hours, rapid charging will need to deliver than is available with current 350-kw fast chargers. Realistically, these trucks will require a full megawatt of fast charging.
New partnerships are being formed between transportation companies, truck manufacturers, and energy providers to develop the charging infrastructure needed to support electrified transportation across the U.S.
Megawatt Charging Stations
One of the first megawatt-capable charging stations in the U.S. is Electric Island, on Swan Island in Portland. Electric Island was developed by Daimler Trucks North America (DTNA) and Portland General Electric (PGE).
The station was built to provide charging for EVs of all shapes and sizes, and to serve as an innovation center, allowing both PGE and DTNA to study energy management, charger use, and performance.
The goal for this venture is to:
Develop Megawatt Charging System (MCS) prototype chargers that deliver electricity four times faster than today’s fastest light-duty vehicle chargers.
Integrate heavy-duty charging technology such as vehicle-to-grid technologies, second-life use of Daimler’s battery packs, and on-site energy generation into PGE’s Smart Grid.
Test fleet and energy management information technology by captive solutions and services.
Volvo and Pilot
Volvo Trucks is partnering with North American truck stop chain Pilot to roll out a network of chargers catering specifically to medium- and heavy-duty electric trucks. This partnership will help to overcome infrastructure roadblocks in support of medium- and heavy-duty truck electrification, “creating an ideal opportunity for public funds from federal, state, and local agencies to accelerate the development of a high-performance charging network.”
Chargers will be located at Pilot and Flying J travel center locations based on customer needs, current and anticipated battery-electric truck density, and the availability of public funding to support infrastructure costs.
Volvo and Shell Recharge Solutions
Volvo Trucks North America is partnering with Shell Recharge Solutions, to develop a medium- and heavy-duty electric vehicle charging network that connects several of California’s largest metropolitan areas along Interstate 5. The project is anticipated to be operational by the end of 2023.
With an award from the California Energy Commission (CEC) the project will deploy high-powered chargers at several existing Volvo Trucks’ dealership locations in Central and Northern California.
The transition to electric vehicles provides substantial economic, environmental, and public health benefits. While electrification poses a number of challenges, it also presents a clear business opportunity and competitive advantage for fleet operators. Recent research conducted by McKinsey & Company on the total cost of ownership suggests that early electrification adaptors will benefit the most. Fleets already committed to electrification by 2030 include Amazon, which plans to replace 100,000 Internal Combustion Engine delivery vehicles, UPS with 10,000 EV replacements, Unilever with 11,000 EV replacements, and Siemens with 50,500 EV replacements. Companies that delay their transition to electric vehicles face rising demand and supply bottlenecks, as well as legal and financial problems if they fail to meet government regulations and consumer expectations.