Corporations Confront Obstacles In The Transition To Green Vehicle Fleets

Green vehicle fleets are in demand. Firms that lease and manage fleets are advocating for the conversion to electric vehicles (EVs) faster than anyone expected. Corporate clients are chasing environmental, social, and governance (ESG) goals to meet announced sustainability objectives, and a huge component of change can be addressed through green vehicle fleets.

That push intensifies the pressure on the auto industry to squeeze carbon and other harmful materials out of their supply chains. The surge toward green car fleets is particularly strong in Europe, where corporations face regulatory pressure to cut carbon footprints. By switching to a green vehicle fleet, companies also can help improve the health of employees and the wider community.

Fleets are placing record-setting orders for EVs.

Fleets play an important role in the auto industry, buying millions of vehicles globally and shaping the used car market when those same vehicles end their lease periods. Many firms replace their entire fleet every 42 months. Fleet owners divide the life-cycle costs for their fleet vehicles into two categories: ownership and operations. The former involves things like initial purchasing costs, longevity costs, and interest. The latter pertains to fuel, maintenance, and repairs.

Electric vehicles (EVs) directly convert electricity into movement. That makes them far more efficient than a conventional internal combustion engine (ICE) car, which has to create heat through burning fuel and then convert that heat into motion, wasting over half the energy in its fuel. So green car fleets have the advantage of helping companies to meet their Scope 1 and Scope 2 emissions, which are those emissions that a company generates itself, directly and indirectly.

The Society of Motor Manufacturers and Traders Motorparc data revealed that 58.8% of all EVs on UK roads are company registered. According to Reuters, leasing has grown as retail sales have fallen — the share of cars bought at retail in Europe fell to 45% in 2021 versus 55% in 2020. An emerging trend in this space is that vehicle manufacturers are becoming more involved in the battery electric ecosystem by providing value-added services to fleets learning to operate in this new and unfamiliar space.

What Does It Take to Electrify Large Fleets?

It’s one thing to want to showcase all-electric transportation for clean energy-conscious clients. It’s another to execute it easily. Here are two important issues that arise when discussing the transition to green vehicle fleets.

Accessible charging infrastructure: Companies profess fear that their fleets won’t find charging opportunities as needed. Yet EV fleets represent a particularly promising segment of the potential market for charging services, which can help fleet operators reduce their costs by procuring and managing energy in efficient ways. In the US, the market for fleet charging services could amount to $15 billion per year by 2030, according to McKinsey Sustainability. They say that procuring renewable power directly from the source, offering energy management services, and providing ancillary grid services to support the charging of EV fleets could be worth some $15 billion in annual revenues and cost savings.

A variety of EVs to match function and aesthetics: Due to chip shortages, supply chain issues, inconsistent inflation, spooky gas prices, awareness of the climate crisis, the war in Ukraine, and continual consumer demand, EVs can’t meet demand right now from individual consumers or fleets. The market for electric trucks, meanwhile, is so strong that some manufacturers have stopped taking new orders indefinitely. Waits will continue until supply catches up with fleet demand.

Case Studies of Green Vehicle Fleets

Amazon, the global distribution company, says decarbonizing their transportation network is a key part of meeting its Climate Pledge by 2040 and making 50% of shipments net-zero carbon by 2030. To do so, they’re actively transforming their fleet network and operations. In 2019, Amazon ordered 100,000 custom electric delivery vehicles from Rivian. They’ve expanded their European green fleet with an order for 1,800 electric vans from Mercedes-Benz, and in India, Amazon is adding 10,000 electric vehicles built by local manufacturers. Their global bicycle fleet includes traditional bicycles and electric bikes connected to cargo trailers that can carry up to 45 packages at a time — 400+ cargo bikes are used to make deliveries for Whole Foods Market and Amazon Fresh to customers in Manhattan and Brooklyn in New York City.

The most entertaining story about EV fleets, of course, is the saga of the United States Postal Service (USPS), which now plans for EVs to comprise half of its future mail truck fleet. Tens of thousands of Postal Service drivers have been wrestling with noisy, polluting, uncomfortable, outdated drives. Yet the decision to transition to a green vehicle fleet didn’t come lightly —  the White House, Congress, and environmental groups pushed, prodded, and shoved the Postal Service into compliance. The plans are for 25,000 EVs from an initial purchase of 50,000 new Next Generation Deliver Vehicle (NGDV) mail trucks from Oshkosh Defense. That’s a huge difference from the original transitional outline in which  just 10% of the NGDV fleet would be electric at first. Somehow, there was rationale that additional vehicles could be converted to electric power in the future. (Huh?)

Cities and states around the US and world are applying for grants and embarking on pilot studies to electrify their fleets. Federal governments, while often criticized for coming late to the EV party, have stepped up transitioning their fleets. Indeed, a key to increased adoption of near- and zero-emission transportation across the public and private sectors, including accompanying fueling and charging infrastructure, is record-setting government funding and legislative support at both the state and federal levels, according to the 2022 State of Sustainable Fleets. The report indicates that orders still far outpace vehicle deliveries, and battery prices remain “stubbornly high.”

Final Thoughts about Green Vehicle Fleets

Ultimately, the importance of green vehicle fleets goes far beyond gas prices and supply chains. Replacing internal combustion engine-powered vehicles with electric ones is an essential element to mitigate the climate crisis, as the direct impact on the environment that stems from the fuel consumption of a fleet is significant.

The journey of switching a fleet from diesel or gas to electric begins with recognition that companies want to contribute to improving people’s health and well-being with the least possible impact on the environment and the society around us. It’s a statement that a company is rethinking how they deliver services in a more sustainable way for the benefit of both the climate and the people it serves.

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