Charting an Unbeatable Fleet Electrification Strategy for Managers and Solution Providers
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Market Overview
- The global electrical commercial vehicle market is projected to grow from 171,000 vehicles in 2020 to almost 3 million by 2030.
- Factors such as growing demand for low-emission commuting and governments supporting zero-emission/sustainable transportation for electric commercial vehicles were the drivers for this. These market drivers are a cornerstone of fleet managers’ electrification efforts.
- The global commercial EV market is projected to grow from US$30.7 billion in 2020 to more than US$682 billion by 2030.
- The number of public Alternating Current (AC)-only charging points is forecast to reach 16 million by the end of the decade.
- For Direct Current (DC) fast-charging-enabled points in public, that number will surpass 3 million by 2030, compared to about a quarter of a million today.
“The growing commitment by carmakers to achieve net-zero goals makes it clear that the future of transportation is electric. Therefore, it is fundamental to understand the constraints that electrification will add to the electricity grid and the most efficient strategies to prevent grid overload. – Adhish Luitel, Senior Analyst at ABI Research
Key Decision Items
In the following sections, we provide three strategies for fleet operators in their electrification efforts, followed by three strategies for solution providers.
Carefully Consider Incentives for Fleet Electrification
In addition to Operations and Management (O&M) savings, many states, cities, and local sustainability organizations (e.g., Clean Cities, a series of initiatives kickstarted by the U.S. Department of Energy (DOE)) offer rebates, tax credits, and incentives that help offset the upfront costs of EVs. For example, Motiv-powered vehicles can generate US$0.33 in revenue per mile for fleet operators. Each program has different requirements, such as requiring the scrapping of old vehicles, route location, and more. These incentives mean that processes, deadlines, and program requirements are really important to follow and require providing detailed information for eligibility. The process of securing incentive funding can be lengthy and time-consuming, so an important strategy for fleet managers is to make sure to partner with a vehicle manufacturer that has a track record of working with fleet customers to collect and report data to secure funding.
Align Fleet Electrification Efforts with Sustainability Goals
The next way commercial fleets can embrace electrification is to align their efforts with sustainability goals. Fleet-based businesses are under increasing pressure to reduce their environmental impact and meet sustainability goals. This includes reducing emissions, improving fuel efficiency, and reducing waste. Businesses that rely on fleets for daily operations need to be mindful of these trends and incorporate sustainable practices in their operations.
Many businesses will start to enforce carbon reduction targets and monitor their Greenhouse Gas (GHG) emissions offsets. With zero tailpipe emissions, as well as quantifiable business objectives, fleet electrification can accomplish both. Additionally, supply chain-driven sustainability mandates now require more transparency and compliance with carbon-reduction measures. Over 61% of businesses are looking for more insights on fuel spending and emissions as part of their fleet electrification goals.
Invest in a Smarter, More Efficient Charging Infrastructure
Another critical fleet electrification strategy for enterprises is to pay great attention to their EV charging network. Charging infrastructure investment is a fundamental consideration for EV fleet managers. Many commercial EVs will need to return to a central location for charging at the end of their shift—and not all vehicles will have the same charging requirements. These issues and others, such as power outages, can be mitigated by using an intelligent mechanism to distribute power. Software integrated with the routing system can identify requirements for the next day, and then determine which trucks are charged first based on need.
Related Content:
Electric Vehicle Smart Charging: Preventing the Dreaded Grid Blackout
The next few sections provide strategic advice for solution providers in the fleet electrification space.
Focus on Strategic Partnerships and Indirect Sales
Vendors typically sell their solutions through direct sales personnel and partnership agreements, with select organizations in emerging markets where they do not have a direct sales presence. Joint projects and joint sales initiatives with consultants or software systems implementers can also help supplement direct sales. With the scope for supply chain digitization expanding, there is a need to expand indirect sales channels through reseller agreements, marketing agreements, and agreements with Third-Party Logistics (3PL) providers. These strategic alliances can help extend market coverage and provide Fleet Management System (FMS) solution vendors with new business leads and access to trained implementation personnel.
With more electrification efforts and fleets considering more EVs, there will be questions surrounding how existing solutions can be paired with potentially incoming EVs to yield the best results. Partnering with complementary solution providers to present wall-to-wall offerings can offer a lot more value to fleet managers with their electrification plans.
Present a More Data-Driven Approach
Our next fleet electrification strategy for solution providers is to incorporate a data-driven approach. With regard to electrification, managers would need to collect actionable data about how their vehicles, drivers, and mechanics are performing if they want to optimize fleet usage or make those concise and well-informed purchases in the future. Although there will be metrics specific to particular fleets, there are a few electrification-specific metrics that every fleet manager will care about:
- Fuel Usage: Including fueling dates and locations, fuel type, quantity, and cost.
- Maintenance: Scheduled maintenance and unscheduled repairs. Include data on the work required, maintenance dates, the parts required, the parts’ costs, and labor costs.
- Purchasing and Leasing: The contract and warranty details for each vehicle purchased.
- Usage: Who is signing out vehicles, as well as the time, date, and mileage of their trips. Make sure you record odometer readings.
- Driver Performance: The dates, times, locations, and nature of all accidents. Record which personnel were present and any insurance claim information.
Telematics solutions and Transport Management System (TMS) platforms will be key to obtaining and analyzing this information. It is important for solution providers to offer this value proposition to prospective fleet clientele. More than half (57%) of businesses deem data accuracy and device reliability as their ultimate goal when considering fleet electrification.
Acquire or Invest in Complementary Businesses
Vendors or Original Equipment Manufacturers (OEMs) with adequate resources should persistently evaluate strategic acquisition opportunities of technologies, solutions, and businesses that are consistent with a platform-based strategy that would enable them to enhance and expand their overall offerings. Preferred acquisition targets for vendors should be those that would be complementary to channels and extend their presence into additional vertical markets and geographic regions.
Key Market Players to Watch
- Amazon
- Caterpillar
- Cummins
- Daimler AG
- DHL
- European Commission
- Ford Motor Company
- Geotab
- Hertz
- Hino Motors
- Hyundai
- IKEA
- Motiv
- Navistar
- Nikola Motors
- Tesla
- Toyota
- UPS
- Volvo
Dig Deeper for the Full Picture
Are you ready to dive deeper into the world of Zero-Emission Vehicle (ZEV) adoption in fleets? Gain valuable strategies and stay ahead of the curve with our comprehensive report, Zero-Emission Vehicle Adoption in Fleets: Investments, Use Cases, Reduced Costs, Regulations, and Infrastructure, which is part of ABI Research’s Electric Vehicles and Supply Chain Management & Logistics research services.
Download the report now to:
- Explore the current state of ZEV adoption in fleets
- Discover market trends and growth projections
- Learn successful strategies for transitioning to ZEVs
- Read case studies of leading fleet operators
- Understand key considerations for fleet sustainability
Don't miss out on this opportunity to stay informed on how best to electrify commercial fleets. Click the link in the graphic below to download the report and gain a competitive edge.
