All in on electric: electrifying commercial fleets
As the world shifts away from fossil fuels and towards renewable energy, many companies are looking to electric vehicles to help meet their sustainability goals.
This shift is especially true for commercial fleets, which often travel long distances and use a lot of fuel. The transition to EVs will require a significant investment to support commercial electric trucks. Many benefits make this investment worthwhile. The rising cost of fossil fuels, the environmental impacts, and more affordable EV technology drive this shift.
For the trucking industry, which is responsible for a large percentage of greenhouse gas emissions, electric delivery vans are ideal for achieving sustainability since these vehicles emit zero greenhouse gases. But making the switch to commercial electric vehicles is not without its challenges. Overcoming short driving ranges, long charge times, and adequate infrastructure are a few obstacles facing the adoption of electric delivery vehicles. Tax incentives, policy development, education, and advancements in technology all look to speed up the adoption of commercial electric vehicles.
Walmart, Amazon, FedEx, and DHL are just a few companies leading the way in making significant investments in EV technology. The work on innovative pilot programs helped to develop electric trucks and delivery vans that meet the needs of their businesses.
- FedEx recently received 500 electric delivery vehicles. While this is only a small part of FedEx's massive fleet, they have committed to buying electric-only after 2025 and set a goal to have their entire fleet electric by 2040.
- DHL plans to have 60% of its last-mile delivery fleet electric by 2030.
- After a successful pilot, Penske ordered 750 E-Transit cargo vans for their rental and leasing operations.
Sustainability and environmental impact play a role in these decisions, but economics is also a key driver. The cost of fuel is rising, and the cost of batteries and charging infrastructure is becoming more affordable and available. These improvements make EVs a more attractive option for commercial fleets. In addition, government incentives play a role in making this shift possible. The "build back better" plan proposed by the Biden Administration includes tax incentives for purchasing EVs. The electrification coalition is also working to promote policies that will speed up the transition to EVs.
In most cases, it comes down to cost savings and sustainability goals. The total cost of ownership for an EV is often lower than a traditional internal combustion engine (ICE) vehicle due to cheaper maintenance and fueling costs. When you factor in government incentives, the upfront cost of an EV can be even lower.
The last mile
The last mile is the most important, the most expensive, and the most emissions-intensive part of the logistics operations. The frequent stopping and starting in urban areas is inefficient for gas-powered commercial vehicles. However, EVs are much more efficient in this type of stop-and-go driving, which means they can make a big difference in reducing emissions and saving money.
An electric truck can travel up to a few hundred miles on a single charge, more than enough for most last-mile delivery routes. The shorter distances also mean that the truck can be plugged in and recharged when not in use, so it's always ready for the next delivery. These are a few reasons why retailers and logistics companies are beginning to invest heavily in EVs for their last-mile delivery operations.
2030-2040 seems to be where experts expect accelerated adoption of EVs in the commercial world. We can expect a massive build-out of charging infrastructure over the next decade. Investment in public and private chargers will be essential to keep these vehicles moving. Paul Rosa, SVP of Procurement and Fleet Planning for Penske, believes we should see a more significant push towards 100% electrification by 2030.
Concerns about blackouts are often cited as a reason why companies are hesitant to switch to EVs. However, many experts believe that these concerns are overblown and that the grid can handle the additional demand from EVs. With proper planning and investment in infrastructure, the commercial world can make a successful transition to EVs.
It is not just the major players that are adopting commercial EVs. Small businesses are also starting to make the switch. Many small businesses find that EVs are a perfect solution for their needs. EVs are often cheaper to operate and maintain than traditional vehicles, and they can help companies meet their sustainability goals.
Fast followers often adopt new technologies after the early adopters have paved the way. This trend is what we see with the future of electric vehicles. The major companies are leading the way, and smaller businesses are following suit. This support is good news for the future of EVs, as it means that adoption will continue to grow in the years to come.
The commercial world is making a major shift to electric vehicles, and this is only the beginning. With so many benefits, it's easy to see why. The transition is happening faster than we think. It seems far off, but maybe someday, today's generation will have to explain to the next what a gas pump is, much like our generation had to learn about phone booths. One thing is certain: EVs are here to stay.
Wondering if electrification is the right move for your fleet? At LeasePlan, our mission is to provide innovative, sustainable vehicle leasing solutions whoever you are and wherever you need to be — so you can focus on what’s next. Our experts can advise you on the best way to transition your fleet. We can help you get acquainted with the different fleet leasing options, identify the best options for your fleet, and gain best practices for aligning with your business needs while maximizing your total cost of ownership.