DHL, the German express mail firm, plans a September rollout of 30 battery-powered, electric delivery vans to operate in New York City, taking advantage of the fact that the vehicles will run mostly fixed routes that maximize vehicle utilization rates and park overnight at central facilities where they can recharge at off-peak electricity rates.
The Electrification Coalition (EC), an industry advocate organization, says this kind of effort is needed to help promote the adoption of battery-electric vehicles (BEVs) in the U.S., which has been slowed by high costs and inadequate range.
“Electrification among the nation’s 16 million fleet vehicles represents an important step toward protecting our nation from the economic and national security threats posed by oil dependence,” said Robbie Diamond, EC President.
The group comprises representatives of the BEV value chain, including vehicle manufacturers, makers of smart grid technology, batteries and components, utilities and energy suppliers, commercial fleet operators, as well as government and public sector agencies.
The sheer scale of the country’s commercial fleets can potentially provide capacity to drive early-stage, ramp-up scale in the battery industry and OEM supply chains, according to the EC. More importantly, the operational patterns that certain fleet segments follow may enable them to rapidly surmount the most difficult challenges facing electrification in the passenger market.
EC explains its strategy and the factors that might allow the process to actually work in the Fleet Electrification Roadmap (www.electrificationcoalition.org/reports/EC-Fleet-Roadmap-screen.pdf). Oliver Hazimeh, leader of the global e-Mobility practice at the management consultant firm PRTM, helped shape the report.
“We wanted first to create a valid cost model, to confirm the BEV costs and find if there’s a barrier there,” he said. “But the industry is not there yet. So with no vehicles to pick off the lot and analyze, we chose representative vehicles of a range of sizes and classes, and then replaced the conventional powertrain in each with an electric unit to perform an incremental powertrain analysis. After scaling the technology up and down, the team went back to the manufacturers who confirmed that their results lay within the cost curves that represent their internal estimates and expectations.”
“Whenever you mention battery-electric vehicles, there’s always this question: How do you overcome the barrier of the high total cost of ownership?” Hazimeh explained. “When we talked to owners and managers of commercial delivery and service fleets, as well as others such as GE Capital, we realized that commercial buyers perceive and handle cost issues in a different way than private purchasers.”
Fleet managers use their vehicles differently, which defines the way they make their buying decisions, Hazimeh said. They are apt to be more willing than individual consumers to focus on total cost of vehicle ownership as opposed to upfront costs. “So we worked on the hypothesis that if the inducements are right, fleet owners may adopt the new technologies earlier than average drivers.”
This approach highlights the economic advantages of electric drive vehicles in cases that the higher upfront costs (compared to internal-combustion-engine vehicles) can be demonstrably offset through lower operating and maintenance costs over time: “The fact that owners can hold onto BEVs longer, and that the service and maintenance for electric vehicles are roughly 30% less than those of vehicles with IC engine,” he said.
Commercial fleet owners are likely to benefit from operational practices that are peculiar to fleets, including high vehicle utilization rates, predictable routing, as well as centralized refueling. Were the latter two coupled, it “could enable fleet operators to right-size their batteries to their needs, and so avoid the costs that buyers of passenger cars typically have to spend on extra battery capacity that they will rarely fully use.”
Fleet operators would also be able to take advantage of commercial and industrial electricity rates, which are significantly lower than those paid by residential consumers. “Certain settings, such as larger, industrial neighborhoods in urban areas, can get lower electricity rates,” Hazimeh said.