- Electric Mobility
- Mobility Services
- Battery Electric Vehicles
Commercial Vehicles Are the New Electrification Frontier
With 2 decades of experience behind them, manufacturers are expanding product lineups and scaling production as they try to drive down the cost premium of plug-in power. Until now, most of the emphasis has been on retail passenger vehicles while electric commercial vehicles have largely been tackled by startups and conversions. With cities around the world focusing on reducing emissions and e-commerce growth, automakers are turning their attention to electrifying the commercial vehicle market, especially in North America.
Electric Light Duty Vehicle Options Hit the Market Soon
While Tesla tends to be the focus when the discussion turns to EVs, light duty trucks and vans are the one segment of the North American market where Detroit, Michigan-based automakers have remained in charge. General Motors (GM), Ford, and Fiat Chrysler Automobiles (FCA) have all struggled to gain any real traction with plug-in cars. But all are preparing to launch a new generation of EVs by 2022, which will play to their traditional strengths.
GM has promised 20 new zero emission vehicles by 2023, 11 of which were shown during a media briefing in March 2020. Among the first will be a revived Hummer pickup and a Cadillac SUV. While those will get attention, an electric van that hasn’t been revealed could be more important to the business. GM’s current full-size vans haven’t had a full revamp since the mid-1990s and an electric replacement could give them a fully competitive product in this important market.
Meanwhile Ford has announced three new battery EVs (BEVs) with the Mustang Mach-E, which targets Tesla. However, battery-powered versions of the new F-150 and Transit van (coming in 2021) could end up selling in larger numbers. The only BEV offered by FCA has been the little 500e, but the automaker has just announced the new Fiat E-Ducato in Europe, which goes on sale in summer 2020. The Ducato is sold in North America as the RAM ProMaster and an electric version seems probable in the near future. In addition to these, BEV startup Rivian has received an order from investor Amazon for 100,000 electric delivery vans.
Companies Do the Math on Electric Fleet Adoption
Large vans are frequently used by a range of companies for goods delivery and maintenance services. The vans are popular in urban environments where air quality problems caused by vehicle emissions are amplified by density. Local authorities plan to ban internal combustion vehicles from urban centers, which will push fleets toward electrification.
However, even without regulations, interest is growing from fleet operators because electric fleets make business sense. These vehicles are among the highest fuel consumption light duty vehicles on the road, often getting 10 mpg or less in their typical use case. They also tend to accumulate more miles than the average passenger vehicle at 100,000 or more miles annually. The reduced operating costs of going electric more than offsets the upfront cost premium for a fleet. Even at $3/gallon, the annual savings is only $300 to switch from a 50 mpg Kia Niro hybrid to a BEV.
A conservative estimate for a van driving 50,000 miles a year at 12 mpg and $3/gallon would be approximately $12,500/year in fuel. If the same electric van got 2 miles/kWh at $0.13/kWh, the operating cost would be just $3,250. The more mileage accumulated, the faster the savings grow. Without competition from Tesla, commercial vans could become the first BEV segment with real customer pull and positive economics.