EV Investments and Orders Indicate Increased Focus on Commercial Vehicle Electrification

Logistics vehicles claimed the electrification spotlight in 2019. Ford and Amazon announced investments in the EV startup Rivian, and Amazon placed an order of 100,000 electric delivery vans. Continuing the momentum in 2020, there were several similar announcements regarding the UK-based startup Arrival Ltd., which has had significant investments and vehicle orders of its own. At the end of January, UPS announced its investment in the startup and that it will buy 10,000 of Arrival’s electric delivery vans. The delivery vans will be added to UPS’s fleets in the UK, Europe, and North America over the next 4 years. Hyundai and Kia have also announced a $110 million investment in Arrival. 

Total cost estimates still place electric logistics vans at a premium to internal combustion engines. However, falling battery costs and achieving manufacturing economies of scale improvements should create competitiveness for some applications in the short term and savings in the long term. Costs are not the only driving factor of EV adoption in the commercial sector. A recent survey revealed that, even more than the improved business case, fleets are placing a high importance on achieving their sustainability goals. EVs can provide solutions for fleet managers to reduce their carbon footprint and achieve their sustainability goals. 

Next Steps for Fleet Adoption

It seems that high mileage commercial vehicle applications are ripe for opportunity for vehicle electrification. However, there are still several adoption challenges to overcome before electrification becomes mainstream. The availability of charging infrastructure is one of the most frequently mentioned barriers to adoption, and it has no simple solution. 

Many fleet operators are reaching out to their local utility about the potential costs to upgrading grid infrastructure for the fleet’s facility. Such projects are highly variable, placing utilities in the difficult position of attempting to unfurl an estimate. Upgrade costs can be very high or even non-existent depending on the number of vehicles at a facility, current grid service delivery, and the surrounding grid infrastructure. To compound issues, many fleets may still be in the trial phase of their electrification efforts and upgrading grid infrastructure incrementally can be prohibitively expensive and time consuming. 

In the short term, charging load management can be a temporary solution for reducing infrastructure upgrade requirements for fleet facilities. In the meantime, fleets and utilities can use the opportunity to get a better understanding of the fleet electrification process. Utilities will need to develop their expertise about fleet vehicle use (average vehicle mileage, hours of operation, maximum trip distances), how these characteristics are used to create electrification plans, and the process of pricing grid infrastructure upgrades for fleet facilities. Fleets can expect to get their own crash course on utility operations and the differences when switching from fuel to electricity. This includes how grid infrastructure will become a factor in their refueling efforts and the number of vehicles in their fleet.