The Case for Electrified Delivery Fleets

With the ever-growing global economy comes larger delivery fleets on the road, in the air, and on the seas. Short delivery times are expected by customers, thanks to shipping programs like Amazon Prime, but with more transport comes more pollution. In 2016, transportation made up 28% of US greenhouse gas emissions, and every package delivered to our doorstep represents a slew of emissions scattered throughout the supply chain.

The Emissions Case

To tackle growing emissions from the transportation sector, we will need to do more than electrify just the light duty vehicle segment. Delivery fleets, in particular medium duty vehicle fleets, may offer an optimal solution to curb emissions in the near term. In fact, to reduce emissions, new delivery alternatives like last mile logistics are being piloted to eliminate the need for a delivery truck to make multiple visits before actually delivering a package. Among these are Amazon Key and other home access options. These programs, in addition to electrifying delivery fleets, will aid in emissions reduction.

Due to the current battery size of Class 3-6 all-electric vehicle options (roughly 100 miles in range, for now), delivery fleets that make frequent stops throughout the day are primed for electric adoption. Class 3-6, or medium duty, vehicles range from 10,001 to 26,000 pounds. The electric delivery vehicles could be used during the day and charged at night, with no interruption to their driving patterns. With nighttime charging comes the potential to use wind energy to charge the vehicles, further reducing the emissions from the transportation sector and integrating renewables.

Workhorse All-Electric Walk-in Delivery Van

(Source: Green Car Reports)

The Cost Case

While electrified delivery fleets have many benefits, the lower cost of operation and maintenance over time helps make the economic case for these vehicles. According to one study, the average cost of gasoline over 300,000 miles at $3.00/gallon comes out to $150,000, while driving 300,000 miles on $0.12/kWh electricity would cost only $42,000. Electric delivery fleets require no oil or fuel filter changes and require fewer maintenance hours off the road, meaning the vehicles would be more reliably utilized. These factors help offset the initial heightened purchase price of electric medium duty vehicles (compared to internal combustion engine vehicles) and receive a ROI more quickly.

The Supply Case

Electric medium duty vehicles are slowly entering the US market (with companies such as Workhorse, Chanje, and Motiv), but are more prevalent across Europe and China. Several recent announcements indicate a larger variety of medium duty vehicles in the US market in the next 5 years. For example, in January 2018, Volvo announced it will sell battery electric delivery trucks in North America in 2020, following introduction in Europe next year. Given that supply constraints currently play a role in market actors’ electrification decisions, the increased market activity will likely spur electrification. Stakeholders—most notably utility companies—can also play a role in incentivizing delivery fleet electrification through subsidized vehicle costs, charging infrastructure incentives, or partnering with OEMs to electrify their own fleets. Stakeholder incentivization could help grow the demand and supply sides of the market, leading to more electrified delivery options and fewer transportation sector emissions.