Benefits and Challenges of Commercial Fleet Electrification

Why is commercial fleet electrification important? If your company operates a light-duty or medium-duty commercial fleet, then you know how high the operating costs can get. You also know that environmental concerns are growing. That’s why more businesses are adopting zero-emission electric vehicles (EVs) to save costs, reduce their carbon footprint, and gain credibility with eco-conscious consumers.

Let’s break down the benefits and challenges of the process so you can develop the right fleet electrification and EV charging strategy for your business.

Benefits of Commercial Fleet Electrification

With a proper infrastructure plan, fleet EV adoption can have a number of benefits like lower ownership and fuel costs, improved sustainability, future-proofed operations, and even the possibility of energy storage. Let's go deeper into some of these benefits.

Lower Ownership & Operating Costs

While the purchase price of battery electric vehicles is typically higher than internal combustion engine vehicles, operating costs are much lower. A 2020 Consumer Reports study showed that EV owners can save $4,700 or more over the first seven years on just fuel — with total cost of ownership savings amounting up to $10,000.

What’s the reason? Electricity is less expensive than gasoline and often more predictable in cost. And with proper fleet management, you can schedule your charging sessions during off-peak hours when utility rates are lowest.  

EVs are also much more efficient than internal combustion vehicles in stop-and-go traffic. This is significant considering fleet vehicles like delivery vans make frequent stops and often need to navigate congested areas.

But fuel isn’t the only driver of EV cost savings. With fewer moving parts and less fluid use, maintenance costs on EVs are typically lower too. (Research shows that EVs cost about 50% of a comparable internal combustion vehicle in terms of routine maintenance.) EVs also depreciate at least as slowly as gas-powered vehicles, especially newer ones that have longer ranges.  

Improved Sustainability & Brand Recognition

Electrification is one of the best ways to meet both regulatory requirements and your corporate sustainability initiatives. Commercial EVs can significantly reduce your Scope 1 carbon emissions — greenhouse gases tied to your company’s direct business activities. And if you choose to install solar arrays at your site, you can mitigate your environmental impact even further by using renewable energy to charge your vehicles.

This also has the added benefit of improving your corporate reputation. Most consumers and investors look for companies with greener practices when choosing who to do business with, especially younger generations. For this reason alone, fleet electrification can be critical for meeting corporate sustainability goals.

Energy Storage Opportunities

Electric fleet vehicles have large batteries that can hold a significant amount of energy. New developments in EV technology are making it possible to use these mobile batteries as onsite battery energy storage systems. This requires “vehicle-to-everything" (V2X) capabilities that allow an EV battery to connect and dispatch energy to a building or even the power grid.  

V2X technology can create energy cost savings opportunities for fleet owners. For example, vehicles can charge at off-peak hours and then dispatch the energy to help power building loads in the evening when electricity rates are highest. Surplus energy can also be sent into the grid for utility bill credits in regions that offer net metering programs.

Future-Proof Business Operations

Finally, fleet electrification prepares your business for a carbon-free future. While impacted by political swings, the overall trend is for stricter regulations on emissions. If regulations on delivery vehicles tighten, you may be forced to electrify to avoid penalties associated with non-compliance. Being ready for this will put you ahead of the competition.

The cost of gas is also likely to creep upwards, making the cost of ownership gap wider over time. The money you save can help win you points with management and free up funds for other business-critical projects.

Challenges of Commercial Fleet Electrification

While an EV fleet has many benefits, there are also challenges and obstacles that can cause businesses to hesitate and slow down adoption. The largest issues are upfront costs, EV charging infrastructure, vehicle range, and the overall cost of energy. Let's look at some of these challenges and see how they can be overcome.

High Initial Investment

The cost of replacing an entire fleet can be high. Some businesses get around this by replacing incrementally, slowly phasing out gasoline-powered vehicles in favor of electric models. This is a fine approach but limits the benefits you get from a full transition.

Luckily, financial incentives and rebates are available to assist fleets in their electrification efforts. At the federal level, the Commercial Clean Vehicle Credit can help. Available to both businesses and nonprofits, it offers a tax credit of as high as $40,000 per EV for larger vehicles such as buses and semi-trucks (it's $7,000 for light-duty vehicles and cars). You can't get more back than you owe in taxes, but it can be a substantial credit amount.

Your state may also offer EV fleet incentive programs. For example, in the California Bay Area, you can apply for funding for fleet replacement, expansion, or improvements to your charging infrastructure. Colorado, meanwhile, has the Fleet Zero-Emission Resource Opportunity, which provides funding for all kinds of fleets as well as for charging infrastructure. (Explore PowerFlex’s Policy Hub for more information on programs.)

Charging Infrastructure

Perhaps the biggest obstacle faced by companies wanting to adopt electric vehicles is managing their charging infrastructure. Fleet managers are often confused about how many EV chargers they’ll need on their property, and which kinds. The answers depend largely on your business model and vehicle schedules.

Broadly speaking, most operators should opt for a mix of Level 2 charging stations, which are ideal for charging EV fleet vehicles overnight so they’re ready for the next day’s routes, in addition to some Level 3 stations with fast-charging capabilities that can accommodate quick turnarounds when needed.

Working with an experienced company such as PowerFlex to design your onsite charging network can help you get it right the first time and provide a home base for your electric fleet that will meet your charging needs.

Electric Vehicle Range

Range anxiety is a big concern for fleet operators, as a vehicle running out of battery while in the field can mean significant losses. Accidentally taking a vehicle out without a full charge, or underestimating how long a charge will last, can greatly increase this risk. Drivers may not always be able to find a public charger, especially for heavy-duty vehicles.  

This is where commercial fleet electrification software comes in. PowerFlex X™ Fleet+ displays real-time charging status, tracks vehicle state-of-charge while in the field, and improves your power optimization strategies. Armed with robust EV charging data, fleet managers can ensure electric trucks make it back to home base before they run out of power — or in the case of longer routes, plan a cost-effective public charging option.

Energy Costs

While electricity is typically cheaper and less volatile than gasoline, an electrified fleet can incur significant peak demand charges due to spikes in energy use. Improvements to your site's electrical system may also be needed to accommodate this added power draw, which can come with significant costs.  

PowerFlex’s adaptive energy management platform, PowerFlex X™, provides a more affordable solution. It uses Adaptive Load Management® to increase the number of chargers you can install without having to upgrade your infrastructure. Charging demand is spread more evenly, resulting in a flatter draw from the utility and no added peak usage fees.  

(Learn More: Renewable Energy and EV Fleet Charging Solutions)

Choose PowerFlex to Help Electrify Your Fleet

If you want to electrify your fleet but are unsure how to minimize costs while leveraging the full benefits of electric vehicles, PowerFlex can help. We’re an all-in-one cleantech solutions provider that can design, install, and optimize a fleet charging solution tailored to your unique business goals — helping you win the approval of your internal stakeholders. And with PowerFlex X™ with Adaptive Load Management®, we can save you as much as 60% on implementation costs. Talk to us about your commercial vehicle fleet electrification plans today.