Are electric utilities a viable option for corporate fleets?

Automakers are beginning to embark on rolling out electric vans, though it may still be several years before they are available to order locally.

The Tesla Cybertruck, Rivian R1T, Ford F-150 Lightning and GM Hummer EV are all highly anticipated electric vehicles in Australia.

Even Volkswagen and Kia are touting their own electric utility vehicles, like the reborn Scout that VW has promised for the US market.

Kia thinks it could sell 5,000 locally a year by 2030 if only there were the right policy parameters to get the South Korean headquarters to commit to bringing them here.

And it would be nice if it could: without a doubt, utility trucks are a major contributor to emissions from passenger transport and light-duty vehicles in Australia.

In the first half of 2022, light commercial vehicles topped the list after SUVs for new car sales in Australia, and nine out of 10 of them were diesel, according to the latest data from Vfacts.

And companies might be keen to get on board, if they can make the case for electrifying utes despite their higher ticket price (something about prices)

Fleets are already starting to switch to electric vehicles

Recent data from the Australian Fleet Management Association shows that 71% of companies operating fleets of more than 20 vehicles believe battery electric vehicles will be mainstream by the end of the decade.

A third of the largest fleets (operating more than 250 vehicles) already use some proportion of electric vehicles.

In fact, the larger the fleet, the greater the adoption of hybrid and electric vehicles, underscoring that fleets are recognizing both the financial and environmental benefits of using less fuel and reducing costs. vehicle maintenance.

Around one in three corporate fleets now use hybrids (particularly medium and large operators), with electric vehicles also becoming more integrated; this suggests that it is realistic to expect electric vehicles to be a mainstream solution within the next 5-10 years. Source: AFMA

AFMA data shows that since 2020 the number of hybrid vehicles in fleets has doubled. Notably, the number of electric vehicles in fleets has almost tripled.

The shift to alternative powertrains continues, with the share of hybrid/electric vehicles in corporate fleets more than doubling in the past 2 years, while diesel has seen a marked decline among passenger cars and SUVs .
The shift to alternative powertrains continues, with the share of hybrid/electric vehicles in corporate fleets more than doubling in the past 2 years, while diesel has seen a marked decline among passenger cars and SUVs . Source: AFMA

But the problem with electrifying the light commercial sector, which includes utility trucks, also known as pickup trucks in the United States, is availability.

And if the landscape for EV adoption in Australian fleets looks positive, if and when EVs get here, will they be suitable?

Cybertruck.  Source: Tesla
Cybertruck. Source: Tesla

An American study on this subject suggests yes. And with the AFMA confirming that there are some 660,000 utes in service in Australian fleets, it’s an important question to ask.

Do EVs have enough range for work vehicles?

Geotab Electric vehicle suitability assessment (EVSA) shows that US utility truck fleets could replace up to 45% of surveyed vehicles with electric vehicles once electric pickups enter the market, saving fleets millions of dollars.

By analyzing data from nearly 405,000 light-duty trucks (Class 2, 2a, and 2b, all of which are utility vehicles), Geotab found that most electric utility vehicles currently available on the US market had more than enough range for use. in a fleet.

49% of American light trucks never travel more than 280 miles (450 km) in a day, according to the study – less than the EPA-rated range of the two-motor Cybertruck, Rivian R1T, Ford F-150 Lightning, GMC Hummer EV and of the Chevy Silverado.

geotab utes distance traveled
Source: Geotab

And, according to AFMA data, the majority of utilities operated by Australian fleets travel less than 100km per day. Seven out of 10 travelers travel less than 200 km per day, and only 7% of travelers travel 400 km or more regularly.

afma fleet distances
Data source: AFMA

When are EVs coming to Australia?

Unfortunately, automakers have to jump through a lot of hurdles before they start seeing electric vans in Australia. Because vehicle emissions policy parameters in Australia are lower than overseas, automakers must first sell electric vehicles there to avoid paying fines for not meeting emission limits. emissions. This is separate from the fuel standards which apply to the quality of fuel burned in combustion engine vehicles.

Cell constraints and other supply chain issues are also holding back the production of large battery-powered vehicles (the heavier the vehicle, the larger the battery it needs).

As we’ve noted in this article, there are several candidates for local introduction, and EV manufacturers such as Rivian have noted that Australia is seen as a key market. However, it will likely still be 2024 before we see a local launch of any electric utility in Australia.

Are electric utilities viable for fleets?

Granted, when electric utilities arrive, they will cost significantly more in Australia than in the US after currency conversion, import costs and other fees are taken into account. And, where, when and how the fleets will charge are also considerations.

The AFMA report shows that most fleets are already thinking about these things. Leaders in the field, in particular, are not just prioritizing the adoption of electric vehicles in their fleets, but are thinking strategically about how to transition their fleets.

ev adoption fleet readiness
Leaders seem better prepared and more advanced in their preparations for electrification; they are not just planning to acquire vehicles, but rather have taken a more strategic approach where they carefully consider the wider implications for their business. Source: AFMA

Geotab’s report examines whether utility electrification is economical. He asks the following question: “do the savings in fuel and maintenance compensate for the cost of the vehicle’s premium? ”

He found that the answer to this question is that it depends on how often the vehicle is used, as cost savings increase with higher use.

But – and this is important in the case of utilities that might transport workers and equipment to a job site and then park for the rest of the day – he found that there is a “sweet spot”, in which vehicles that travel both short enough distances to be capable of range and high enough annual mileage to provide a lower total cost of ownership than a gasoline (diesel) pickup.

Geotab also determined that government incentives for fleets would encourage fleets by helping to offset the higher upfront cost of fleet electrification. A rebate of US$4,000 (about A$6,000) for fleets would allow 56% of electric vehicles to break even in seven years. A discount of US$6,500 (about A$9,600) would increase this percentage to 62%.

ev fleet discount
Source: Geotab

Importantly, Geotab’s report also notes the superior capability that EVs typically offer in terms of horsepower and torque. There is also often more storage space, as batteries and electric powertrains are more compact than combustion engines.

They also provide a quieter and smoother ride, increasing comfort for drivers and workers. And let’s not forget the ability to power tools (and other devices!) from the battery without idling the engine. Coffee, anyone?

About Melanie Tweed

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