Fleet electrification is the process of replacing traditional gasoline or diesel vehicles with electric vehicles. This is better for the environment, while ushering in significant fuel efficiency savings for the business.
Vehicle electrification has increased in recent years, due in part to state and federal regulatory efforts alongside advances in technology. The upfront cost to upgrade is definitely expensive, and it also requires new training and adjustments to fleet management software.
Still, an EV is up to 67% more fuel efficient than its gasoline-powered counterparts, and will eventually pay for itself. Hybrid or fully electric fleets are the wave of the future. Here’s what to know about their benefits, their costs, and what next steps are needed for any business that plans to electrify its own fleet.
What Is Fleet Electrification and How Does It Work?
Fleet electrification is the process of converting a fleet of commercial vehicles from using gasoline or diesel to using electric power. To electrify their fleet, operators will slowly retire older vehicles that use internal combustion engines (ICE) and buy new electric vehicles (EV) or zero-emission vehicles (ZEV). They may also opt for plug-in hybrid electric vehicles (PHEVs), which use both an electric motor and an ICE.
The biggest reason fleets are electrifying? Legal compliance. Depending on the state or states that a fleet operates in, the law may require that a set percentage of the fleet must be electric by a certain year. California has one of the most ambitious regulations, given its decree that all new trucks sold in the state must be EVs by 2035.
The biggest reason fleets aren’t electrifying? It costs a lot upfront, with an “unclear business case” to justify those costs, say 35% of fleet managers.
Volvo’s VNR Electric is a road-tested fully electric truck, designed for regional use. Image: Volvo
In the US, most commercial operations have at least begun incorporating electric vehicles into their fleets. An impressive 57% of fleets in North America say that a quarter or fewer of their vehicles are EVs, while another 21% say that EVs constitute over a quarter of their vehicles. That’s a far cry from 100% electrification, but it indicates that most fleets have a strategy for electrifying their vehicles.
What Fleet Electrification Regulations Exist Today?
Estimates say US corporate fleets will collectively own 15 million EVs by 2040. Given that every state has different definitions, goals, and requirements, it can be difficult to sum up the current status of US EV law.
States that want zero-emission fleets
Currently, three states require public state fleets to fully transition their light-duty vehicles to zero-emission models by 2030: Connecticut, Illinois, and Hawaii. Three more states have similar goals set for five years after that, in 2035: Washington, New Jersey, and New York.
Maryland demands all state agency light-duty vehicles be ZEVs by 2036, while Maine wants ZEV state fleets by 2040 and Massachusetts wants them by 2050.
The exact time when all fleets across the US will need to be fully electrified may not come at all. However, plenty of fleet shot-callers think it’s only a matter of time: One 2023 study found that 54% of fleet management senior decision-makers think expect full electrification to happen at some point after 2030.
All laws and legal incentives for each of the 50 US states can be found online, thanks to the Department of Energy.
Fleet Electrification Plans and Strategy
Upgrading your fleet to meet regulation and save on fuel isn’t easy. You’ll need an EV adoption strategy; here’s what to consider in order to get started planning a go-green intiative.
First, crunch the numbers in order to review current vehicle use. How many vehicles do you use at a given time, and how often?
Next, you’ll want to figure out which EVs are right for you. You’ll have to consider the total cost of ownership (TCO) for each EV. This calculation includes the initial cost, lifetime maintenance cost, and resale value, among other factors. Don’t forget to consider vehicle downtime: You’ll want to limit downtime to save money, but you’ll also need to give your EVs the time they need to fully recharge between uses.
Finally, keep your vehicle range requirements in mind: Any EV will have a limit on the total miles it can drive before recharging, and the charging process will typically take six hours or more. As a result, you’ll need an EV that can handle your fleet’s maximum trip distance on a single battery charge.
Benefits of Commercial Fleet Electrification
Electric vehicles are a big upfront investment. However, as with any investment, the benefits outweigh the cost over time. Here are all the ways your operation and the world at large will benefit from a fully or partially electric fleet.
- Reduced greenhouse gas emissions – EVs do not create tailpipe emissions, limiting the business’s carbon footprint and mitigating our still-escalating climate crisis. Local air quality will improve as well.
- Reduced fuel costs – A full tank of diesel or gasoline costs more than an equivalent charge for any given EV. One study found EVs are three times cheaper to operate per mile than the average gas-powered car, and a case study found 67% fuel efficiency gains.
- Better energy efficiency – EV transmission systems are more efficient than internal combustion engines. Plus, electricity prices are more stable than fuel prices, making it easier to stick to budgets.
- Lowered noise pollution – EVs are quieter, cutting down on the negative emotions that are stirred up by the persistant ruckus of an urban environment.
- Legal regulatory compliance – Depending on your state and local laws, your entire operation could be in jeopardy if your fleet isn’t electric. This currently a major concern for public rather than private vehicles, but changes are likely coming for any commercial vehicle in the US, so you might as well get ahead of them.
- Potential incentives and subsidies – If regulations are the stick, incentives are the carrot: Your operation may be eligible for tax benefits from the EVs and charging infrastructure that it buys. This will depend on state and local laws, so make sure to check those before committing to a purchase.
How do fleet management systems accomodate electrified fleets?
The process of updating to an electric fleet can be tough, since everyone must learn the new system. Drivers can be trained on the new vehicles, and software can be updated. Most top fleet management systems can track EVs just as well as traditional vehicles, but some will incorporate more EV data than others.
The Verizon Connect Reveal fleet management software can track the battery level of each EV in its system. Image: Verizon
Tech.co’s favorite fleet management system, Verizon Connect Reveal, includes support for EVs, and can track which ones are available, which are charging, and what battery percentage is left on each.
Another top solution, Samsara, will monitor fleet emissions and recommend the best EV replacements, while Teletrac even offers its own web-based AI tool to help fleet operators make the transition to EVs.
Fleet Electrification Costs
The costs of fully electrifying the United States’ commercial vehicles are daunting: In a February 2024 report, Roland Berger estimated the cost at $1 trillion just for infrastructure investment.
On a fleet level, that infrastructure cost could be around $145,000 per heavy-duty truck. The vehicles themselves are the biggest initial cost to the fleet, with a typical Class 8 electric truck costing north of $400,000, compared to around $180,000 for its diesel-powered counterpart.
Costs might drop if the technology proves widely popular. Even just charging stations for vehicles are poised for massive growth: Market Research Future found a $3.45 billion valuation for the global fleet charging market in 2022, and the same group estimates a $26.4 billion valuation a decade later, in 2032.
Conclusion: Electrification Is on the Rise
Currently, the transport sector accounts for 25% of carbon emissions around the globe, with three-quarters of that number coming from road transport. Fleet electrification is a slow-moving revolution that aims to cut down on those emissions.
Most fleets in the US have experimented with adapting electric vehicles, and rolling state deadlines for public fleet upgrades will keep fleet electrifying for decades to come.
However, as it stands now, the industry has yet to fully get behind EVs, given the high initial cost to adapt paired with an unclear business path towards recouping that cost. The infrastructure must still be built out.