Element’s director of strategic consulting shared her knowledge in a fireside discussion of fleet electrification issues including cost of ownership, remarketing, charging and maintenance
There are many crucial considerations that fleet operators and managers must take into account as they set out on the path to electrification. And it is vital for industry players to share data and exchange lessons learned to lay the groundwork for the future success of the sector.
One of the leaders in these areas is Element Fleet Management, a Toronto-based global fleet management company.
Earlier this month, Electric Autonomy invited Zingha Lucien, Element’s director of strategic consulting, for a fireside chat with Nino Di Cara, Electric Autonomy’s president and founder, about fleet electrification.
Their discussion delved into a range of topics: understanding the different motivations for electrifying a fleet, identifying the challenges of doing so, discovering the total cost of ownership of an electric fleet, understanding what a success roadmap might look like, and more.
A summary of the fireside chat is available below along with a video of the full session.
The motivations and challenges for going electric
Companies may have multiple motivations driving their decision to electrify their fleets.
On a micro-scale, it might be to improve their environmental footprint or to help retain and attract executive and high-performing employees. The desire to lower their total cost of operations through fuel cost savings may also be a motivation, says Lucien.
Government laws, regulations, and sustainability targets can also influence companies to go electric.
“[Fleets] are also motivated by certain incentives that may be given by those governmental organizations,” says Lucien. “The focus on sustainability is moving in an upward trend, so there’s the response to that from a lot of corporations.”
But while there are several compelling reasons for companies to go electric, it’s easier said than done — with the primary challenges being the higher upfront costs of EVs compared to internal combustion engine (ICE) vehicles and the learning curve around installing charging infrastructure.
Starting your fleet electrification journey
Shifting to an electric fleet requires thoughtful planning and effective strategies to make the process smooth and cost-effective.
According to Lucien, there’s no fixed way to do it. In many cases, fleets may decide to incorporate hybrid vehicles or even ICE vehicles to allow for flexibility in their transition.
“It’s still pretty much early days,” says Lucien. “What we don’t do at Element is rush to any one conclusion when it comes to any one asset or any one scenario.”
Instead what she recommends is for companies to focus on a sustainability roadmap that suits their specific needs.
“What we have done on our part is employed pilots within a lot of the programs that we have with our customers,” says Lucien. “We’ve incorporated pilots and tried to understand the needs for their specific fleet applications. But we’ve also tried to modify what we recommend and what they utilize within their fleets to make sure that the recommendations that we put in place are specific to what their needs.”
Lucien adds that fleets need to employ telematics during pilots. Telematic information offers fleets valuable insight into their vehicle operations, charging feasibility and driver readiness.
After that assessment is complete, other considerations can come into play such as vehicle choice and availability and what type of charging solution will be needed for the fleet to operate seamlessly.
“There was one thing that we found with most of the fleets that we’ve worked with. One of the success factors in forwarding electrification is the commitment by leadership and the commitment to seeing it through, so that’s the overall, overarching success factor for electrification,” says Lucien.
Total cost of ownership considerations
Lucien points out that although it’s well-known that EVs have a higher upfront cost compared to ICE vehicles, fleets need to look at the total cost of ownership (TCO) in setting their plans for electrification.
For example, when dealing with take-home fleets, there are significant questions to address regarding the feasibility of adding charging points at drivers’ homes. This can be a challenge, especially if drivers live in apartments.
Other short-term expenses that require consideration include title and registration fees, insurance and potential downtime for recharging EVs.
On the operational side, EVs show clear advantages in terms of fuel expenses, says Lucien.
Element has seen savings of up to 50 per cent on fuel costs with EVs compared to ICE vehicles. The National Renewable Energy Laboratory reports potential savings of around $14,000 over a 15-year lifespan for EVs. Although these savings can vary based on factors like driving conditions, weather and vehicle payload, says Lucien.
“The one thing I do caution to a lot of customers when it comes to TCO is that the TCO cost of today is not necessarily that of tomorrow,” says Lucien.
“We know that increasingly electric vehicle costs are decreasing. There are investments with regards to creating infrastructure [and] incorporating renewable energies, that’s going to change the cost of fuel in the future.”
Maintenance and repairs
Based on Element’s fleet portfolios, overall maintenance expenses for EVs appear to be around 50 per cent lower than for ICE vehicles.
There are different aspects to look at when it comes to maintenance and repairs for electric fleet vehicles, says Lucien.
For preventive maintenance, fleet operators need to be checking brakes, batteries and fluids.
“The demands as far as preventive care are definitely not comparable to ICE vehicles. It’s a lot less, so, of course, the cost of preventive care would be less as well,” says Lucien.
As for repair costs, these remain somewhat unknown.
“Over time, as we continue to use these vehicles, we’ll have a better understanding of what the demands are when it comes to repairs,” says Lucien.
“One of the things that I do caution, however, is that there is the need for certification and certified technicians when it comes to electric vehicles. There has been a shortage of that and I could see that that affecting the price of maintenance to meet demand and supply.”
Additionally, tire replacements might be more frequent and lead to slightly higher costs due to the fact EV are heavier vehicles and experience more tire wear compared to their ICE counterparts.
There are several programs that offer fleets the opportunity to obtain a certification in how to maintain electric fleets, says Lucien. (For example, Electric Autonomy‘s EV Fleets program offers online modules for many aspects of EV education and ownership. A certification is awarded upon completion.)
Vehicle remarketing and end-of-life battery use
During the fireside chat, Lucien also discussed the used marketplace for EVs, which hasn’t yet reached “critical mass”.
“What we are seeing is that [used EVs] are not performing as well as ICE vehicles with regards to the retention of its value,” says Lucien.
The primary reason for this seems to be the impact of supply and demand.
The increasing availability of new electric vehicles is driving down prices over time, directly competing with the market for used electric vehicles. This dynamic affects the expectations for resale value. Additionally, there’s ongoing uncertainty about battery health, which raises questions for potential buyers.
Based on anecdotal evidence, Lucien notes that battery health tends to hold up well by the time vehicles reach the used market. However, the real challenge is ensuring there’s a clear and specific way to demonstrate this battery’s health to potential buyers.
There are efforts underway to create a battery scoring system for used electric vehicles, aiming to provide more clarity and confidence for buyers, says Lucien.
In terms of the fate of the batteries, once they deteriorate and reach the end-of-life, Lucien acknowledges that significant investment is going into battery recycling for environmental reasons.
“We don’t manage that side of things necessarily, but the importance lies in our ability to make this move to electrification a little bit more sustainable and a little bit more affordable in the future,” says Lucien.