Now is the time for fleets to start their transition to electric vehicles or risk losing a key competitive edge, says Deloitte Canada

In a time when it feels like the winds of uncertainty are swirling, it can be a reflex instinct to hunker down with what feels safe and reliable.

Certainly, that is a scene playing out in some fleets across Canada as electric vehicle head and tailwinds buffet the sector, mandates spark controversy and novel technologies threaten to disrupt the market.

While some fleets are embracing change others are shying away from it. But this year is the moment to put aside reservations and take the plunge into EV fleet vehicles and there are some key reasons why.

“The market is moving quickly and the transition of short haul fleets to zero emission vehicles and electric vehicles is imminent,” says Elizabeth Baker, partner at Deloitte.

“Our opinion is fleet owners need to be aware of the market and prepare to move.”

Staying ahead of the game

The transportation sector is responsible for 25 per cent of Canada’s greenhouse gas emissions. Commercial vehicles account for 60 per cent of emissions within that 25 per cent.

So, the first reason to make the switch to an EV fleet is obvious: customers are demanding carbon-free transportation for goods. Fleets that can offer that lower carbon footprint method of transport are at a double advantage due to catering to market demand and because of the cost savings that come with an electric fleet.

“We recently ran some TCO’s for light-duty vehicles across Canada, in all of the provinces and two of the territories, and found that the TCO for EVs is lower than ICE vehicles,” says Baker. “This is driven by maintenance and the cost of fuel per kilometer.”

To compliment these benefits, it may come as a surprise to learn that 90 per cent of fleets in Canada have fewer than 10 vehicles, many of which are able to be electrified based on technology available today.

“The hope then, is that the larger fleets set a trend towards electrification of short-haul vehicles and the 90 per cent who have less than 10 vehicles start to follow,” explains Baker. Deloitte’s research shows that, in this segment of the commercial fleet industry, some of the electric vehicles cost just 15 per cent more than their combustion counterparts, but cost approximately 30-40 per cent less to operate meaning the point to start saving over the lifetime of the vehicle is being reached much sooner.

Where and how to begin

There isn’t a lot of readily-available guidance about where to begin electrifying a commercial fleet. This leads to many fleets not acting on electrification or mis-stepping early on and feeling wary about trying again.

We have good and bad news: electrifying a fleet is not as hard as you may think, but it isn’t without challenges.

“I recommend to start small,” says Baker. “There is some fear of, ‘well, what is this going to do for our fleet?’ Assess your fleet operations, vehicles and facilities. What is an easy, low hanging fruit route or series of routes where an electric vehicle makes sense and is not overcomplicated?”

Breaking down a meta task into micro-sized pieces will make the experience more intentional and, hopefully, smoother.

The best way to explore the early how’s of EV adoption is to conduct a “meaningful pilot” with a  vehicle subset representative of the fleet size, advises Baker.

“Tie that to a facility that has capacity for a charger(s), without requiring upgrades. Get some feedback from the drivers, get some feedback on the fuel usage…look for the outcomes you want to trace and understand how to put EVs into your operations, which will then inform how to move forward.”

Maximizing financial benefits

The federal government and some provinces offer purchase incentives for EVs across all class sizes. At the time of purchase these rebates should be applied and stacked, when possible, to maximize upfront cost savings.

But, did you know there are savings on the back end of EVs and their charging infrastructure, too?

Carbon credits are a federally backed (and provincial, in the case of British Columbia) revenue stream where financial credits are generated by electric vehicles and charging infrastructure. The credits are tied to the federal Clean Fuel Regulations and B.C.’s Low Carbon Fuel Standard.

Essentially, the credits are a financial reward for supplying/providing low-carbon fuels, including electricity for EVs, to displace gas or diesel. EV charging stations that supply electricity primarily for electric fleet vehicles are eligible to earn carbon credits.

As the government’s corresponding carbon tax is only set to increase this decade, organizations have both a carrot and a stick reason to overhaul their fleet’s power source now to minimize disruption and maximize benefits over time.

And while getting EV charging infrastructure established in a way that meets fleet needs and can maximize carbon credit benefits is often the most complex part of fleet electrification, Deloitte is releasing a new report in February that will dive deeper into infrastructure considerations including investment behind the fence or outside it, electrical capacity and upgrades, and the importance of an ecosystem approach to achieve scale.

“I think the call to action really is: don’t look at it as an overwhelming task,” advises Baker.

“There are ways to start. There are no regret decisions that can be made that can get you on the path, get you information to get started, and overcome change management and some of those mental barriers out of the gate.”

For more information, please visit Deloitte Canada.