Why There’s No Better Time for Fleet Electrification

A fleet operation will never find that perfect moment to move toward electric vehicles. Forget about waiting for more choices in vehicles, lower prices, or expanded battery capacity.

It will cost more to wait and then try to do it all at once based on an elusive perfect moment, says one fleet electrification expert. That’s because the best results come from gradual, phased planning and execution based on a customized plan.

“Don’t let the perfect be the enemy of the good and pass up savings today,” said Josh Green, founder and CEO of Inspiration Mobility, based in Washington, D.C. “You could erode your advantage related to your competitors. Reaping maximum advantage from fleet electrification takes a lot of learning, so why not take the first steps?”

Set Up for Custom Plans

That informs the business approach of Inspiration of designing customized, turnkey transitions to electric fleets. Inspiration is a holding company with two complementary connected businesses, Fleet and Energy. The Energy division designs and develops charging infrastructure, such has depots and hubs for fleets.

Inspiration’s fleet business acquires all types of Class 1 and 2 electric vehicles, including sedans, pickup trucks, SUVs, light-duty delivery vans, and light-duty trucks for fleets, such as utilities and cable TV services. This enables it to design and optimize a fleet electrification program for each customer.

“Like the general contractor, you find the best deals, the right charging equipment and vehicles,” Green said. The company can source vehicles in a supply-constrained market through its strong relationships with electric vehicle OEMs.

“Most of the market is divided into fleet and leasing companies, with an unrelated third-party partner for charging,” Green said. “The two parties have a different agenda and expertise. Nobody is designing the EV fleet as a system.  What makes us unique is deeply experienced charging and fleet leasing teams under one roof.”

Green outlined three categories of clients they serve:

• EV-only start-ups that need help financing and procuring electric vehicles, launching and operating an EV fleet from day one.
• Traditional taxi and livery/chauffeured fleets that want to electrify that need vehicles, a charging strategy for their drivers, and logistical support.
• Corporate fleets of all sizes that need to outsource their fleet business and would like to lease their electric vehicles and hire someone to manage them, acting as a contracted fleet management company.

Inspiration does not disclose specific clients, other than Revel, an e-mobility company with an all-EV ridehail service in New York City.

Correcting Concerns & Hang-Ups

Among the most common misconceptions about fleet electrification that Green cited are the continuing range anxiety, technology risk, and upfront costs. Some challenges are easy to resolve, others take some research and adjustment. Either way, “many still see the EV as more of a toy than a heavy-duty fleet vehicle,” he said.

Range Anxiety: For starters, range anxiety is overrated given the fact most fleet vehicles operate locally on fixed duty cycles and mass-market EVs today are built with battery ranges that can accommodate them with mileage left to spare. Charging accesses at homes, depots and public places are rapidly growing and filling the gaps. As to the battery technology, most are long-lasting and durable with little to no powertrain maintenance, and fleets will have access to maintenance and roadside assistance.

Data-Centric: Unlike ICE vehicles, EVs are still accumulating long-term data that can better inform engineering and performance decisions.

“Here you have new vehicles that don’t have as much of a track record,” Green said, “and the options you face are increasing every year. Many new models are coming out with a bewildering range of choices.”

Data analytics can help manage power costs by factoring in peak grid times and demand flow relative to fleet schedules and duty cycles. “Technologies used to optimize the use of grid power is part of the analysis when looking at a potential charging site,” Green said. 

Green cautioned that EVs are still in the early stages of data accumulation and do not present the same, predictable depreciation curves of ICE vehicles. Anecdotally, EVs should run longer, generating increased savings relative to an ICE vehicle with every mile driven, he said.

Costs: For fleet managers reticent about the upfront cost of an EV, Green assures that EVs and ICE vehicles are nearing upfront cost parity within the next few years. Current incentives, credits, and rebates at federal, state and/or local levels can offset any gaps. Even with a slightly higher upfront cost, in mnst reasonable scenarios EVs deliver attractive cost savings when factoring in lower maintenance and fueling costs, Green said.

Inspiration can offer creative deal structures based on the needs and timetables of clients. Fixed and mileage-based payment arrangements for bundled customized vehicle and charging programs are available, allowing for multiple ways to tap and use capital.

“That’s why we are a comprehensive EV Solutions Company with all the core capabilities under one roof,” he said. “Our cross disciplinary team comes out of fleet, energy, auto rental, real estate, clean energy infrastructure, and finance. All those areas are necessary for successful deployment at scale.”

Technology and vehicles are good enough today to produce savings in many subsets of fleet applications. The market now offers enough Class 1 and 2 EV models with a variety of costs and ranges worthy of replacing ICE vehicles and saving money while not compromising utility, Green said.

“The higher upfront cost gap is narrowing every year,” he said. “If most people dive in and run the numbers, the total cost of ownership (TCO) benefits with maintenance and fuel savings outweigh the upfront (purchase) cost disadvantage.”

Charging Resources: Green also dispelled concerns about a lack of charging access for fleets. Since most operate on predictable routes and duty cycles, often within specific local areas or territories, most fleets need not be at the mercy of public access chargers, Green said.

“When people talk about public charging being a barrier, they’re talking about barriers to mass market consumer adoption,” he said.

Some fleets can assign vehicles to home-based chargers, while keeping others at a central depot for overnight charging. That can often determine which fleet vehicles should be transitioned to electric first.

Inspiration handles the charging infrastructure like a general contractor and strategic advisor, putting together a transition plan that is suited to each individual fleet client.

“You start with the overall fleet composition and see which vehicles travel which routes and how often they have dwell time in what locations, and if those are long enough for charging,” he said. “Most fleets can be charged on location in a fleet depot with lots of other vehicles, depending on range needs.”

EV Batteries: Battery technology has reached the point of providing clear cost advantages in most fleet applications, since EV batteries are gradually getting lighter, more durable, and longer range.

“Each year as they improve, charging time goes down while range improves,” Green said. “As those factors improve along with the cost, more fleets will electrify, and a higher percentage of vehicles can be electric. To get to 100% electrification will take an improvement on the charging and battery side, and ongoing reductions in cost, but we are on the glide path and this will be “in the money” sooner than most people think.”

Residual Values: Inspiration can help fleet managers evaluate residual values based on an operating risk assessment coupled with available data, and the company can take the full residual value risk on the vehicles it leases. Clients can lease vehicles, either short- or long-term.

“Not many people are willing to fully take EV residual value risk, given the lack of long-term data,” he said. “It’s still new and there are few clients who want to go long on risk at scale.”

Managing Transitions: Green reminds fleet managers they do not have to transition all vehicles at once, and a phased-in approach over several years makes the most sense.

“Our goal is to make EV adoption as easy as adopting another ICE vehicle into the fleet,” Green said, determined by such factors as TCO, maintenance and downtime.

“It’s a missed opportunity to wait and do everything at once,” Green said. “Let’s learn and do what’s profitable today and develop the plans to take full advantage of electrification over time. The development of new charging infrastructure, for example, is often the long pole in the tent, delaying the electrification of certain routes or vehicle types. There are so many learning benefits from just getting started.”

Green emphasizes that fleet electrification points to far more potential and advances beyond its current early stage.

“We’re in the first inning of a big disruption,” Green advised. “Electrification can be intimidating and requires many services and capabilities. But the opportunities are massive, and the transitioning is happening. We think there will be huge economic and competitive benefits to fleets that get this right and adopt EVs early to make it a core part of their business. Each time this happens, and we see a success story, the snowball gets bigger and picks up speed, roping in more fleets.”