Is it time to change my entire fleet to Electric Vehicles (EV)?

A 2022 MESCR Minute

After rising steadily since last year, the price of oil has reached an all-time high.

Alan Kohler, ABC, 21/02/2022.

Based on what is happening internationally we can expect petrol prices in Australia to soon reach an average of $2.10 a litre.

Vlado Vivoda, The Conversation, 24/02/2022

An interesting question. In my view, the answer is more than just exceedingly high fuel prices -but yes, high fuel prices are becoming one of the factors.

When asked recently, a fleet planner with Pepsico in Seattle said there were many good reasons to go to a fully electric fleet of light trucks and cars. The advantages are in both cost improvement and in operational improvements. She did add, however, the caveat of ensuring proper planning is in place before transitioning, because operating a fleet of EVs (Electric Vehicles) is fundamentally different from an ICE (Internal Combustion Engines) fleet.

 She listed the advantages as many:

• There is no need to refuel. The actual act of refuelling is expensive. When you add the time it takes to: detour from the route, drive into the refuelling site, fuel up, pay, return to the vehicle, and then return to the route, there are substantial time savings in eliminating the process. For Pepsico, with a reported  20,000-vehicle urban delivery fleet and two refuellings per day, this adds to potentially 10,000 additional operating hours per day (assuming a conservative 15 minutes per refuelling stop x 2 per day.)
• There is the cost of the fuel itself. The planner did not say the numbers but on the often-reported fleet size of 20,000 vehicles in Pepsico US, and at 60 litres per truck per stop, that’s 120,000 litres of fuel per stop, 31 million litres per year on a five-day work week, 62 million litres per year if there are two refuelling’s per day as noted above. A substantial saving in anyone’s language. Even more when the expected continued price increase is factored in.
• There are less parts on an EV so there is less repair and maintenance: As a simple example, there are no mufflers and exhaust pipes. This results in fewer repair costs, fewer logistic and stock-keeping costs, and less maintenance time and cost.
• The technology on an EV is substantial and provides multiple opportunities for business operational improvements and improved route effectiveness. An EV is essentially a computer on wheels, and a fleet of ‘computers on wheels’ provides the base line for a new, fully-digitalised way of operating an integrated, efficient, fully-connected ‘external’ business operation.

The above Pepsico comments are from a webinar last week and I have not verified the comments but they do seem to be the view of other U.S. fleet operators. The Marketing Director of Chevrolet said recently “Commercial customers are increasingly lured by the lower cost of operations and the Environmental, Social and Governance benefits of adding zero emissions trucks to the fleet.”

There are other reasons too. By all reports, EVs provide an enhanced driver experience. One American truck fleet operator said the battery in an Electric Truck is better placed, making for better handling and driver operations: The battery placement provides for better vehicle balance and less fishtailing. He said, “the days of an ill-riding, poor handling, low-tech utilitarian vehicle is a thing of the past.”

However, according to Pepsico, there are operational issues to factor into your planning when considering converting to full EV:

• Battery power and vehicle range must be assessed: is the vehicle fit-for-purpose? Don’t believe the hype, do a full assessment.
• For fleets with in-house maintenance, the maintenance staff will need substantial re-training and the facilities will need to be upgraded and changed. Potentially, a major up-front investment.
• Lastly, (and this is critical): to save the refuelling time mentioned above, EVs must be put on charge every night (or during the scheduled down periods.) No longer can a driver return a vehicle to base unfuelled and leave it for ‘the next day.’ Every vehicle, every night, on charge.

So, what about Australian fleet operators?

The advantages of moving from ICE to EV seem to be strong and worthy of assessment. Especially with fuel costs increasing and spare parts becoming subject to delayed logistic and shipping constraints into Australia.

Gregory McGarvie’s from the ACE EV Group recently posted on the advantages of EVS over ICEs in Australia. Using only $1 per litre for ‘fossil fuel’ (this is very conservative) and 7c/kwh for electricity, Gregory calculated the difference in cost over a set km range to be $16,675 for an ICE vehicle compared to $2,475 for an Electric Vehicle= an operating cost saving in Australia of an eye-watering $14,200 PER VEHICLE! (More, if fuel is more than $1 per litre)

While sales of EVs in Australia are increasing exponentially year-on-year, the actual supply of electric vehicles remain limited. More models and more vehicles are expected to land on our shores this year, but demand seems to be strongly outpacing supply. As Tennant Reed the co-host of our podcast ‘What on Earth...’ suggested in Episode 10, if you are looking to EVs to reduce carbon emission and operating costs, “you need to be getting your company onto a supply list as soon as possible”.

Given the above, and the increasing cost of fuel, we can expect the demand for EVs in Australian business fleets to be strong from now on. It seems the end of the ICE vehicle era is coming fast. The challenge is to learn the early lessons from our northern counterparts. And to start considering EVs for your fleet.    

Want more information?
Contact MESCR GM James Scotland (james.scotland@aigroup.com.au) or get in touch via our LinkedIn here.