There are more than 16-million public and private fleet vehicles on the road today in the U.S. Only a tiny fraction of them are electrically powered, but that could soon change. The fundamental economics of electric vehicles (EVs) dovetail fully with the needs of fleet operators (for example, low operating costs and high reliability), but the full potential of electrification is predicated on functionality that relies heavily on the intelligence provided by connectivity and data sharing.
In terms of light duty vehicles, fleets are an outstanding use case for EVs, and their low maintenance and fuel costs are being borne out in real-world experience. New York City operates more than 9,000 vehicles from all-electrics to hybrids to gasoline-powered, and the city’s maintenance data for 2018 is compelling. According to a study performed on 1,893 vehicles, of the ten models in use, the three least expensive to operate were EVs. The Chevy Bolt cost just $205 for the year, 59% less than the best-performing hybrid (Ford Fusion at $497) and 78% less than the best-performing gasoline powered car (Ford Taurus at $923).
Fleet vehicles usually have much higher utilization rates than consumer vehicles, which means the price premium of an EV is recouped sooner via lower operating costs. Predictable routes can also be planned and managed to avoid range anxiety, though with several EVs already on the market touting a 250-mile range, this is quickly becoming a non-issue for many fleet owners.
On the transit side, the trend toward electric buses is well underway, but still nascent outside of China, which currently accounts for 99% of the global e-bus fleet. Electric buses have a higher upfront cost than their diesel counterparts, but new business models are helping to address that. Leasing (of the bus or just the battery), joint procurement, and bus sharing between transit operators are all on the increase, though the traditional full purchase option is still by far the most common.
Bloomberg New Energy Finance (BNEF) estimates that electric buses will reach price parity with diesels by 2030. That’s due mostly to the falling cost of batteries, which will account for just 8% of the total vehicle cost in 2030 compared to 26% in 2016. More importantly, BNEF projects parity on total cost of ownership within the next 2-3 years.
There are still barriers to wider adoption of electrified transit buses. Lack of charging infrastructure makes electric buses seem less flexible than diesel-powered alternatives that have 100 years of fueling infrastructure in place to support their operations. Despite that massive advantage for diesel power transit, BNEF estimates that by 2040, there will be 2.3 million e-buses on the road, accounting for 80% of the global fleet.
Another aspect to consider regarding fleets is that if even a few major operators decide to go electric, it could have a ripple effect across the industry. The 50 largest fleets in the U.S. account for more than 500,000 vehicles, a tantalizing opportunity for vehicle original equipment manufacturers (OEMs).
Effects on the power industry
It’s important to remember, too, that the electrification of transport has as much to do with the power business as it does with the transportation industry. From the grid operator’s perspective, EVs represent a massive potential source of new revenue, but they also present unknown operational challenges for utilities.
Fleets tend to operate holistically; owners are focused on extracting the maximum value from their assets, and so are open to anything that can improve their return on investment (ROI). They are likely to allow the utility to influence their charging regimen, for example, as long as it doesn’t interfere with their operations, and that presents a tremendous opportunity for the utility.
Fleets of EVs could also provide ancillary services like frequency regulation back to the grid — for a price — and could participate in demand response programs. All of this gives the utility more options for keeping supply and demand in balance day-to-day and moment-to-moment. On the other hand, the idea of hundreds or thousands of EVs charging willy-nilly is a recipe for early equipment failure and potential outages for grid operators.
Here’s where connectivity and data come in. First, consider the nature of EV charging networks. They are made up of widely dispersed assets that operate on standards and software that evolve over time. So, it’s essential that upgrades, re-configurations and diagnostics be performed remotely.
Second, there are numerous features and functions of the charging process and user experience that rely on cloud connectivity. Smart charging, whereby the vehicle owner sets time and price parameters, requires price signals to be sent to the charger. Data on the vehicle’s state of charge and the customer’s preferences goes to the utility. Vehicle-to-grid (V2G) applications, like participation in ancillary services markets, require a similar bi-directional flow of information on a real-time basis. The payment process requires user authentication, validation of charging and confirmation of payment method, balances, and so on. While bi-directional charging models add more complexity to charging systems and commercial models, they have potential to enhance fleet charging scenarios where operational benefits exceed costs of enhanced equipment and battery degradation.
The charging business has evolved a lot already, as network owners and operators strive to understand how their networks are being used (which chargers and for how long, where to locate new units for maximum utilization and more). They are also interested in understanding their users’ habits to help shape promotions (discounts that drive higher asset usage, or traffic to retail centers, for example) as well as the introduction of new services. All of that will rely on data collected from charging networks.
In the longer term, a transition to autonomous vehicles will require even more robust connectivity (how many of us would get into an autonomous vehicle that relies on cellular networks?) One can imagine huge data flows between cars on the road, between cars and the power grid, and between vehicles and the internet. Connected EVs will become just another “thing” among the internet of things.
While the raw economics of EVs, whether in terms of individually owned vehicles or fleets, appear to have reached the tipping point, mass adoption in the real world will take time. The charging and information sharing capabilities are already here but moving beyond the pilot project stage will require continued improvement in EV range and costs, the proliferation of ubiquitous charging infrastructure, and sound policy mechanisms that expedite the transition to electrified transport.
Edited by Dorothy Lozowski
Bob Stojanovic is the director EV Infrastructure North America for ABB. He started his career at ABB in 1999, and assumed his current role in 2017. Prior to this role, Stojanovic was responsible for Microgrids in North America for ABB. His responsibilities included business development, strategy and analysis of local markets, development of new solutions including strategic relationships with customers, developers, and other key technology providers.
Stojanovic also held positions of director of the vertical solar power initiative within ABB North America, and various sales management roles within ABB on theWest Coast and Southern California, primarily surrounding ABB’s portfolio of industrial automation and power products and systems. He holds a Bachelor of Engineering degree from Western University, London Ontario, Canada and an MBA from Loyola Marymount University, Los Angeles, California.