Clean fleet transition - A fleet operator's dilemma

The starting pistol has been fired on the race to decarbonise transport fleets, and the role of fleet operators and owners has become increasingly complex.

The pace of change across the technological, commercial and regulatory landscapes is unprecedented, and fleet operators are being asked to navigate these changes against a backdrop of tight profit margins and high finance costs. This is no simple task.

At Ricardo, we like to think of this as a balancing act whereby external drivers are responded to with internal business decisions with the aim of maintaining or improving business operation. With increasing and changing pressures, there isn’t a lot of room for the scales to tip.

Below, we take a closer look at some of components on either side of that equilibrium and reflect on the imperative to make progress in the green fleet transition. While we will focus on commercial medium- and heavy-duty fleets, many of the same challenges will apply to cars.

Vehicle technology choice and operations

Figure 1: The fleet operator's delicate balancing act

There are a range of considerations that feed into the optional choice of zero emission vehicles: duty cycle, contracts, operating terrain, and depot facilities, to name just a few. To further complicate things, the order that decisions are made can also influence the success of vehicle adoption. We see real-world examples where fleets have started with the vehicle without considering depot space and power availability, resulting in costly and long delays.

Considering that the range of electric trucks is smaller than conventionally powered trucks, there will be implications on driving hours, rest periods and payload. With these different operational characteristics of electric vehicles, it can be difficult to maintain status quo and so the key is to understand what the fleet needs to do, and not necessarily be limited by how it is operating today.

Charging and route management

There are several battery electric truck technologies, but, at the moment, plug in electric vehicles are the only practical solution for early electric truck deployments in Europe.

The question of battery sizing then comes into play, and it can be tempting to specify the biggest battery possible. However, this impacts cost, payload, efficiency and end-of-shift charge time, and even the biggest batteries available won’t give you the range of a diesel truck.

This means that truck routes and charging strategies should be carefully planned. In general, trucks with shorter duty cycles can rely on overnight charging at the depot but long-haul operations will require top-up charging enroute. This could be at a customer or supplier depot, or utilising public infrastructure. Across this private and public charging landscape, there are two important considerations:

Many depots are leased and not suitable for EVs, so the decision about where to electrify might not necessarily be for the easiest routes, but the most suitable depots. There’s an important opportunity here for collaboration between fleet operators, customer and suppliers to support the ability to charge en-route. 

The opportunity or en-route top up exists as breaks are required every 4 ½ hours of driving [EU Law]. However, public charging infrastructure for trucks in Europe is simply not there yet and will be a challenge to deploy the 50,000 high powered chargers needed by 2030 (ACEA).

More: Ricardo's charger route model, ChaRM, helps transport authorities to identify optimal locations for charge points across their routes: Visit ChaRM.

Vehicle and depot operations and safety

Depots and operations are set up for conventional transport fuels so the transition to electric and hydrogen fleets changes all this. Everyone will require basic training and maintenance teams need retraining. Even with fuel cell vehicles, high voltage training is required. Working areas may also need to be modified along with guidance on safe working practices. For example, untrained staff should be kept away from vehicles during maintenance. 

Financing and procurement

The procurement picture is much broader than just buying a vehicle and a charger – there are a range of financial considerations across operations, infrastructure and energy. For example, vehicle maintenance contracts might change, so it might make sense to move from ownership to lease, and there are emerging business cases for on-site renewable generation.

The big-ticket item is of course vehicle total cost of ownership, and the headline is that battery electric trucks are not yet economically attractive but are expected to be from mid 2020s depending on their use. Trucks used for regional distribution achieve total cost of ownership (TCO) parity ahead of larger trucks due to their smaller battery requirement and more favourable duty cycle.

The recent high levels of inflation and interest rates have also made procurement fleets challenging, but there are hopes that we will soon be over the worst. These factors make finding subsidies doubly important - they won't be around forever so there is a first mover advantage. Furthermore, subsidies and grants often don't apply to leased vehicles, and certainly not to grey fleet, so it may be necessary to re-evaluate the ownership model.

The case for electrifying

Those are a lot challenges… but it’s worth remembering the strength of the case for electrifying fleets. It can position organisations favourably with customers and, as well as reducing emissions, there are benefits around driver retention, recruitment, and diversity. The vehicle business case is improving and there are regulatory pressures that are already signalling the end of fossil fuelled powered vehicles.

Focusing on Europe, there are several things in our favour: It is a relatively densely populated area with a reliable and greening grid. It also has a population that is broadly keen on decarbonisation, coupled with availability of affordable finance and strong legislation.

Figure 2: The case for clean fleet transition

In summary

The scales will never be perfectly balanced for a fleet operator, not least because business, regulation and technology are rarely perfectly aligned. However, the time to start the transition is now, otherwise you risk being at the back of the queue for vehicles and power and may lose a competitive advantage. It’s not going to be easy, cheap or quick so collaboration will be key.