Commercial Electric Vehicles progress slower than expected

Electric vehicles are the next big thing in transportation – or so they would have us think.

If you listen to EV manufacturers like Nissan and Tesla, environmental organizations gunning for lower emissions and even governments, seeking to free themselves from Middle Eastern oil, EVs are selling like hotcakes.

In fact, the opposite is true.

In 2010, Barak Obama pledged to get 1.5 million EVs on American roads by 2015. But, even though he backed up his promise with hefty subsidies and tax breaks for buyers, today there are no more than 400,000 electric and hybrid vehicles on the road worldwide.

Back in 2010, when Nissan rolled out its popular LEAF, CEO Carlos Ghosn anticipated sales of 1.5 million units by 2016, ie. an average of 17,857 units sold per month for seven years. But in March 2014, in an article titled “Nissan LEAF Crushes Competition In March Electrified Vehicle Sales”, the company boasted of 2,507 units sold in the US. By January 2014, only a ho hum 100,000 units had sold worldwide.

Carlos Ghosn blamed infrastructure.

"We have to admit, it is slower than we thought. I would not buy a gasoline car if there were no gasoline stations," he told the Financial Times in a September 2013 interview. Certainly, infrastructure is part of the equation, but the main reasons EV sales have fallen so short of expectations is price and range anxiety.

Under the best of circumstances, the LEAF has a range of about 124 kilometers on the 2013 European model – in winter, with the heat going, it is lower. To be sure, at over 27,000 USD, the LEAF is relatively bargain basement. Tesla’s Model S has a more impressive top range of 240 miles per battery charge, and an equally impressive price tag of $70,000 after subsidies.

Battery recharge time and location is another problem. It takes four to eight hours to fully recharge a battery from a plug in your garage – provided you have one. Sure, there are public high-speed recharge points which can do the job in 30 minutes, but they deplete (very expensive) batteries, which means you have to exchange them sooner. 

Summing it up, for private consumers, EVs just aren’t quite there yet, technologically. But they are ever-so there for fleets.

“The main benefit of EVs for fleets is cost savings,” says Matthieu Noël, senior strategy consultant for Ptolemus Consulting Group, the first international strategy consulting company specialized in telematics and location-based services.

“To go 100 kilometers, the cost of EVs is around €1.5, compared to €5 and €7 for diesel vehicles,” he says. “Moreover, EVs are more efficient, converting about 59–62 percent of electrical energy to the wheels, compared to fuel vehicles, which only convert about 17–21 percent.”

EV owners also save on maintenance, he says, as there are fewer moving mechanical parts, no oil to replace and no clutch. Downtime for maintenance and risk of breakdown during work are significantly reduced, increasing overall profitability. Even brake systems last longer, thanks to regenerative braking, which produces electricity for the battery.

Companies also save on emissions fees and taxes.

“Fleet emissions are taxed in almost all European countries,” Matthieu Noëlsays.“Reducing fleets’ CO2 emissions directly reduces companies’ taxes and fleet running costs. Many governments even offer incentives or tax credits to EV fleets.”

These facts have not been lost on fleet owners and managers.

In 2013, Coca Cola added 16 electric delivery trucks to its Bay Area fleet. Granted, even with subsidies, the trucks still cost some $10,000 more than the diesel variety. Still, the company says, savings on fuel and maintenance promise a return on investment within 3 to 4 years.

Frito-Lay, FedEx and Staples also use EVs. Their trucks can be driven 60 to 80 miles on a single charge, depending on the terrain and the amount of cargo being carried.

General Electric, which operates one of the world’s largest motor vehicle fleets, plans to convert half of its vehicle fleet to battery power over the next several years. Google has an employee car-sharing program which uses a “green” fleet of Chevy Volts, Nissan LEAFS, and Toyota Priuses retrofitted with A123 Hymotion batteries. The largest fleet equipped with EVs is La Poste in France, with 10,000 Renault Kangoo ZE. La poste was involved with the French energy provider ERDF in the charger format standardization definition.

That’s not to say that using EVs in fleets is not without its problems, most of which go back to the maximum range of 120 miles, compared to 400 miles for diesel.

“This is generally less than is needed for many delivery routes. It only works for employee commuting from home to work and urban delivery,” says Matthieu Noël.

Batteries pose another problem. They can realistically only be recharged overnight, provided the fleet has enough charging points for all vehicles. Even a "quick charge" takes 30 minutes, assuming a quick charge point is available – and you have to factor in employee time and the fact that quick charging degrades battery life faster.

Then there is battery cost. Large battery packs are expensive and may need to be replaced one or more times during the lifecycle of the car depending on how it will be used. Still, this need not be an issue for fleets, as Nissan and General Motors are offering eight-year /100,000 miles warranties for their batteries and fleets tend to replace their vehicles long before they reach this point, says Matthieu Noël.  

“The real issue will be the residual value of EVs, depending on their battery capacity after 2 or 3 years of intensive use,” he adds.

Telematics can help fleet managers mitigate such concerns and reduce their risks.

Either installed or in app form, telematics provide information on vehicle range, charging point locations or best routes to reduce distance driven. They allow fleet managers to remotely monitor battery level and charging capacity. This is crucial to fleets on a battery lease scheme.

“In Renault and Nissan’s battery lease models, remote capacity monitoring is mandatory to plan battery replacement when it reaches 75percent of its initial value. In other words, when the vehicle driving range is degraded by 25 percent, the manufacturer replaces the battery with a new one,” explains Matthieu Noël, who had earlier helped Nissan define a battery leasing business model for the LEAF in Europe to increase sales.

Telematics also aids dynamic routing and scheduling.

“Fleet managers are able to plan battery charges during their journey or to instantly choose vehicles in their fleet with corresponding driving range for each route,” Matthieu Noël says, adding that dynamic scheduling solutions are also a way to reduce EV complications. “By integrating all vehicle driving ranges and charging times in the planning calculation, fleets can better dispatch orders to their technicians depending on their location in order to optimize vehicle usage versus their driving range. To succeed in integrating electric vehicles in fleets, companies must deeply adapt their organizations and processes. It’s not only a matter acquiring new vehicles.”

No surprise, therefore, that everyone’s jumping on the EV app wagon.  

Google uses GM’s “On-Star”, an Android app and online service that lets employees instantly detect the charge level of any EV and determine if it is sufficient to bring them to their destination and back.

In August 2013, Nissan’s unveiled a new IT system for its light-duty commercial vehicles which provides fleet managers and drivers with vehicle maintenance information by linking a smart phone or other connected device wirelessly to a vehicle’s IT system. It lets fleet managers access the information remotely from the cloud to confirm a given vehicle’s location, provide vehicle maintenance timing information based on miles driven, monitor eco-driving and smart driving information for each driver, track electricity mileage and confirm charging status and battery condition.

There’s even an EV app to tell you if you need an EV.

In 2013, the government of British Columbia launched a program to encourage corporations to add electric vehicles to their fleets.

It turned to Fleet Carma, an Ontario-based company that provides modeling and simulation technology to car owners, to help nine fleet operators in the province decide about EV adoption. Using a device about the size of a thumb, clipped into the fuel-powered cars diagnostic port, Fleet Carma collected data every second for an entire month, then used it to drive software models and simulate various EV adoption scenarios. The modeling tool showed fleet managers which EV model would be ideal for each driver in the fleet and also most cost-effective to replace the existing vehicle over the total life-cycle of the car.

The result? All of the pilot companies, have started incorporating EVs into their fleets or are planning to do so.

“We’ve effectively turned telematics on its head by making it forward looking, rather than historical, by using the data to do predictive modeling, predictive analytics for the future of the fleet,” says Fleet Carma General Manager,CEO Eric Mallia.  “We basically broke down any duty cycle they had with any of their current vehicles and showed how that would compare to a plug- in alternative. We ended up providing a summary report across thean entire fleet, showing of where the best case is for electric vehicle conversion or replacement of an existing vehicle by an EV alternative, which vehicles to get started with.”

The information allowed fleet managers to plan on how to phase one vehicle at a time into their fleet portfolios. Of the nine pilot companies, several have started incorporating EVs into their fleets and the rest are planning to do so.

Fleet Carma’s telematics devices are extremely useful in such a predictive function because they provide much more granular data from the non- EVs, which can then be used to drive software models of electric vehicles using the fleet’s own data to determine if an EV would make sense for them before they buy it and to determine which make and model would be the best which particular duty cycle for the entire fleet.

In addition to helping potential users decide whether they even need EVs, Eric Mallia’s firm also helps EV owners ensure they are using their vehicles effectively.

“We use those metrics to see if you’re maximizing the potential for your EV,” Eric Mallia says. “Because if you just buy an EV and don’t use it right, you wouldn’t see the payback to make it worth it.”

Fleet Carma’s turn-key EV devices and web portal provides vital user statistics for fleets with EVs in operation, Mallia counts them:

“How many miles or kilometers are you driving on electricity as opposed to gasoline? How much are you driving using the battery and are you charging it each day? Do you have enough time to fully charge? How much electricity are you actually consuming on each day and each trip? If it’s a plug in hybrid, are you increasing your electric fraction as much as possible? If it’s an all- electric vehicle, are you achieving the utilization thresholds that you need to get the payback on purchasing an EV instead of the gasoline alternative?”

Eric Mallia, whose company works with municipalities, utilities, universities and private corporations in Canada, the US and Europe, says that EVs can be ideal for fleets, provided they are chosen wisely and used right.

“Some fleets have very predictable, repetitive duty cycles, for example delivery fleets can, and lend themselves well to an all- electric vehicle. If you know pretty reasonably that the required range for the vehicle each day doesn’t vary that much, it reduces the uncertainty for the fleet managers and makes it possible for them to successfully integrate all electric vehicles into their fleet.”

The company also has a program for potential private buyers.

“We have our sister brand called MyCarma, specifically for individuals, where we give them EV telematics device connected to a phone app to enable them to get data from their personally-owned EV in very much the same way that we do for EV telematics for fleets,” Mallia says. “Vehicle owners looking to purchase EVs can also use MyCarma predictive modeling service through car dealerships.  This offers the dealership a way to show their customer if they got something more efficient like an electric, how it would work for them in their particular driving patterns.”

Still, for EV sales to fleets to really take off, owners and users must take a more comprehensive approach, says Matthieu Noël.

“EVs need to significantly change the way drivers and fleet managers interact with their vehicles,” he says. “Today the range of connected services specific to EVs is not broad enough. Remote diagnostics solutions for combustion vehicles are already significantly penetrating the fleet market. Car manufacturers and suppliers definitely need to develop new services dedicated to EVs to make them more competitive for fleets.”

Multi modal transportation and car sharing could be the solution.

“Embedded telematics allow drivers to access multi-modal transportation and car sharing solutions in their car, on their smartphone or from depots for fleet managers. By integrating these new solutions in their day-to-day business, fleets could improve their routing and scheduling by using the most appropriate transport mode or by having access to a shared pool of commercial electric vehicles, fully charged in real-time, based on their business needs. for employee trips and last mile deliveries,” Matthieu Noël says.

“The car sharing model solves almost all infrastructure issues and optimizes the use of vehicles between different customers. But telematics is obviously needed to run this king of model. Operators will need to monitor many more parameters from vehicle than battery capacity and charging level to always offer working vehicles to their customers.”

According to Eric Mallia, information is the key.

“The price of EVs is coming down, and we think that’s a great thing for the industry but we still know that for it to be widely adopted, folks need to see the total life cycle benefits financially of getting into something that costs a little bit more upfront but a lot less to operate as you go. And we find the two best ways we can help in that regard are to provide predictive analytics using their own personalized data and making that equation as personalized and simple as possible. And then allow them to validate their decision by giving them a system to monitor their vehicle after they buy them.”