James Carter, Principal Consultant at Vision Mobility joins us to discuss the importance of electrifying fleets and the short and long-term impacts electric vehicles have on fleet-based businesses.
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James Carter, Principal Consultant at Vision Mobility joins us to discuss the importance of electrifying fleets and the short and long-term impacts electric vehicles have on fleet-based businesses.
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Stacey Papp:
Welcome to the Mile Marker podcast. My name is Stacey Papp and I will be your guide, taking you on a journey into the world of fleet automation and shared mobility focusing on innovations for businesses with fleets. Joining me today is James Carter, consultant, author and expert in New Mobility. As Principal Consultant at Vision Mobility, James leads the organization in providing visionary consulting services while focusing on the future of mobility research and forecasting, as well as providing strategic direction for startups. Today he joins us to talk about the importance of electrifying fleets and the impacts clean vehicles have on fleet-based businesses. James, welcome. Thank you so much for joining us. It's great to have you here today.
James Carter:
It's really good to be here and it's great to talk to you again, Stacey.
Stacey Papp:
Absolutely. So let's jump right in. Why is fleet electrification so important?
James Carter:
So look, I think there's two reasons for that and I want to start by just being a humanist for a second. And I think the first part that we should really think about is what does this do for our environment at large and what direction are we taking our world? And I think we really have to say, well, we want a world with the least amount of pollution as possible, whether that be smog-forming pollution that we breathe and shortens people's lives, or whether that's carbon dioxide pollution that has an impact on, the greenhouse impact and is causing climate change. And I really think we need to start with that as a point. And I realize that a lot of people understand it, but when it comes to economics, sometimes that just gets put aside and we don't want to deal, necessarily, with that point.
But I think we should also have a look at the cost points as well. One thing that we're really starting to see with electrifying fleets is cost down. And I think that is really the big drivers that we're seeing in the direction that companies are looking to go. And they also have this direction and an ESG mandate, which is really what corporately we would say for having this, I guess, humanist direction we're talking about. And the rise of ESG is really starting to pair with these cost down initiatives, which is coming together with new technology and new battery capabilities and really a broadness in the market of EV, and really starting to offer solutions out there that we can not only enjoy significant cost down, especially in the operation cost of fleet, but also start to fulfill that ESG mandate, which, frankly, I think for many companies has been a long time coming.
Stacey Papp:
So in that same vein, on that ESG front, that often comes with requirements and compliance and regulations. Are there any specific requirements for fleets switching from ICE vehicles, or internal combustion engine vehicles, to EVs?
James Carter:
So right now it's a little spotty, but obviously new cars are built to a certain way. I think what fleets are really staying on the ESG side is that many companies are really needing to move the needle forward and their investors are looking, particularly if they're larger companies, investors are looking to really see, well, what are you doing with ESG? Are you doing the right thing? How are you reducing your carbon emissions? And they're really starting to look at these fine details. And I think one of the easy way, especially that fleets can move forward, and let's face it, vehicle emissions are going to be the primary area of a fleet's ESG component, is that they can look at cutting this back through the adoption of electric vehicles. So you've got this dual mandate really going on that consists of, basically, the company reaching out to do the right thing, and also its investors and its suppliers and its customers saying, hey, what are you doing about ESG? And I think there's this holistic pressure really for fleets really to start thinking about changing over towards electric vehicles.
Stacey Papp:
Well, and we know that ESG is not something that's going away today. A lot of companies, manufacturing and even non-manufacturing companies, are deploying this ESG strategy. But going back to the fleet-based businesses for a minute, how do clean vehicles help both in the short term and in the long run when it comes to implementing these into businesses that rely on fleets from day-to-day operations?
James Carter:
Well, I think you really, from a top level point of view, you make your business more investable. You bank your business worth more simply because that's what customers and clients and investors are looking for. And by doing that, you drive the value of your business up. And conversely, if you are going to hold out, then you're going to have the reverse impact. So that, I think, is a real issue and I think a reality that fleets have to really think about. Now, I know some fleets are moving towards hybrids, and that's been a very good step. However, there are next steps, and that is electric vehicles and that is electrification. Where we can take zero tailpipe emissions become a reality, and I think that's a great thing.
Stacey Papp:
And you touched on this in the first question when you talked about the human approach to electrification, which I think is incredibly important. Everybody wants to do well for the environment, we want to put the good back in that we've gotten out. But you also touched on something that I think is worth exploring a little bit more on this question. When it comes down to cost, there's been so much information on the internet, true or false depending on what sourcing. And you know this, I mean, you've been out there and you've seen, you've probably even had people ask you what is true and what is not. But when you're talking about cost, ultimately the bottom line is, what most fleet managers or owner operators are thinking about, how cost-effective are EVs actually for fleet-based businesses?
James Carter:
So I think we have to speak on a more general terms. I think I would encourage every fleet right here to go out and get an assessment on electric vehicles to really understand in detail how their use case and how they use their vehicles is relatable to electric vehicles. And frankly, there might be some vehicles that it's going to be a lot more tricky to convert to full electric vehicles than others, and I understand that and we're hoping that new vehicles will come out over the next few years that will cover that. But I think that's really the starting point is really to have someone come along and really start to identify what can be done. To me, that's the point. So when I was talking about actual cost for that operation, that's what I would do. But if I was speaking in broader terms, typically what we see with electric vehicles is a much higher capital cost and a much lower operational cost.
And at some point in time, the cost down in the operational side will balance out to what that CapEx looks like. Now, it really does depend on some factors of what that is, and typically the higher the miles that the vehicle does, the faster it will start to pay off in time period terms. And also you've got to be a little bit careful about what vehicle you're comparing to the other vehicle. If you start comparing a Tesla Model S to a Toyota Corolla, there's no way you're ever going to pay it off, and conversely, if you compare a Nissan LEAF to a Bentley, of course, exactly the reverse is going to happen. But I think once fleets start comparing like for like vehicles, they'll start to see that there's a payoff. And that could be two years, it could be five years, it could be eight years depending on the circumstance.
However, in most cases, there is going to be an operational payback. And particularly those vehicles that payback fairly quickly, say two or three or four years, if that fleet tends to keep vehicles a little longer, for instance 10 years, then we really start to see some really significant savings for that fleet over the long term. One thing I would really suggest that fleets think about is really understanding what their CapEx and their OpEx budgets look like because, as we know, most fleets will have a budget for that. But really EVs kind of throw that upside down because of this much higher CapEx, much lower OpEx and really starting to think, well, you know what, I do need to move some money around, maybe this total cost is going to stay the same over four or five years or whatever it is, but at the same time, I really need to understand where this money now falls and where it now lies. And I think that's really important.
Stacey Papp:
So we're talking basically a spend to save situation. It's just not realizing that savings right away, like most of us want to, we try to save, we want to see the fruits of our labor very quickly, but we're spending upfront to save a little bit on the backend.
James Carter:
Yeah, and I mean, you're spending a lot upfront to save a lot on the backend is how I would characterize it.
Stacey Papp:
Sure. So what are some of the unique challenges fleets could face when they start to incorporate EVs into their mix of vehicles?
James Carter:
And I would really go back to what I mentioned earlier about really having someone in to really understand what their use case is and what the electric vehicles can do and are capable of and may necessarily face challenges. But some of the challenges that you could particularly think about would be things like, A, do you have enough electricity coming into your depot? Can it cope with a full, you might be able to cope with two or four or 10 vehicles, but what if you decide you've got a larger fleet and you decide to electrify a hundred vehicles for overnight charging? That becomes a big challenge.
Stacey Papp:
Or looking at to grow your fleet too, right?
James Carter:
Right.
Stacey Papp:
Yeah. So you're trying to scale to size, but whoops, if you don't have the power to literally operate them, there's no scaling to size.
James Carter:
Exactly. So that is a real challenge. And you can't just rock up to utility and say, hey, can you come around tomorrow and put in a bigger service? Trust me, don't work that way.
Stacey Papp:
Well, they could try, but I don't think they'll have much luck or many friends.
James Carter:
Yeah, you can try. But you're probably on, you could be on a 12 or 18 month timeline, really, to upgrade that service to make sure that you've got half a megawatt in or whatever your needs are to successfully charge that vehicle overnight. So I think that that is a challenge. The second challenge is really to understand what that vehicle is capable of in range and how that range changes with the different use environment. So for instance, you might see a vehicle and, let's just say, it's rated at 200 miles of range, but it comes to winter, and winter if you are living in the northeast or where I am in here in Canada, that's going to take a big chunk, that could take as much as 40% out of your range if you're operating in some below freezing. So that plus you've got a heavy load and suddenly you're towing and maybe you've put winter tires on your vehicle, or you're traveling more on highways rather than around town.
And so suddenly all of these things start to add up, and can this vehicle particularly do that job that you need it to do? And I think that's an important question that fleets need to ask. Typically, what we see is often that fleet vehicles tend to do the same thing, and that duty cycle really doesn't change dramatically. So it does allow fleets to plan for a trip to easily plan for a worse case, and if there's a worse case when something happens, let's just say someone's forgot to charge the car and it's only got 30% state of charge when it should have 90 at the start of the day, then what happens? Do you have a backup plan? So they're the sorts of things that really fleets really need to think about and start actually at making some procedures to ensure that their drivers know what to do.
Stacey Papp:
It'll be really nice if there was a checklist somewhere. Maybe there is a checklist out there somewhere of what you just mentioned, maybe we should make one. But I think that was really good tactical advice because I've never seen anything really like that as far as here are a few things to think about. It's just we know we should, we know we need to, it's more of the how do we do this than how do I think my way through it, so. That's really cool to be able to provide people. And I really like the approach you take when you're baby stepping this. I think a lot of people are looking at this and thinking, I've got to jump into the deep end with both feet. This seems like a really big task rather than you've got time. No one's, I don't think, really breathing down anybody's back, but as this becomes more of a hotter topic than it has been, being able to have a tactical checklist, say, let me think about these things.
What's the strategy? What's the plan? What's the cost? How does this impact me? Is really important. So thank you for sharing that. And I want to flip this a little bit away from the actual vehicle and talk more on the technology side. So when we're thinking about EVs and operational efficiencies and productivity, there's often some sort of technology behind it, and that's usually fleet automation. So in your mind, where does fleet automation come in to help some of these challenges that fleets may be having on those productivity, efficiency, and cost size, maybe using an ICE vehicle, and can EVs really kind of help that? So moreover, how does fleet automation basically help?
James Carter:
Well, I think really what it can do is solve some of those problems for you that some of those detail issues that did that car get charged? What is the state of charge? Can it be capable of doing its duty that it needs to do the next day? They're the sorts of things that fleet managers might find out when the driver calls them up and goes, hey, who forgot to plug this car in? I can't go anywhere and I can't do my job. But if you have some sort of notification, if you have some sort of automation that can make this type of thing much easier and you can iron out some of those wrinkles, then you can get past these points. And that's where it's you're not risking the business operational side for adapting a new technology by at least having something within the automation process that can get you past 95% of those day-to-day issues, then I think you're way ahead.
Stacey Papp:
You talk about making a vehicle roadworthy, if it's not charged and it doesn't go, it's not roadworthy, right?
James Carter:
You're not going anywhere.
Stacey Papp:
Yeah, that's right. Your day's just not going to happen. And I mean, sure, we could probably pivot that into the digital key solution discussion, which we won't, not for this podcast. But it's, you're right, having those alerts, which I think on the fleet automation side, which helps to take the noise and make some sense of all that stuff coming from vehicles, what can get buried under there is, hey, is this charged? And if it's not, how many minutes or hours to charged because we have things to do today.
James Carter:
Exactly. So what is the minimal, how long will it take to charge? And if that has gone here, how long will it take to charge? What can I get done in a couple of hours while I'm waiting? Or where is the nearest fast charger? All types of things that can really counteract a problem as well as solve it before it even becomes a problem.
Stacey Papp:
So with the focus on implementing more EVs, what do you see from a futuristic perspective, how it impacts fleet-based businesses? Do you think more fleet-based businesses will adopt EVs? Do you think they'll kind of stay status quo until they have to? In your opinion, where are people at when it comes to, yes, I'm going to do it, no, I'm not going to unless I'm told, or I just don't know yet?
James Carter:
Yeah, good question. Look, I think when we look at fleets, well, actually let's step back a bit. When you or I look at buying a car from our private needs, we'll go, oh, do we like the stead styling? Oh, it's fast and that's great and has it got enough interior room? Or will my wife like the interior styling? Or whatever it is that we happen to judge buying a car on the showroom floor. Fleets, I think, are much more simple creatures. There's really two things. There's one, does it do the job? And two, how much does it cost? So we really need to answer those questions. And for a fleet from the first one, will it do the job?
I think in the past there hasn't been enough vehicles really that could do everything. There simply wasn't available vehicles to be able to do the jobs that the fleets needed to do and the way that they wanted to do them. And that's obviously not great for electric vehicles, but as we've seen a lot more product rollout and a lot more offerings out there that are becoming very suitable, just being able to do the job, I think, is a great first step. And then the second thing, how much does it cost? And we talked a lot more earlier about OpEx and CapEx costs, but having that cost down, at least in sight, really opens that up for fleets.
Stacey Papp:
So if you had a crystal ball and looking way far into the future, do you think more and more fleet-based businesses will normalize the use of EVs versus ICE vehicles? Or is it five, 10 years from now will people be saying, gosh, I don't have enough clean vehicles in my fleet, or is it more of like, okay, I'll do it because that's the right thing to do and I'm a good steward of the environment, knowing that really the future of automotive is lending towards hybrid or clean vehicles?
James Carter:
Here's what I think, Stacey, I think that fleets who particularly do higher miles will not be competitive that if they don't go EV in five years time, I so strongly believe that. Maybe you could figure it out with, if you're only doing five or 10,000 miles a year, maybe that might work by keeping an ICE vehicle longer. But if you are doing a lot of miles in your vehicle, you simply will not be competitive by 2030, that is my feeling. And I believe that we'll see a lot of fleet vehicles just start to turn over for that fact because they will look at the cost and they will go, no, not doing that. And it comes with all these other ESG problems. I could save money and go along, hit my ESG goals by going EV, and that's the shift.
And I think it's still happening somewhat slowly, but as that product comes out and as some of the other problems start to be solved, what you mentioned earlier, this shift is going to be happen very quickly. What I've really discovered with technologies, particularly in automotive, in my more than 25 years in the industry, is that we see these technologies come out and let's take electric vehicle passenger cars, for instance, right now. We saw a Nissan LEAF come out in 2011, we saw the Tesla Model S come out in 2012, and really they were the first ones out in market, but they sold in quite small numbers. And the market slowly grew, it slowly grew, and then suddenly we had Model 3 come out and it changed the world.
And we've seen just right at that point, total hockey stick in terms of EV outlook, EV adoption, the pace of which EVs have been accepted. The top North American regions, which is British Columbia by the way, have over 20% of new car sales are plugin, being either a plugin hybrid or electric vehicles. That is absolutely amazing. This is a transition that's happening quickly and we're going to see exactly the same thing happen with fleets.
Stacey Papp:
Here's the scary thing, 2030 is not that far away. If you look at it, I mean.
James Carter:
It is not that far away.
Stacey Papp:
We're right around the corner from 2023, so we're holding you to 2030 that your prognostications will be correct. No pressure. But that's really a nice mile marker, no pun intended given that's the name of this podcast, but a mile marker to look at and say, in the next seven years, things can really be different when it comes to the fleet vehicles that are on the road and, to your exact point, by the number of miles that they're driving, which I think forces fleet managers and owner operators to look at it and go, we need to really think about productivity and efficiency from a completely different way.
James Carter:
A hundred percent. And the other thing that I would really say about this is we hear a little bit about electric vehicles perhaps not offering the range that some ICE vehicles do, particularly when towing, and that's absolutely true. What I think also needs to be considered is some of the other non directly cost associated things that EVs really have. One is they are just so much better to drive. And if you've spend any time in an EV, you'll know just how much more powerful they are, how much more torque they are, how smooth and quiet they are. They just are a much nicer driving experience. And I think that's the feedback that I've heard from every fleet. The drivers just enjoy driving EVs much more.
So I think that's the first thing. And even more so, we've heard of fleets that actually reward their good drivers with an EV and have their other drivers try to catch up so that they can get into the next one when it comes along. So I think that's the first point. The second point is that they offer other things that may not be available in an ICE vehicle. The really one I'm thinking of is Ford F150 Lightning, which has 9.6 kilowatts of power on board, so you can run a whole job site just off your truck. You don't have to bring a separate huge generator along. You can power your house if there's an outage. You can run a Halloween party, you can, you name it.
Stacey Papp:
Let's hope not.
James Carter:
Yeah, whatever it is, you can run a campsite, you can run a whatever.
Stacey Papp:
Sure.
James Carter:
But the ability to have power on the truck with you is a total game changer for some fleets. And I think really having a think about, well, can I use that type of, let's call it an accessory or benefit or whatever you might think of calling it, that is huge. And so for some fleets, that's just going to be an amazing offer.
Stacey Papp:
Well, James, I want to thank you so much for lending your insight on electrification. It's a topic that nobody can escape, and I think it's only going to get one that's a little bit more supercharged as we get closer to that 2030 date you mentioned. So thank you again for sharing your knowledge and your wisdom about this topic. It was so great to talk to you about this and have you join us today.
James Carter:
Thank you, Stacey. It's great to be here.
Stacey Papp:
Absolutely. Until the next time, keep moving the world better. Thank you for listening to the Mile Marker podcast. Stay tuned for another episode full of insights and ideas to keep the mobility industry moving forward. In the meantime, follow us on social media and be sure to like, comment, and share today's episode.