07/12/2019 | News release | Distributed by Public on 07/12/2019 02:50
Whether you're looking at fleets of light and medium commercial vehicles (LCVs and MCVs) or at light truck fleets, there are a few obstacles to overcome before the potential can be realized
The transition towards electric mobility is gaining momentum when it comes to passenger vehicles. In the commercial sector, uptake of electric commercial vehicles is still limited despite considerable potential. Major obstacles to faster uptake include lack of information transparency as well as of a unified approach to integrating vehicle technology and existing infrastructure. OEM customers are looking for solutions that go beyond the vehicle itself, with implementation, operation, and optimization of ECVs. To satisfy their customers, OEMs need to address these challenges by creating holistic solutions, utilizing partnerships with external companies where appropriate.
For customers, adoption and continuous integration of electric vehicles into their commercial fleet depends on business-specific criteria. These usually include a set of basic conditions such as total cost of ownership (TCO), infrastructure, service, emissions, regulatory risk (toll, transit zones), and vehicle characteristics (range, reliability, payload, life duration, model variety, and charging time).
Generally, hesitancy over transition is caused by lack of information. Thus, the uncertainty of commercial fleet owners about the above-mentioned conditions makes them reluctant to integrate ECVs into their fleets.
Therefore, this article describes problems relating to the transformation to an ECV fleet from the customer's perspective and puts forward some solutions. In this context, the article covers the following three issues:
Commercial fleet owners know that integrating and operating an efficient fleet mix is crucial for success in e-mobility. However, as mentioned above, they lack information about the implementation and operation of electric vehicles, as well as the respective costs. Thus, they struggle to find electric substitutes for existing vehicles that meet the requirements of their driving profiles.
Another area where information is lacking is that of complementary infrastructure (charging and power contracts). Uncertainty in this area makes fleet owners reluctant to transition to ECVs at all, regardless of models.
Operation and optimization
Charging and energy consumption have a crucial impact on the efficiency and costs of owning an electric fleet. Factors such as delivery times, varying routes, traffic jams, and operating procedures clearly affect vehicle range, but they also create specific charging windows for the ECVs. Success depends on utilizing fleets optimally in terms both of route allocations and of fully exploiting charging windows.
Another focus area is the charging process itself. For instance, charging all vehicles at once during the nightly immobilization period causes bottlenecks at the point of connection to the grid and entails high costs. Additionally, extending the grid connection or installing further power chargers for the fleet represent heavy investments.
To support these investments, the market requires attractive financing solutions for vehicles and complementary infrastructure alike. Furthermore, automated billing and cost-efficient power contracts with sufficient grid connection are critical enablers of ECV fleets.
Another key customer demand is real-time digital availability of fleet data (charging times, routes, and vehicle utilization) to help with monitoring and optimization of operations.
Planning and implementation
Many of the problems described above can be resolved if OEMs offer a holistic solution including complementary services (Fig. 1), working with partners as necessary. These partners can become important as they can help deliver holistic solutions with their competencies.
Figure 1 Holistic solution with partners
First and foremost, light commercial vehicle (LCV) and truck OEMs need to seize the opportunity to advise their customers about existing ECV fleet solutions. Publicizing case studies of successful fleet integration - DHL's experience for example - reduces anxiety and promotes the benefits. In addition, these success stories can show how to successfully implement and operate an electric commercial fleet.
Furthermore, all costs associated with the implementation, operation, aftersales service, charging stations, and energy consumption should be made transparent. Extending the TCO calculator with variables such as subsidies by regulators (e.g. tax, charger operator bonuses) as well as soft benefits (no driving bans in cities) are just two of several opportunities here. The calculator should also include duty cycles, driving profiles (speed-time trace), and charging options to make it easier for customers to build their optimal ECV fleets.
As full-service providers, OEMs will also need to ensure satisfactory delivery of electric vehicles, installation of charging stations, and IT support.
A new approach within the full-service provider solution, is to adopt the so-called 'Netflix Model,' where customers do not own the ECV but pay for its usage. The configuration of the business model behind it originates from the risk aversion of the OEMs. They can validate if a package with a fixed price for an agreed upon range, where every additional kilometer/charging minute is charged extra, seams more feasible for them, or if they want to use a pay-per-use model. This may seem like an additional risk for the OEMs in a yet evolving industry, but the additional data this model generates for the OEMs offers also the possibilities to sell additional offers.
Operation and optimization
When it comes to operation, customers want OEMs to deliver solutions for load balancing and efficient energy management, as well as for the whole area of payment automation. Making use of solar cells installed on on-site storage units can help to ensure sustainability and long-term cost efficiency. OEMs can create additional value for customers by offering monitoring and optimization based on data from the vehicle and energy consumption statistics.
OEMs also need to offer charging infrastructure that meets commercial requirements, and to guarantee on-site service, for example installing and maintaining the power chargers.
As argued above, LCV and truck OEMs need to overcome the immaturity of a market that is currently limited by lack of knowledge and skepticism towards ECVs. To do so, they need to inform the market, demonstrate the benefits of successful ECV fleet use with success stories.
In addition, OEMs need to offer a good variety of models to enable customers to choose vehicles matching their exact business requirements. Moreover, ensuring TCO parity with conventional powertrains, especially via lower initial costs, would increase the attractiveness of ECV fleets.
By offering an all-in-one solution, as suggested above, OEMs can become customers' providers of choice for the transition to an electrified fleet, but this idea introduces complexities of its own. As full-service providers, OEMs will not only supply all services needed for the electrification of commercial vehicle fleets but will also engage in closer customer relationships. OEMs will therefore need to commit to excellent service and maintain it throughout the electrification process - a significant challenge in itself.
In order to expand their competences sufficiently to provide a holistic ECV fleet solution, OEMs will have to cooperate with partners. To some extent, these collaborations are already established - typical partners include charging location owners, charging infrastructure operators, service providers, energy providers, mobility providers, and financial services and leasing companies. OEMs will have to decide whether to strengthen these collaborations and embark on new ones, as opposed to moving into new business areas themselves. Diversifying into the relevant industries via acquisition would probably exceed budgets and cause extensive management effort, while growing the capabilities internally would require major R&D investments. Whether investment is internal or external, OEMs will be challenged to achieve the necessary rapid time to market. Partnerships may offer a better way to achieve the necessary agility.
E-mobility calls for an integrated approach by OEMs and partner companies to develop the integrated solutions required for ECVs to succeed in the market. Besides the general success of e-mobility, OEMs producing LCVs and trucks need to consider the effects on their own businesses; in particular, established LCV OEMs should recognize the threat to their core competences from the disruption of the market for diesel powertrain vehicles. Thus, R&D investments to differentiate and position OEMs as reliable e-mobility providers will be key for their future competitiveness.
Consultant - Capgemini Invent