Most fleet managers are aware that the electric vehicle market will eventually replace internal combustion vehicles, and that the question of upgrading to EVs is simply a matter of time.
But, given the costs involved, is 2020 the right year to upgrade to an electric vehicle fleet? Let’s look at that topic today in the EV Connect Blog.
A Fleet Manager’s Biggest Concern
At EV Connect, we provide comprehensive EV charging infrastructure solutions for commercial fleet managers and government agency fleet managers, and the biggest concern that our fleet manager customers share with us is the question of whether EVs are ready for prime-time yet. Nobody wants to be saddled with a big investment in a transitional technology that could be obsolete or possibly even incompatible in a few years’ time.
This is a reasonable concern. The electric vehicle market is still in an early, rapid-growth phase. The past ten years have seen massive changes in what we expect from an EV’s capabilities and performance. So long as this uncertainty continues, it would be too early for many managers to upgrade to an electric vehicle fleet.
However, in the last couple of years we’ve seen some clear trends suggesting that EVs are beginning to settle down in terms of standards and compatibility. And that makes 2020 a good year to take a step back and take stock of the electric vehicle market.
Where Things Stand in 2020
The 2010s were a transformative decade for automobiles. Most EVs now available can definitively boast the operating ranges and performance options necessary to meet the needs of the vast majority of today’s corporate and government fleets, as well as the needs of the general motoring public.
In other words, as a transportation solution, electric vehicles are now indistinguishable from traditional vehicles in most contexts. In fact, many EVs coming off the line in today’s electric vehicle market are equal to and often better than their internal combustion counterparts, offering a quiet ride, great zip, reduced maintenance, and massive savings on fuel costs.
Let’s look at some of these value propositions in closer detail.
In 2019, according to reporting by The Los Angeles Times, pure-electric cars made up about 5.5 percent of all new vehicle sales in California, the national leader in EV adoption. Hybrids made up an additional 8 percent or so of new sales. Meanwhile, sales of traditional vehicles in California actually fell by over 7 percent in 2019, despite the strong economy.
The most impressive growth in EVs has been due to Tesla sales, which we’ll discuss later, but for now the takeaway is that, although the automobile industry is slow to change, the trend is clearly in favor of the electric vehicle market.
Plug-In Hybrids Are in Decline
It’s also interesting to note that the electric vehicle market is beginning to settle into two distinct segments: electric-only, and gasoline-only. We’ve been seeing sustained large-scale growth in sales of pure-EV cars, as well as in gasoline-powered hybrids (which have electric motors but are not EVs from a fueling standpoint). However, at the same time, we’ve seen a precipitous decrease in the sales of plug-in hybrids. It would seem that motorists only want to deal with a single fueling option—either a trip to the gas pump, or a plug-in at a charging station—but not both.
What this tells us is that more consumers are accepting electrical fueling as convenient and inevitable, which was previously a significant psychological hurdle. This is due in no small part to the proliferation of charging stations and the innovation of charging network solutions, like our own EV Connect Network, that make charging convenient, consistent, and more accessible both to drivers and to charging station operators.
These sales trends make it clear that plug-in hybrids are a transitional solution, and that in the future all EVs will be pure-electric.
What About Affordability?
In the last few years, we’ve seen a wide diversification of price points in the electric vehicle market, which is crucial for mass adoption and also a key prerequisite to the viability of electric vehicle fleets. Tax credits and other subsidies at all levels of government continue to be robust, and in pro-EV markets like California these incentives drastically increase affordability.
Nevertheless, cost does continue to be a significant impediment to consumer adoption. The class of electric vehicles on the market in 2020 is the most affordable we’ve seen yet, but the up-front price tags are still high enough to significantly dampen the rate of adoption.
This is one area where EVs are even more appealing in a fleet context. Individual consumers might balk at a price tag that’s 50 or 100 percent higher than a comparable gasoline car, but the savings on gasoline are typically between 50 and 60 percent (at the consumer level), which significantly mitigates—and sometimes completely recoups—the higher up-front cost of an EV over its service life.
From a capital budget versus operating budget perspective, upgrading to an electric vehicle fleet that costs more upfront but is cheaper to run has proven to be an appealing option for more and more fleet managers, especially in light of the external factors pushing companies to burnish their public image by embracing green technologies. In 2020, electric vehicles are more than just a transportation solution: They are perceived by the public as a moral good. Companies get brownie points for operating an EV fleet.
Public Pressure in Favor of EVs Will Continue
This growth is projected to continue throughout the 2020s. EVs will continue to gain market share in hotspots like California and major cities nationwide. They will also begin to spread into regional cities and even towns, on the basis of growing price competitiveness and the large-scale expansion of charging infrastructure and EV cloud-based management solutions.
At EV Connect, we are ahead of this trend and have already developed a suite of best-in-class open source Platform-as-a-Service solutions for our fleet customers, including:
- Pioneer: A private label branding of the EV Connect platform, offering you an out-of-the-box EV charging management solution to facilitate your switchover to an electric vehicle fleet.
- Foundation: Developed primarily for our enterprise customers, Foundation is our API suite offering custom solutions in areas like pricing, payment processing, and cybersecurity. Our fleet customers take advantage of Foundation’s powerful offerings in vehicle integration, uptime maximization, and OCPI roaming.
- Roam: Our integrated network solution, seamlessly extending your fleet’s operating range by leveraging the rapidly growing availability of public charging stations due to sustained ongoing growth in the wider electric vehicle market.
Aside from price, the biggest obstacle to EV adoption is lack of infrastructure and infrastructure management. Our suite of cloud-based solutions directly supports the development of EV infrastructure and adoption nationwide, even in small towns.
What this means for you is that, no matter where your fleet is located—big city or small town—you should definitely be considering the upgrade to electric. The physical infrastructure and networking infrastructure are both falling into place, and this will only accelerate the growth of the electric vehicle market.
How Does Tesla Fit into the Picture?
As we mentioned, Tesla has driven much of the growth in EV sales in recent years. Other manufacturers, while making respectable gains, have not yet been able to replicate Tesla’s popularity. Our read on this is that Teslas are something more than just electric cars. They are something of a status symbol, especially among people who work in the tech sector. It’s plausible that the environmental concerns of many Tesla customers, while genuine, are secondary to this “cool factor.”
Therefore, while Teslas are doing important work to popularize EVs in the minds of the public, and the cars themselves are genuinely excellent, they are very much off in their own secluded wing of the electric vehicle market. From a fleet management perspective, they’re not a good choice for an electric vehicle fleet upgrade, since their higher price points are cost-prohibitive and their sporty reputation is rarely the kind of image that our fleet customers are interested in.
Having said that, we think that both the Model 3 and the upcoming Model Y are must-includes as points of reference when you’re doing your due diligence and comparing the stats of the various electric vehicles on offer in 2020.
Let EV Connect Facilitate Your Upgrade
We think 2020 is a good year to start thinking about upgrading to an electric vehicle fleet, or at least a partially electric fleet. So many EV models coming onto the market in 2020 and 2021 are excellent for most fleet managers’ needs, and the wider electric vehicle market is starting to figure out what it’s going to look like for the long haul. The charging standards in particular look to be settling on DC fast charging as the main charging solution, and Level 2 AC chargers will continue to be a reliable and widely available alternative when the DC infrastructure is not viable. This means an infrastructure investment today isn’t going to be obsolete anytime soon, and probably not for 20 years or more.
When you’re ready to commit to making the upgrade to electric, EV Connect can guide you through the entire process, from charging station certification and installation, to the numerous networking solutions we mentioned earlier, to our customized fleet solutions that meet your business’ or agency’s particular needs.
Contact us today to get started. We can answer most of your questions about the electric vehicle market, and set you on the path to a successful, painless upgrade to an electric vehicle fleet for your company or agency.