Dive Brief:

• The electrification of vehicle fleets presents a significant opportunity for organizations to reduce their operating costs and drive the adoption of emissions-free transportation, but electrification must be tackled systematically or risks driving up costs, according to a new report from Rocky Mountain Institute (RMI).
• RMI surveyed fleet managers for local and state governments, utilities, universities, private technology companies, and delivery services, and concluded 81% have already begun electrifying their fleets.
• Clean energy advocates are calling for the federal government and U.S. Postal Service to electrify their fleets, and expect a push toward electrification under President Joe Biden. EV advocacy group Plug In America on Wednesday launched a campaign calling for the administration to commit to all new light- and medium-duty car and trucks to be plug-in hybrid or battery electric vehicles by 2030.

Dive Insight:

Fleets make up about 3% of all vehicles registered in the United States but can "have outsized influence on the successful electrification of the entire transportation sector," according to RMI's report.   

Converting large fleets of vehicles to electric can "drive scale," the report concluded, which can result in lower vehicle and infrastructure costs for the organization doing the conversion, help streamline permitting and utility interconnection processes, and influence broader trends towards electrification.

"Done right, it's a fundamental business restructuring challenge for entire organizations," the report said. "Done badly, it can be a series of very costly errors."

Chris Nelder, a manager with RMI's mobility practice and co-author of the report, said organizations need to take the long view on electrification.

"If you take an incremental approach instead of a systemic, long-term approach, it's going to cost you a lot more money and you're probably going to wind up with more stranded assets, and it will ultimately limit your ability to electrify your fleet," Nelder said.

One potential trap, Nelder warned, is that organizations beginning with small pilots can wind up owning under-sized charging infrastructure as more and larger vehicles are introduced. 

An incremental approach to fleet electrification can cost organizations four times as much as utilizing a long-term strategy, RMI's report estimates, though Nelder said every situation is different.

As an organization's EV adoption accelerates, "it gets much more complicated," he said. If you start with a piecemeal approach, "you will discover that you actually need a much more comprehensive charging strategy, much beefier charging infrastructure, and you will miss out on all the economies of scale that come with a comprehensive plan."

Electrifying large fleets, which RMI considers those over 500 vehicles, means organizations need to restructure procurement processes, long-term capital planning, budgeting, internal expense accounting and more. They will also need "a much more extensive relationship with utilities," said Nelder.

Electrifying the federal government 

Rapid adoption of EVs is possible, says Plug In America Executive Director Joel Levin. The group wants Congress to commit to require 100% electric vehicle or plug-in hybrid sales by the end of this decade, and says the government should "lead by example" and set aggressive electrification targets for its own fleets.

"It's not as crazy as it sounds," said Levin. "When new vehicles come on the market that people want to buy, things can shift really rapidly."

There were about 300,000 EVs sold in the United States last year, said Levin. The all-electric sales goal would represent 50% annual year-over-year growth, for the next decade. Levin said that rate of growth is "achievable and is already being done," pointing to rapid adoption in Germany.

Plug In America is also calling for Biden to establish a Transportation Electrification Czar in the Office of the President. 

If the federal government electrifies its own vehicles, "they would provide a strong market signal that all manufacturers can start responding to," said Nelder. "Overall, it would accelerate the development of the market ... when you have the federal government stepping in as a major buyer it can have all sorts of ripple effects."

Levin said the postal service is "in the middle of a bidding process [to replace] all their delivery vehicles."

A postal service decision on that could come in the first quarter of this year, according to Climate Nexus. The group says the USPS has more than a quarter million vehicles in its fleet.

"Postal vehicles would be perfect for electrification," said Levin. "Their range doesn't mater. The postal vehicle does a loop, and goes back to base."

Nelder said he expects progress on transportation electrification under the Biden administration. The new President campaigned on supporting the installation of 500,000 electric vehicle charging stations nationwide.

Biden and Vice President Kamala Harris "have made lots of statements about being interested in vehicle electrification and being focused on reducing the federal government's climate impact," said Nelder.  "I don't think there is any doubt that under Biden there will be some kind of fleet electrification."