The Government of Canada has accelerated its zero-emission target for all new passenger trucks and light-duty cars and sales to 2035 – five years ahead of its previous 2040 target date. It has announced a program of partnerships and incentives along with investment in infrastructure such as charging stations.
However, during the next 14 years, the challenges for commercial fleets will go beyond securing a practical and accessible EV charging infrastructure, to also encompass customers mindset, residual values, workability, and climate change.
We spoke with Basil Marcus, Commercial Director at Foss National Leasing, to get some insights.
"We're only beginning to see electric light commercial duty vehicles – such as trucks, work vehicles, electric transit – coming on stream," says Basil. He believes that is a major challenge for commercial fleets because EV for fleet is new ground with many elements of the unknown.
As an example, he says that while General Motors and Ford are making big commitments to EVs, such as the Chevrolet Silverado and Ford's F-150 Lightning, the real adoption challenge will be getting the customer's mindset around what EVs means to fleet, such as effect on residual values.
What's it worth?
"Getting the EVs will be the easy part because the manufacturers will produce them and you can buy them, but a challenge will be the lack of real world data," says Basil. He adds that while consumer EVs have been available for almost 10 years, along with real-life testing and subsequent data, there is no current true data that supports the residual value of what fleet EVs are going to be worth in four to five years, which is the typical cycling time for commercial lease vehicles.
"So, how do you estimate residual value?" he asks "You can't use the same, predictable residual rate as your ICE (internal combustion engine) vehicles. Fleets will need to make some judgment calls on what the EV residual rate might be while balancing risk to avoid being in a situation after four or five years when the vehicle may need to be disposed of and there's a potential loss."
Understanding new life cycles
Basil adds that another challenge facing fleets will be the need to understand new EV life cycles: "There may be a higher capital cost from day one, balanced with less mechanical moving parts and less operating costs for the actual vehicle, so maybe fewer things to go wrong.
He cites warranties as one example of the new reality with EVs lifecycles and says that a detailed analysis of the manufacturer's expectations in relation to the maintenance upkeep costs will need to be balanced against how long the vehicle will be kept in the fleet.
Then there's the practical side of how well an EV vehicle will operate in fleet conditions, such as range and ability to be work-ready, especially if upfitted, and used in potentially harsh conditions.
"OEMs offer test environment data," says Basil, "But how will that stack up for an EV operating out of Fort McMurray, loaded up with drill bits to go into the oil sands? How is the EV going to perform from a range- and load-capacity level when you're operating it to the maximum threshold of its ability? That work vehicle may need to be on for its entire working day, because it's going to be used as a power source, as an office, as a toolbox. The EVs may also be moved to different parts of sites and be out there for a long time. How is that EV going to continuously perform under those harsh conditions?"
He also wonders how, or if, upfitting may affect the EVs range: "Most light-duty commercial vehicles get some upfitting, whether it be racking or shelving, so how will that impact the overall range of the EV vehicle? We will get some real-life data but it's something we're going to have to work on."
Basil adds that another key element in weather: "In most Canadian provinces – except some parts of BC – conditions are sub-zero for five to six months of the year. We're getting more extremes of temperatures – such as Vancouver basking in 47 degrees – but minus 47 is a temperature we're more accustomed to in Canada. How does that EV vehicle operate in extreme conditions?"
Infrastructure is key
More than $460 million has been invested in projects that will eventually create a coast-to-coast network of hydrogen stations in metropolitan centres (10 to date), natural gas stations along freight corridors 20 to date), and EV fast chargers of which there are currently more than 16,500.
Basil comments that the infrastructure will continue to evolve, but fleets will face some charging-related challenges, such as how an individual fleet driver in a condo building can get at-home EV-charging access, or how to charge multi-vehicle EV fleets in restrictive-lease buildings. There may also be the need to utilise new software programs to enable pairing data with route mapping to ensure EV fleet driver safety in remote locations.
"So, the key part is infrastructure, " says Basil. "It's fine if I get an EV for my personal use. I go buy the charger, install it and use it at home. But there are different factors that fleets need to take into consideration."
As an example, Basil cites a fleet driver with an EV, who lives on the Danforth and has nowhere to park. Or is in a condo building with no accessed power: "Does that mean home charging is not an option? Or maybe a request is to put a Level 3 charger in the home but the local infrastructure may not support that because the regional municipality may need to be consulted first. In addition, will the draw required by the charger be supported, especially if 20 other people in the immediate area also want to use Level 3 chargers?"
However, even if the charger is approved, Basil questions where does liability exist if anything happens as a result of that installation, even if installed by a certified electrician, with all the required certifications?
And there's another potential problem to the charger installed in the driver's home, as Basil asks: "What happens if the driver is fired? There's a piece of equipment on the house wall, and the driver might refuse to let it be taken off the wall as it's attached to his house. What then? How do you factor that potential challenge into your employment contracts to the effect that it gives the company the right to remove the charger at the end of the employee's contract? And if the house is sold, and the driver moves to a new one and now needs a Level 3 charger in the new home, who pays for that?"
Many commercial fleet vehicles go back to base at the end of the workday, but charging them all could be problematic, says Basil.
"For example, how does a fleet of 20 EVs get charged in time to be ready to go again in the morning?" he asks. "Are 20 chargers needed? If not, and there are only 5 chargers, would someone have to come in at night to shuffle the EVs around the chargers? That's fine if you own the yard but what if the cars come back to a shared parking facility in a business plaza where the business leases space? Would data show when a car was fully charged and needed to be moved to make room for the next EV vehicle in the queue. Would you need a valet system? That would be crazy."
Basil also wonders how a fleet on a remote location, such as a construction site, or on road building, would factor in EV charging: "Those vehicles are going to be working pretty hard all the time."
A blink in time
Basil thinks it's realistic that more charging infrastructure will be developed, although he wonders if it will be mostly public sector charging infrastructure that won't specifically benefit the commercial sector.
He adds that electricity grid support is an interesting question, wondering about municipalities' expectations on how they're going to have to transform over the next decade: "Because Transport Canada wants all new cars and light-duty trucks to be EV by 2035 – that's only 14 years from now. And you blink, and 14 years is gone."
There's still time
"We're a slow industry in some ways and while the ordering window for 2022 vehicle models is becoming available there will be a limited allocation for this year, comments Basil. He adds that any fleet EVs probably won't get ordered until at least mid-2022, with delivery at the end of that year, and then vehicle flow will gradually increase.
"So we have time to think about how to effectively incorporate EV vehicles into fleet," says Basil. "With ICE vehicles the scenario is relatively simple: Johnny needs an outfit for the job and gets an F250 (because he likes Ford and the business has a good arrangement on price), and it's that simple. Now, with an EV fleet there are additional things to think about, such as figuring out the range to where Johnny's going, how many engineers he's working with, does he have access to charging infrastructure, is he coming back to base? There's a lot more to it than just putting the fleet driver in the fleet vehicle."
However, as Basil concludes:
"Nobody needs to panic, but they do need to start the bigger conversation, figure out what's going to be the right fit for their fleet and work out a long-term strategy for the vehicle, and how they can transition to EVs, considering the many variables.
We're on the cusp of something that's changing and evolving and growing, and that can be fun!"