Lessons From the Road to Fleet Electrification
UPS is making big investments in delivery vehicles that offer an alternative to the gas-powered internal combustion engine, including electric vehicles that produce zero tailpipe emissions. Of the vehicles we added to our fleet in 2018, 13 percent rely on alternative fuel or advanced technologies. We aim to increase this percentage to 25 percent by 2020.
While electric vehicles often deliver a lower total cost of ownership, they often have a high initial purchase price, making large-scale investments a challenge. We have also encountered a scarcity of products that meet the unique needs of UPS’s fleet.
We’re not alone in these dilemmas. For UPS’s third joint research study with GreenBiz, we explored the transition toward commercial fleet electrification, including barriers, motivators, and strategies for accelerating the market. The study included a web survey of the GreenBiz Intelligence Panel, and interviews with fleet, facilities, and procurement professionals, as well as thought leaders in sustainability, energy, and logistics. Their feedback echoed much of what UPS has experienced in our own fleet electrification journey.
For example, sustainability aspirations are a primary motivator for large businesses choosing to electrify their fleets: 83 percent of respondents said this influenced their decision-making. Lowering total cost of ownership was an important consideration; however, cost was also a barrier, with 55 percent of companies saying that a prohibitive initial purchase price prevented them from investing more in electrification. Leaders also cited lack of EV charging infrastructure and lack of product availability as obstacles in their path.
The study revealed possible avenues for improvement. For instance, it’s well established that the transition to electrification will require strong collaboration among utilities, governments, Original Equipment Manufacturers, fleet customers, and other stakeholders. However, although 70 percent of survey respondents say they collaborate with suppliers, less than half are currently working with government or utilities on electrification solutions.
UPS is setting an example of the types of collaboration and innovation needed in our industry. In the U.S., we recently ordered electric-powered delivery trucks that we anticipate will be at cost parity with conventional diesel-powered vehicles. And in London, we found a solution for our charging needs through the Smart Electric Urban Logistics project, a public-private partnership piloting smart-grid technology. While we still have a distance to travel to reach our own EV aspirations, our hope is that these new insights will help our entire industry move forward to navigate the curves ahead.
Despite the complexity of transitioning commercial fleets to an electric future, the vehicle technologies and options to upgrade infrastructure are quickly improving.
Continued industry collaboration will be critical to accelerate fleet electrification across a wide range of applications. - John Davies,
Vice President and Senior Analyst, GreenBiz Group