Filling a need for electric fleets

Amazon's gargantuan fleet order of 100,000 electric delivery vans from Michigan-based startup Rivian will no doubt turbo-boost adoption of electric commercial vehicles.

But the move, announced in September, simultaneously will amp up another fledgling business — the fleet-charging infrastructure industry.

To power its planned battalion of battery-powered vehicles, Amazon likely will need to plow a hefty investment into vehicle chargers, electricity infrastructure upgrades and new charging technologies wherever those vans will travel.

The scale of Amazon's fleet electrification project is a "game changer," Mark Kerstens, vice president of global fleet solutions at EV charging network ChargePoint, told Automotive News.

"It will help drive costs out of the system and accelerate learnings around how to develop, operate and scale EV charging networks for commercial fleets," Kerstens said.

As it builds its EV network across the country, Amazon will have to collaborate with the hodgepodge of utilities. Once utilities figure out how to handle commercial vehicle charging at the scale of Amazon's project, they can pass that learning on to other EV fleet customers, said Sam Abuelsamid, analyst with Navigant Research.

Amazon's fleet electrification also will drive demand for charging infrastructure, delivering economies of scale and lowering costs for equipment manufacturers. The demand also invariably will attract new operators into the fleet-charging business and drive innovation in charging technologies, Abuelsamid said.

The investment and attention are much needed as vehicle manufacturers plot their electrification strategies. According to a 2018 survey of large corporations, inadequate on-site charging infrastructure is the second biggest barrier to electrification of corporate fleets.

Ninety-two percent of respondents said their companies were not equipped with on-site EV chargers for commercial vehicles, according to the GreenBiz study, commissioned by UPS.

Overcoming that barrier is complicated and expensive. A fleet of 200 to 300 electric trucks requires up to four times the power needed for a facility designed for diesel trucks, according to the study. Getting that scale of power to the facility requires planning, new technology and collaboration with local utilities.

Adding chargers to transportation depots and warehouses requires a sophisticated understanding of electrical capacity on-site and a solid projection of future charging requirements, Mike Whitlatch, UPS' vice president of global energy and procurement, noted in the report.

A significant increase in the demand for charging electric vehicles could require increased electrical capacity at a given site — possibly a fivefold to tenfold upgrade from their current capacity, Whitlatch said.

The main factor holding back large-scale EV charging investment is simply the lack of electric vehicle models on the road.

"We are expecting a big ramp in commercial vehicles sold, particularly in the midsize truck and lower segments," said Colin McKerracher, head of advanced transport at Bloom-berg New Energy Finance.

Softening battery prices are only beginning to make electric vehicles a cost-effective investment for businesses. From 2010 to the end of 2017, average lithium ion battery prices dropped 79 percent, while average energy density of EV batteries improved 5 to 7 percent annually, according to the 2018 Bloomberg New Energy Finance Electric Vehicle Outlook.

Meanwhile, the prospect of tighter government and local regulations on emissions is fueling interest in the technology switch. California, for instance, is moving to an all-electric public bus fleet by 2040. Some European metros are banning or levying hefty fees on diesel and gas vehicles in congested city centers. That trend does not impact North America's charging infrastructure, but it does stir product development for vehicle manufacturers that operate in both Europe and the United States.

"The pressure to green the supply chain is ramping up," McKerracher said. "Companies like Amazon are wary of the increased traffic that they are pushing down into neighborhoods from all the deliveries. They want to ensure they meet noise and emission restrictions."

In addition to the dearth of current EV models, another factor causing fleet-customer wariness is the outlook on how much it will cost to charge them.

Commercial fleet customers are especially susceptible to pricey "demand charges" — when a customer exceeds the power consumption it's allotted at a given time and must pay a premium for it. So companies must balance their fleets' charging schedule to minimize demand charges.

To avoid those premiums might require such customers to upgrade their on-site electric infrastructures. There's a major conversation beginning among utilities about how best to accommodate the increases in electric load from large fleet consumers, said Ben Kellison, director of Grid Research for Wood Mackenzie Power & Renewables.

"Aggregated load in a very specific area can lead to distribution infrastructure issues and need for upgrades," he said.

While commercial fleet electrification is still in its infancy, utilities anticipate that will become a major revenue stream. Converting all passenger vehicles to battery power would boost U.S. electricity demand by about 20 percent, noted Kellen Schefter, senior manager for Sustainable Technology at Edison Electric Institute, a trade association that represents U.S. investor-owned electric companies. Commercial fleets alone would boost electricity demand by 10 percent, he said.

Utilities are responding by developing investment models and programs to simplify the process and offset the costs of expensive upgrades to the electricity infrastructure at fleet depots and distribution centers. These plans include offering rebates on upgrades, installing equipment to support customer-owned charging stations and owning and operating charging stations on behalf of customers at some locations.

The GreenBiz study reported that as of July 2018, electric companies had committed more than $1 billion to new customer programs. The California Public Utilities Commission last year approved $768 million in transportation electrification proposals from PG&E, San Diego Gas & Electric and Southern California Edison, which includes installations for 15,000 medium- and heavy-duty vehicles across Northern and Southern California. There are also proposals or plans for incentive programs in Hawaii, Michigan, Nevada, Ohio and Oregon.

"We really want to see more EV adoption occur, and we think helping to reduce the cost of the customer's infrastructure is a great way to do it," Schefter noted. "Plus, it gives us a little more insight and ability to manage the energy grid."

Like Amazon, UPS is betting big on electrification.

The Atlanta-based logistics provider said one-fourth of annual vehicles purchased in 2020 will be electric or use alternative fuels. UPS has placed orders for electric trucks from a host of vehicle makers, including Tesla, Daimler and Loveland, Ohio-based Workhorse Group.

UPS is working with 1,000 electrified vehicles around the world and knows that charging must be reliable and cost-effective. The delivery giant is developing approaches to determine not merely when to charge a vehicle, but where.

"We are prioritizing electrification based on route profiles and electrical capacity at its depots," Whitlatch said. In deciding whether to use electric vehicles in a given location, he said, "We look at the total cost of ownership which includes the cost of the charging infrastructure, the incremental cost of the vehicle and the electricity charging rates."

At hubs where the charging infrastructure cannot be upgraded to the company's target levels, UPS is considering alternate charging technologies, such as solar-powered electricity and battery storage.

It might include more use of vehicle-to-grid technologies, which allows an EV to feed unneeded power from its on-board battery back into the grid to charge other vehicles.

"We are operating in essence a mobile battery," Whitlach said. "Those vehicles bring a state of charge back to the building at the end of each day.

"We are looking at how we reshape the demand profile at our facilities," he said. "These models can also provide an economical way to charge vehicles."