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Automotive Fleet & Leasing Association Whitepaper Series, Volume 34 Published July 2013

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Why are companies apprehensive about converting to cheaper more efficient fuels when presented with the option? Is it that there is an expectation that current oil prices will eventually decrease? Or is it merely that companies faced with the option are not provided with adequate information to make a good business decision? According to the US Energy Information Administration, petroleum as a source of fuel is showing no signs of providing consumers with any kind of cost relief in the foreseeable future. Over the past ten years, the cost of petroleum, particularly, diesel fuel has increased steadily. A gallon of diesel fuel that cost $1.44 in December 2002 is currently priced at $3.92, an overall price increase of 272% and an average per year increase of 11.24%. Unfortunately, GDP is currently hovering at the same percentage point it was ten years ago. That is to say fuel is a necessity in our daily operations both residentially and commercially. In many industries, fuel consumption is one of the largest operating expenses on a company’s financial statement. Over the past several years there have been considerable efforts in researching cheaper and more efficient methods of fuel production and consumption. As a result several types of alternative fuels have gained popularity and support. Though these alternatives have offered some kind of cost saving options to consumers there is still room for improvement. As in the case of LNG (Liquefied Natural Gas) and CNG (Compressed Natural Gas), which are fuel alternatives that are experiencing a less than acceptable infrastructure growth rate, and has not provided enough of a fuel price reduction that would convince the weary to convert fuel usage. The medium and heavy truck industry is one of the largest consumers of diesel fuel globally for reasons such as; vehicle size, loads being hauled, distances that the vehicles may need to travel, and engine types. Several cost conscious and progressive companies within this industry have performed due diligence type studies and have determined that opportunities surrounding conversion to (FEV’s) Full Electric Vehicles will provide huge ROI’s in the future. Companies like Pepsi, Frito Lay, and Coca Cola are currently replacing conventional trucks with new more efficient and completely electric powered trucks.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Many risk-adverse companies are convinced that the following factors are preventing them from venturing into initial fleet electrification. 1) High vehicle acquisition cost 2) Current infrastructure (repair services, charging stations) are not large enough to support needs 3) Lack of government support (incentives) 4) Low battery capacity resulting in less travel time between charges

Consumers currently using diesel as its primary source of fuel should understand the efforts being made to build a strong infrastructure for vehicle electrification. Without understanding all the facts clearly, a company could place itself in a competitive disadvantage as more versatile companies embrace and begin to convert to electric powered vehicles. The following are considered advantages of using electric powered vehicles: 1) Reduced repair and maintenance costs resulting in a payback period that is reasonable 2) Significantly lower fuel cost than petroleum, CNG, LNG and others 3) Less or no emissions 4) Virtually silent engines 5) Government incentives for manufacturers and fleets that want to convert

The configuration of an electric motor is relatively simple. There are very few parts, which is a major reason why repairs and maintenance costs are significantly cheaper than with a combustion type engine. There are two major components to a full electric vehicle; an onboard energy storage component (a high capacity lithium battery), and a high-powered brushless magnetic electric motor. The components are scalable to many different vehicle configurations, which is a significant benefit to companies that use non-standard type vehicles. Due to current battery capacity technology, electric powered vehicles are currently suited for short trips, local deliveries, and frequent stop type businesses. Industries such as garbage pick-up and postal services are good candidates, and are currently using these types of vehicles. The ability to travel further between stops are forecasted in the coming years as charging will begin to populate exponentially across the US, some of which are specified as fast charging Stations US. Smith Electric Vehicles is one the largest manufactures of electric powered medium trucks, currently with a customer base that includes Frito Lay, Pepsi, and FedEx. Technological developments in areas of battery capacity continue to progress as additional investments are made through customer purchases or government incentive programs.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Currently batteries are available in several capacity ratings ranging from 36KWH to 120KWH capacity. Per Heavy Trucks? Smith Electric, the current mileage rating on a medium truck (26,000lbs GVW) with a maximum payload of 16,000 lbs. approximates to the following:

Electric Powered

Diesel Powered

120KWH = 75 mile range

300 – 400 miles per tank

Current cost per mile: $0.11

Current cost per mile: $1.27

Smith’s proprietary battery system has the unique capability of managing power using an integration scheme that allows the use of batteries of varying sizes from different manufacturers (Smith Electric)

Smith Drive utilizes a brushless permanent magnet motor, which increases motor efficiency (Smith Electric)

Smith Electric is currently in the process of opening another manufacturing plant in the New York area. This action was prompted by a recent announcement that a government voucher system will be established to aid manufacturers of electric powered trucks in New York.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks? The infrastructure expansion and potential increased company profitability cannot be realized without the following: 1) Demand for more efficient fuel 2) Support from large investors 3) Government incentives to prompt investment

Pike research states that “Hybrid medium and heavy duty trucks can expect to experience a compounded annual growth rate of 42% between 2011 and 2017”. 100,746 units will be purchased globally and 21,675 will be purchased within the US. A major concern surrounding electric powered vehicles is initial cost and how long the payback period will be. Trucks currently fueled by LNG or CNG are experiencing an average payback period of 12 months at $120K per year. This initially seems to be the more attractive option compared to electric powered vehicles; however Stephen Burns, CEO of AMP Electric Vehicles, states that all electric step vans “payback in 3-4 years” and “over a 10 year basis, they are at least $100,000 cheaper than the air polluting, air climate-changing diesels that fill the roads these days”. The initial acquisition costs of electric powered trucks are presently higher than diesel powered by $60K to $120K per vehicle. The government and other significant supporters are aware of this price disparity and realize that continued upfront costs to build a sound infrastructure will eventually drive manufacturing costs down and provide prices that are more competitive to consumers. Several government programs have been implemented to encourage investment in electric trucks. 1) The Chicago Department of Transportation has announced a $15 million incentive program to assist in the electrification of diesel truck fleets. 2) The Department of Energy is promoting the ideas of electrification by developing technology that can replace several mechanical parts in an engine to be powered by electricity. This effort alone results in on-road fuel savings of 2%, and idle fuels savings of 6%, with a total fuel cost savings of 8%. 3) The Department of Energy has also implemented the STEP (Shorepower Truck Electrification Project) that will add an additional 1,200 electrified parking spaces for long haul trucks and 50 truck stops around the country. In addition $10 million in rebate incentives will be offered to subsidize development costs. The EV (Electric Vehicle) charging stations that are being deployed will be fully upgradeable for future demands. (See Figure 4 & 5) – Deployed Charging Stations

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Graph 1 According to Graph 1 supplied by the US Department of Energy, electric fueling stations have increased market share compared to total fueling stations over the past couple years.

Graph 2 According to Graph 2 supplied by the US Department of Energy, truck stop electrification steadily expanded through 2009 and is currently growing at a rapid rate in 2012.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Graph 3 Graph 3 illustrates the population and concentration of electric stations around the US.

Graph 4 Graph 4 details current projects funded by The Department of Energy through the American Recovery and Reinvestment Act to accelerate the deployment of electric drive vehicles and charging equipment.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Table 1 Table 1 highlights that total electric fueling station count far exceeds other alternative fueling stations.

In summary, both the private and public sectors have realized the benefits that electric powered vehicles provide are at least enough to warrant an initial investment. The government has shown support by providing incentives and in some cases has placed orders for electric vehicle productions. The city of Chicago has recently placed an order for 20 fully electric trucks with a 5 year cost of $13.4 million. San Francisco currently operates 20 fully electric passenger shuttle buses that have resulted in a cost per mile reduction of $.70 per mile. By the end of 2012, Frito Lay will have deployed 275 electric trucks into the US. This not only shows the interest of large companies wanting to reduce cost, but 275 electric trucks eliminates 4.5 million pounds of greenhouse gases. With the rapid expansion and potential for lower operating costs the trucking industry will be able to shorten the return on investment period and provide the public with environmental benefits such as cleaner air.

Can the Current Electric Vehicle Infrastructure Impact the Current Fuel Choice for Medium & Heavy Trucks?

Electric Vehicles and Fuel Choice for Medium & Heavy Trucks  

Learn how fleet managers can evaluate the impact of electric vehicle infrastructure and fuel choice for their medium & heavy truck fleets.

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