by Jay Collins
Worldwide, electric vehicles (EVs) are in higher demand than ever before. Electrek’s Michelle Lewis reported in May that 52% of consumers worldwide seek out EVs, according to the latest EV Mobility Consumer Index (MCI), a spike from 30% just two years ago. In America, consumers’ increasing appetite for electric vehicles (EVs) will soon be heightened even further by new legislation introduced this summer that will add incentives such as vehicle credits and fiscal support for a broad expansion of charging stations. Bloomberg NEF projects that plug-in vehicle sales will rise from 6.6 million in 2021 to 20.6 million in 2025. I recently met with Caroline Falls of Fleet Auto News in a podcast discussion about the rise in EV adoption, the new US legislation, and what the future looks like for EVs.
How does this new EV legislation help fleet managers?
Caroline and I met just days after new legislation passed that’s expected to propel consumers towards EVs in the US. In mid-August, President Joe Biden signed new US climate legislation (IRA) that provides substantial tax breaks for electric vehicles and new chargers. The legislation produced an ongoing flurry of optimism and excitement at WEX, and in the automotive industry.
In the commercial space, WEX’s conversations with customers about EVs have often reflected a desire to initiate more sustainable business practices. WEX has recently seen an uptick in customer interest in converting to EVs based on total cost of ownership. Total cost of ownership (TCO) is the purchase price of an asset plus the costs of operation. The August EV legislation responds to two key challenges consumers have been facing with EV adoption: the cost of the vehicle and the expansion of the charging network.
What have we learned in the early phases of EV adoption?
If the Biden administration achieves their goal, half of the American auto vehicles produced by 2030 will be electric. The initial wave of fleet EV purchases since electric commercial vehicles were introduced has given WEX insight into how best to plan for the introduction and migration of EVs into a fleet. WEX has learned what questions to ask, and when to ask them, which positions the company to best help its customers enjoy the benefits of the conversion without growing pains.
WEX believes a bad first experience with EVs will impact adoption, and a bad ongoing experience with EVs will impact its customers’ businesses. We won’t let that happen. WEX is working to help its customers convert the right vehicles at the right time to get the best result. This new US legislation will broaden the advantages to converting to EVs, whether it be for reasons of sustainability, total cost of ownership, or other business reasons.
How can companies strategize about the best approach to converting to EVs?
Strategizing over how to approach EVs– which vehicles to convert, how many at once, when to start conversion, if conversion makes sense for a particular business – is one in which many fleet managers have been working to develop a sophisticated understanding. WEX has developed a few big themes to help its customers best strategize on their approach:
“Look before you leap”
- to help customers convert the right vehicles at the right time.
“Make it simple”
- to ensure that EVs are as ubiquitous as internal combustion fueling.
“Measure and control”
- to ensure the reporting and transaction control needs for EVs are being met the way they are in the fueling space today.
The first theme, “Look before you leap,” came from WEX’s initial experiences working with businesses that had purchased EVs. Many of those early adopters jumped in before thinking through the use case(s). WEX looked at the challenges those customers faced and built a comprehensive question set to work with customers who’d not yet jumped into EV ownership.
WEX’s customer base is vast in its scope, giving WEX great insight into what companies of all shapes and sizes are grappling with when approaching EV adoption. This breadth of use cases is being used to help all WEX customers learn from one another.
What kind of credits are included in the new EV legislation?
The legislation, which becomes effective at the end of this year, contains substantial credits for EV consumers. For example, there’s a clean commercial vehicle credit worth up to $40,000 per new commercial electric vehicle, and a refueling credit worth as much as $100,000 per charger. There are also credits for buyers of used EVs. These incentives make electrifying a fleet in the US more affordable than ever.
How is the new legislative policy impacting overall EV adoption?
The EV market has experienced dramatic growth over the past few years, with registrations increasing by 60 percent during the first few months of 2022 alone. This new legislative policy can only serve to increase that drive to EV adoption. For those already focused on sustainability, the legislation will further support a business’s decisions going forward, and will make it easier to execute on existing sustainability goals, especially due to the charging credits included in the bill. The greatest impact WEX is expecting to see from the new legislation will be with fleets concerned with total cost of ownership: this legislation tips the scales in favor of at least trying an EV or two as part of a vehicle replacement plan.
What is the biggest foreseeable hurdle with US EV adoption?
Demand for electric vehicles will likely be greater than supply for the foreseeable future but that probably won’t be the biggest adoption hurdle. The most pressing issue remains the speed with which companies can build charging stations to meet consumer and business needs. More EVs on the road will mean a higher demand for charging areas across the country. Contractors will be racing to build charging stations to allow for speedy and efficient service.
How will fuel tracking tools change with EV adoption?
The shift from pumping traditional fuel to charging an electric vehicle drives a need for a new type of tracking: one that allows fleet managers to account for charging costs from various public and private chargers. WEX has solutions in place today that allow customers to pay for public charging using their existing WEX account. The payment process is only one part of the charging experience, however, and WEX is evolving its solution set to meet the growing needs of its customer base by providing a seamless overall mixed fleet management experience.
What are potential EV charging challenges for fleet managers?
Fleet managers will need to change some of the ways they oversee their fleet of vehicles with the introduction of EVs. One question for fleet companies is how to avoid the productivity impact of drivers sitting idle waiting for their vehicle to charge. Managers will want to have a well-developed charging plan for their drivers. Another question: how will expense reporting change with the introduction of at-home charging which will likely become a part of the EV experience? To avoid regression to outmoded and time-consuming expense reporting, having an integrated reporting system under one technology will save time and money over time. A third challenge for fleet managers will be energy management. Effective energy management solutions will be crucial as EVs are introduced into a business’ fleet of vehicles.
There is a lot to digest with this move to electric vehicles. WEX’s goal has been to create the integrated, connected, and seamless experience for EVs that mirrors the traditional fueling experience today. Helping its customers manage and control fuel costs is what WEX has been doing for four decades, which gives it the tools and expertise to translate that into the most efficient and effective EV adoption path for its customers.
What about EV data collection for things like emissions reporting?
In the United States, fleets are now grappling with reporting on vehicle emissions, and accounting for a company’s overall impact on the environment. WEX has a service to help fleets collect data to account for their emissions-reporting obligations. With insights into both sides of a mixed fleet equation, not only will WEX help fleets measure the impact of reduced emissions for conversion but it will be able to help customers determine which vehicles to convert next based on the level of emissions per vehicle in a fleet. This is a meaningful analysis to undergo both for purposes of sustainability and for total cost.
Customers rely on the data WEX provides today for their business - the need only increases and gets more complex with EVs. Most businesses need data to report on the progress of their sustainability efforts for investors, consumers, board members, and employees, and WEX provides a single, comprehensive reporting of that data.
Are there sophisticated alternatives to leasing or buying EV fleet vehicles?
The current consumer focus is on leasing and purchasing electric vehicles: WEX hasn’t yet seen a big shift in subscription to share-car setups like Zipcar in the EV space here in the US. Internationally, there’s a much broader adoption of these types of services. Here in the US, there is chatter in the marketplace about subscription offers and car-as-a-service offers but those EV options are more of a consumer interest than a commercial one at this time. If availability to purchase or lease EVs becomes a significant issue, businesses may be driven to think more about using the subscription or car-as-a-service model.
The EV and mobility transition is changing fleet management, requiring a different skill set, and attracting a new cohort of people
President Biden’s plan calls for construction of a nationwide network of charging stations. Energy management and charging strategies will become a big part of a fleet manager’s job as we see increasing numbers of EVs on the road. For example, in the case where fleets use a depot charging solution, the line between facilities and fleet manager will blur as it relates to the energy required and how to manage it. Solar panels and battery banks will need to be installed and managed. The same technical capacity that was used to figure out fuel efficiency and fueling solutions will be needed to understand energy, peak rates, demand charges, and so much more.
The EV transition is underway - don’t miss out!
According to a recent article by New York Times reporters Jack Ewing and Neal E. Boudette, part of what’s driving the legislative push to EV is that the United States is competing on a geopolitical level with other nation states to develop an emerging technology. The legislation is part of an effort “to drive the electric vehicle future forward, outcompete China and tackle the climate crisis,” according to a White House fact sheet. A comprehensive adoption of EVs is essential to America’s continued position as a world leader in both global stewardship and technology.
More and more US fleets are setting sustainability goals, transitioning their fleets, and even adopting new mobility measures. Now is the time to partner with a company like WEX and drive your sustainability strategy forward in a smart, efficient, and timely way.
WEX is excited to be at the forefront of this new era of EV adoption and ready to lead the charge as we develop better ways for our customers to streamline and simplify their business operations.
Explore further with our "EV 101" Infographic.
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