Alternative Fuel: Electric 101

Overview

Electricity was officially declared a fuel in the Energy Policy Act of 1992. Electricity can be produced from the following sources: oil, coal, nuclear energy, hydropower, natural gas, wind energy, solar energy, and stored hydrogen. It can be used to power battery electric vehicles, often referred to as BEVs. Battery electric vehicles use electricity stored in a battery pack to power an electric motor and turn the wheels. Batteries are recharged using grid electricity, either from a wall socket or a dedicated charging unit. 

Fleet benefits

Battery electric vehicles are classified as zero emission vehicles (ZEVs) because they feature zero tailpipe emissions, leading to significant air quality improvement in areas where these vehicles are used.  As companies search for transportation-related emission reductions in either scope 1 or scope 3 categories, electric vehicles offer a strong environmental case for change. Further, battery electric vehicles are extremely quiet, reducing noise pollution for the communities in which they operate.

From a usability perspective, battery electric vehicles feature the instant torque and horsepower capabilities that many commercial vehicle operators dream of. If used in heavy start/stop applications, electric vehicles utilize regenerative braking, further extending battery range. Operators also appreciate the minimal vehicle vibration in comparison to their experience with diesel equivalents. 

Economically, it’s believed that battery electric vehicles will have a lower total cost of ownership as compared to other fuels, due to low energy costs, but this case is still yet to be determined due to the newness of technology. To support an unknown total cost of ownership, fleets can use government funding programs to offset higher initial technology purchases and infrastructure investments.

• The federal Renewable Fuel Standard, California’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program, were all created to expand clean fuel solutions and reduce transportation-related emissions, which for the third year is the largest cause of poor air quality. As these programs expand, electric vehicles could assume a larger portion of potential clean fuel credits, for both electricity development and use.

• Another worthy comment relative to economics is that of battery costs. Batteries remain the single most expensive component of commercial battery electric vehicles. Over the past 8 years battery costs have fallen 85% from 2010-2018, with anticipation of further decline. Some experts argue that as demand for batteries rise and raw material scarcity increases, costs will also trend upward. This is a valid concern we’ll continue to monitor. 

Fleet considerations

Aside from the many benefits battery electric vehicles offer, key considerations remain. 

• As noted above, battery electric vehicles offer zero tailpipe emissions, which is great for local air quality. However, the consideration lies in electricity generation. Utilities are starting exploration and integration of renewable sources to produce electricity, but many aren’t there yet. Not to imply utilities will not shift from coal-produced electricity to renewables, rather that capital investment for the most part, hasn’t yet been enough to drive significant change. As you evaluate emission savings battery electric vehicles can bring to your fleet, consider the source of electricity and evaluate total lifecycle emissions for a true comparison. 

• Mentioned earlier is the topic of cost. Electric vehicles, regardless of vehicle class, are significantly more costly than other technologies. Some of this incremental cost will be offset by lower energy pricing in the place of ongoing fuel. Further, maintenance costs are assumed to be lower – but most of the cost comparisons are based on assumptions, minimal real-life use or field testing. 

• Vehicle weight, driven largely by battery density, is a significant hurdle for commercial battery electric vehicles. Batteries are currently in a technological battle between less weight and more density/range. Currently, battery electric trucks further down the development path than Tesla weigh between 5,000 and 8,000 pounds more than a traditional class 8 diesel truck. Weight limitations could restrict where your fleet can operate. That is, until weight exemption policies are passed. But then – consider the impact a 25,000-pound vehicle will have to road conditions. 

• Another key consideration for battery electric vehicles is range. While a concern for many, supports the return-to-base model adopted by many electric fleets today. Still – as companies seek to determine their future of fuel strategy, range is a key consideration for electric. 

• Battery supply poses another consideration and is one of the more debatable subjects throughout the alternative fuel community. Cobalt, one of the main ingredients in lithium-ion batteries, is derived primarily from Congo – known for its political and social instability. Congo represents over 60% of cobalt production and 50% of all reserves. They have also been guilty of using child labor during cobalt extraction. As companies seek to use alternative fuel as a sustainability tactic, they must also factor in the societal impact of battery production.
  • It’s expected that between 2016 and 2025, demand for cobalt will double. The growth in demand for lithium-ion batteries strains cobalt supply, causing researchers to look for what’s “next” in battery technology. Some say it’s a challenge and others feel it is a non-issue. To mitigate a risk in supply, researchers are working to meet the Department of Energy’s goal to reduce or eliminate critical material battery dependence by September 2022. Several potential solutions are being worked on, with solid state batteries thought of as the “holy grail” solution. Despite this, a solution remains about 10 years out from commercialization. 

• Infrastructure is the next topic of concern, specifically accessibility, cost and grid capacity. Very few fast charging systems are available today and for those that are, plug-in receptacles aren’t standardized, causing chaos as fleets grow and trial different vehicle brands. Then, the debate of cost arises. For fast-charger ports, Harvard University estimates these ports can range anywhere from $40,000 – 60,000 depending on existing grid infrastructure. Other reports estimate costs to range from $50,000 – $100,000. Note that these costs don’t factor in any facility upgrades, such as transformers, to produce additional power. 
  • Regardless of cost, the next challenge related to infrastructure is grid capacity. Utilities will be challenged to deliver enough supply to meet peak hours of demand. Utility upgrades can take a year or more, depending on region and workload. For companies choosing to integrate some form of electric vehicles into their operations, the sooner conversations with local utilities begin, the better.

Bottom line

Battery electric vehicles are consuming headlines nationwide, from passenger to commercial vehicle applications. For commercial vehicles that have return-to-base routes of < ~140 miles, battery electric vehicles present a strong value proposition. Emission reductions for local communities immediately improve and fleets typically qualify for government incentive programs and financial credits. However, commercial battery electric vehicles have yet to prove themselves from a long-term technological viability and cost of ownership perspective. Also, the true environmental impact for each situation should be carefully considered to evaluate upstream emissions as well as emissions during use.