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Greening the fleet

fleet
Illustration by Jesse Lefkowitz

Office-products giant Staples has 53 electric trucks in its fleet doing direct deliveries to customers. Its experience with these zero-emission vehicles closely mirrors the progress of electric vehicles (EVs) and other alternative-fuel vehicles in corporate and government fleets.

The 22,000-pound Smith Newton trucks used by Staples cost 2.5 times more than an equivalent diesel-fuelled model. The trucks, built by Smith Electric Vehicles, represent just a tiny fraction of the 1,700-truck fleet that runs direct-delivery routes across the United States and Canada.

The trucks can only go on routes that are limited to 70 miles per day. They’re not currently used in Canada, where it’s too cold, or in parts of the U.S. south where temperatures climb too high. And Staples only acquired them because government funding covered half to two-thirds of their upfront cost.

Yet the company is happy with their performance. Maintenance costs have been cut in half and annual fuel expenses are one-fifth of what’s paid for the diesels.

“We really endorse the technology, and we’ll use more of it,” says Mike Payette, Staples’ director of fleet equipment. In fact, five additional Newtons – more advanced models – are on order. However, adds Payette, “it’s not the sole answer.”

Fleets, which comprise about half the car and truck market, are critical to the success of alternative-fuel vehicles. But while numbers are expanding, they’re still minuscule and there are tough obstacles to making them mainstream.

Last year, fleets acquired 20,000 vehicles powered by natural gas, as well as 18,300 conventional hybrids, 7,000 plug-in hybrids and 2,300 pure-electrics – barely noticeable among the nearly three million units they acquired, according to industry analyst Dave Hurst of Pike Research. By 2020, he says, the electrified-vehicle total will climb to 108,000 – “still a tiny fragment” of a market expected to top 3.7 million.

Even within the 2012 “Top 50 Green Fleets” compiled by Automotive Fleet, electrified vehicles – including conventional hybrids – account for less than 3 per cent of the total. Johnson and Johnson Services led with nearly 2,300 hybrids and EVs among its 8,330 vehicles, followed by PepsiCo and AT&T.

“Adaptation is slow. Fleet managers are inherently skeptical,” says Roger Smith, executive director of Fleet Challenge, a non-profit based in Ontario that promotes alternative-fuel vehicles.

Throughout last year, Smith’s group coordinated a test in which Toronto municipal employees and customers from AutoShare, a car-sharing service in the city, drove battery-powered and internal-combustion vehicles equipped with data loggers on their regular rounds to determine whether EVs make sense for government and corporate fleets. The result, similar to Staples’ experience, was “pretty compelling,” Smith says. “The business case is clearly there for fleet use.”

With fewer repairs and lower fuel expenses than the standard Ford Focus used for comparison, the electric cars – Nissan Leafs and Mitsubishi i-MiEVs – would recoup their extra purchase cost, including government incentives, in less than four years. The extra payback time for a battery-powered Ford Transit Connect, compared with a regular Ford cargo van, was found to be 5.9 years.

“There is a place within most fleets where the economics do work,” John Schaaf, vice-president of market development with Johnson Controls, said in a recent online discussion hosted by Ernst & Young. “It is very much a business decision.”

What’s in the way? For a start, budgets rarely permit the higher upfront cost of EVs and other alternatives, despite the government support and lower lifetime costs. As well, alternatives complicate fleet management, requiring assessments of range, purchase versus lifetime costs, access to fuel, and which technology makes most sense for a particular use.

“It takes effort to determine what vehicle is best suited to a duty cycle and then ensure it’s used – since without use, there’s no benefit,” says Eric Mallia of FleetCarma, a company based in Waterloo, Ontario, which helps managers decide which technology best meets their needs.

With so much at stake, in investments and performance, the private sector is letting government fleets show the way, Mallia says. The public sector, with mandates to cut costs and emissions, as well as stimulate new industries, “is happy to be leading by example.” Even so, it’s “still at the stage of trying it out.”

At the present state of battery technology, EVs thrive where drivers follow regular daily routes under 80 miles or so and return vehicles to a base for overnight recharging. Package delivery companies, such as Staples, as well as some salespeople, contractors, gas and electric service crews, and municipal works supervisors fit this profile.

The growing interest in electric propulsion for package delivery has sparked development of vehicles for such uses. Smith Electric’s Newton is most popular among medium-weight trucks. Customers include PepsiCo’s Frito-Lay North America division, which operates 176 as part of a government-supported demonstration project. The change cuts annual fuel consumption by 500,000 gallons, says Mike O’Connell, director of fleet capability for Frito-Lay.

Also in the delivery-vehicle mix are Nissan’s e-NV200 light-duty van, based on the design of its Leaf model, and Ford’s electric Transit Connect. Amp Electric converts diesel medium-duty vans to electric power, and says 100,000 U.S. vehicles are candidates.

Car-sharing companies such as Zipcar and Car2go seem suited to EVs since most trips are relatively short. All have some in their stables and are investigating “a bigger commitment,” says Mallia.

However, the companies can’t afford to idle vehicles for hours of recharging. And while an internal-combustion car is ready for the next customer almost immediately, the changeover time with EVs varies with how much the previous driver depleted the battery. With those constraints, car-sharing operators favour plug-in hybrids, which cut fuel costs by up to half over equivalent gasoline-burning versions.

Corporate fleets face range anxiety and resistance to change as well as more subtle complications: There’s no corporate credit card to reimburse employees who recharge EVs at home. And where company cars are a taxable benefit, the higher cost of EVs increases employees’ tax burden.

Those are among the reasons General Electric will reduce the 25,000 EVs it planned to add to the 1.43 million vehicles it operates for its employees and lease customers. “There are so many technologies out there and our customers need a variety,” Deb Frodl, the fleet division’s chief strategy officer, explained in a January wire-service interview. “We’re not picking winners and losers.”

For long-distance fleets, once-promising bio-diesel has fallen by the wayside, but natural gas is increasingly popular.

Waste hauler Waste Management began running heavy-duty natural-gas trucks in the early 1990s, and now has more than 2,000 – the most, it says, in any U.S. fleet. It plans to convert all of its 18,000 collection vehicles from diesel.

The switch cuts maintenance and fuel costs as well as greenhouse gas emissions, says spokesperson Jennifer Andrews. By 2020, Waste Management will have saved $1 billion in operating costs, 350 million gallons of fuel and 3.5 million tonnes of emissions.

Regulations to improve diesel’s efficiency and reduce emissions, which raise the trucks’ price, weight and maintenance costs, amplify the advantages of natural gas, Andrews adds.

Beyond electrification and low-carbon fuelling alternatives, fleet managers, assisted by software and GPS technology, are also finding savings by making sure vehicles are used in the most efficient way possible. With the ability to track vehicles – including where they go and how fast they get there – companies are optimizing delivery routes and discouraging bad driving habits. “You get more miles per gallon with better driver behaviour,” says Chris Ransom of Networkfleet, which installs data loggers on vehicles.

Ransom says fuel savings from efficient driving are routinely 10 to 20 per cent, and in some cases can cut fuel costs in half.

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