December 22, 2022

Preparing Electric Vehicle Fleets for the Rising Cost of Charging Equipment

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5 Min. Read

Inflation is causing many businesses to reassess their spending and plans. The desirable environmental benefits of fleet electrification now come with a higher price tag as the cost of materials and charging components continue to rise. This, coupled with industry supply chain concerns, can create a moment of hesitation as companies look towards a future with electric vehicle fleets and the necessary charging infrastructure to keep their fleet vehicles on the road. Electrifying your vehicle fleet will be challenging, but progress toward the further expansion of vehicles and their necessary components continues at a rapid pace.

The number of electric trucks for fleet use is growing considerably, alongside the demand. Many logistics firms have placed large orders for electric vehicles (EVs). However, vehicle manufacturers remain backlogged and the delivery dates for these highly-sought vehicles can take months. In the interim, demand is unlikely to slow despite the rising costs, as the value of these vehicles over their lifespan often outweighs their gas-powered counterparts, and the current incentives to make the switch add even more value to commercial EV fleets.

Supply chain concerns

Supply chain bottlenecks, particularly for EV battery parts, have been a cause for concern over the past several years. The demand for lithium-ion batteries is expected to increase tenfold by 2030. However, the raw materials needed to make these batteries are in limited supply. Furthermore, the costs for cobalt, lithium, nickel, and other raw materials doubled during the pandemic. The burgeoning demand for such materials could lead to volatility in EV pricing and force automakers to prioritize or limit select EV models. As a result, these transitioning fleets could potentially see delays (or price hikes) as they plan to expand or upgrade their vehicle fleet.

Widespread EV adoption has forced demand to grow in the non-residential EV charging services market. Some factors help keep the price of charging equipment down, such as the regulatory nature of the market, the scalability of cost as suppliers face greater demand and product consumption, and the need to remain competitive. Even so, the higher cost of materials also affects charging components, which means developing your electric fleet charging infrastructure could cost more in the near future.

Manufacturers responding

The 2022 Inflation Reduction Act laid down a challenge for manufacturers. The legislation added domestic production requirements to garner EV tax credits (such as battery sourcing and final assembly). Accordingly, vehicle makers are expanding U.S. production capabilities.

Major investments are being made to boost EV battery production in the U.S. New battery factories are being constructed to meet both accelerating demands and to satisfy the domestic manufacturing requirements so future buyers can capitalize on the EV and EV charging station tax credits.

American vehicle production is largely based in the South and Midwest. An estimated $40 billion is being spent on a new “Battery Belt” in those regions which may assist in keeping costs low through mass production and local shipping of the lithium-ion batteries. Since early 2021, over 15 new facilities or expansions were announced in the U.S. Fourteen of these plants expect to exceed 10 GWh in capacity, whereas earlier facilities historically produced less than 1 GWh.

Fleet planning and funding

Fleet managers need to make electrification plans that balance inflationary concerns, their budget, available incentives, and increasing demand. Besides the obvious environmental advantages, there is a strong business case for using an electric vehicle fleet. Accordingly, it is more important than ever to focus on ROI for future fleet additions and establish a charging infrastructure that will enhance the value of that fleet for years to come.

People cited the higher upfront price tag for EVs versus internal combustion engine vehicles and range concerns as top EV deterrents for many years, however, EVs require less maintenance, and “refueling” is less costly. Even now, there are many models of electric vehicles that cost less than the average gas-fueled vehicle being sold in the United States. Technology-based route planning helps make the most of your investment and installing a Level 2 EV charging station in your homes of your employees can further expand your business range. The telematics data will help you address EV ranges and route optimization concerns to efficiently develop efficient routes between delivery sites and available charging stations. This ultimately helps increase your ROI on an electric fleet.

With subsidies and incentives, fleet managers can offset the higher initial costs, for both the vehicle and charges at the worksite or residence for drivers. The National Electric Vehicle Infrastructure (NEVI) project is funding up to 80% of the costs in states to build a national charging infrastructure. Each state is rolling out programs and has committed to this national initiative of accessible EV charging. Even local governments and area utilities are offering incentives to encourage EV purchases and the installation of EV chargers. The U.S. Department of Energy’s Alternative Fuels Data Center has a database featuring many of the available incentives.

Charger considerations

When planning your fleet, it’s best to focus on the full scope of the project rather than only looking at the vehicles themselves. Planning the right charging infrastructure to support your business’s needs is vital to the operation of a successful electric fleet. For select fleets, particularly those in use during daily standard business hours, slower overnight charging makes sense. A vehicle fleet that drives longer routes or uses heavier vehicles requiring more powerful chargers needs additional consideration to ensure they are available when needed. Many businesses are seeking an ideal, scalable charging infrastructure that will suit their needs presently and in the future, as their business continues to expand. Other companies are grappling with the expense of adding high-speed stations in rural areas, including grid-independent solutions, to support their operations.

Transitioning your fleet is an investment in the future of your company that will require maintenance – for your chargers as well as your vehicles. NEVI requires that charging stations funded through their program have at least a 97% uptime. Efforts to thwart downtime will require effective supply chains, reliable maintenance efficiency, high connectivity, and potentially even cybersecurity.

Finding a trusted installer

Expert advice helps. You know your industry, and Qmerit knows electrification. We are accelerating the energy transition by making it easy for everyone to go electric through safe and reliable EV charger installations done by electricians with extensive training in electrification services. When you make the investment of electrifying your fleet, Qmerit is the trusted partner to ensure your installation is done right the first time.

For businesses, Qmerit simplifies the fleet transition by helping fleet managers overcome the complexities of installing EV charging stations for your vehicle fleet, whether at the worksite or @Home. We provide a budget-friendly, white-glove installation and integration. Top auto- and EVSE manufacturers, utilities, and businesses trust Qmerit for our vast experience in supplying top-quality service, helping control costs, and tracking every step of the process.

See how Qmerit’s expert team is ready to simplify your EV charging installation with guaranteed satisfaction and support. Contact us today for more information.

Author: Greg Sowder Greg Sowder President, Qmerit Network