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Commercial fleets poised to bolster electric vehicle market

July 1, 2021
By Jayson Bussa

As the consumer vehicle market gradually transitions to electrified models, automotive experts say the commercial fleet segment has the potential to transform the sector more rapidly.

Corporations and municipalities are increasingly considering electrification as they begin to rethink the fuels for their fleets.  Whether fleet operators are motivated by the financial bottom line, anticipated emission mandates or public opinion, industry analysts suggest that mass adoption by commercial fleets is on the near horizon.

“When you look at commercial fleets and public fleets, there is no question that electrification — or some form of electrification, not necessarily full electric vehicle — is definitely where everyone is looking for a variety of reasons,” said Glenn Stevens, executive director of statewide auto industry association MichAuto.

According to the federal Bureau of Transportation Statistics, plug-in hybrids and all-electric vehicles accounted for just 2.1 percent of the light vehicle market in 2019. However, experts say commercial fleet adoption could accelerate the slow-moving consumer market.

A push to electrify

According to Stevens, the widespread adoption of electric or hybrid commercial fleet vehicles can be far less cumbersome compared to consumer vehicles.

For example, many fleet vehicles travel along fixed or predictable routes and return to a specific depot or location to charge. This means a fleet manager doesn’t have to rely on the availability of consumer charging stations. 

Fleet vehicles also are used frequently, which helps a business or municipality recoup upfront costs relatively quickly through savings on fuel, plus electric vehicles cost less to maintain compared to internal combustion models. This makes shuttle buses, delivery vans, box trucks and similar light-duty vehicles good candidates for electrification, experts say.

In addition to the fuel saving benefits of on-vehicle technology, hybrid and electric vehicles are outfitted with advanced telematics, which can provide valuable information for fleet managers.

Novi-based The Shyft Group Inc., a manufacturer formerly known as Spartan Motors that maintains a large presence in Charlotte, saw opportunity in the electric vehicle space, specifically for Class 3 light-duty vehicles such as mini-buses, RVs, walk-in vans and city delivery vehicles.

The specialty vehicle manufacturer announced earlier this month that it will bring to market an all-electric, purpose-built Class 3 chassis platform designed to serve a wide array of medium-duty truck markets, from last-mile parcel delivery fleets to work trucks, passenger buses and recreational vehicles.

Shyft Group President and CEO Daryl Adams told MiBiz that two of the company’s larger clients lobbied it to fill a void of quality products in the Class 3 space. The Shyft Group’s executive team saw opportunity.

The Shyft Group is currently searching for a location to produce the chassis and is poised for large-scale production in late 2023, Adams said.

As a company that has built more than 2,500 alternative propulsion vehicles in its history, Shyft executives foresee an era when electrified Class 3 vehicles will be crucial for operations, Adams said.

“We’re seeing it in Europe, where a lot of the cities are saying you must be green to deliver inside the city limits,” Adams said. “These would be perfect to do some of the delivery in a city that is mandating something like that.”

The Shyft Group is a leader in the North American market in purpose-built delivery vehicle solutions, a $3.2 billion industry dominated by parcel delivery. This segment of The Shyft Group generated $491 million in sales for the company in 2020.

A third-party study commissioned by The Shyft Group showed that the country’s fleet of walk-in and cargo vans totaled some 150,000 vehicles in 2015 and is expected to grow to 450,000 by 2025, partly fueled by a booming e-commerce industry that was accelerated two or three years by the COVID-19 pandemic.

“From a delivery standpoint, or anyone that leaves a location and comes back to that exact same location on a daily basis, I think electric vehicles will be for them as the adoption rate continues to increase over the years,” Adams said.

Boston-based XL Fleet Corp. is another company looking to capitalize on the growing demand for electrified fleet vehicles. XL Fleet recently opened a 24,655-square-foot facility in Wixom — its fourth facility nationwide — for product research and development programs. The site has technology capabilities for prototyping, controls development and electrical and systems engineering.

XL Fleet has developed kits to retrofit existing vehicles with plug-in hybrid technology. This allows fleet managers to reap similar benefits without going fully electric.

“The industry wants to push toward an all-electric landscape, but there are a number of significant challenges that still exist today and they existed 10 years ago when we founded the company,” said Eric Foellmer, director of marketing for XL Fleet.

Foellmer pointed to the lack of widespread infrastructure, the scarcity of electric vehicles and the fact that fully electric vehicles may never be ideal for certain fleet applications.

However, when clean energy mandates come from states, municipalities or within a company itself, many clients are leaning on XL Fleet’s hybrid solution as more of a necessity than a cost-saving luxury, Foellmer said.

“We hear from customers much more frequently now that say, ‘I have a sustainable mandate. What do you have that can help me meet that right away?’” compared to asking about system costs and a return on investment, he said. “It’s a much different conversation now than it used to be.”

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