EY: HOW TO PREPARE FOR THE RISE OF EVs
Building the fleets of the future: how to prepare for the rise of EVs
By: Branson Smith, Senior Manager, Ernst & Young LLP branson.smith@ey.com
In some shape or form, you’ve likely heard the following statement as it relates to environmental sustainability: “Electric vehicles are the future!” Indeed, with the recent uptick of electric vehicle (EV) pioneers and an increasing focus on electrification from legacy manufacturers, there are now two million EVs in the US — with EY estimates forecasting that in the US, annual sales of EVs are expected to surpass other powertrains by 2036 and there could be as many as 165 million EVs in operation by 2050. Continued proliferation of EV adoption, no doubt, will be significant, especially with the adoption of electrified fleets expected to ramp up faster than personal EVs. To date, much of the conversation on EVs has centered around personal use. However, the pandemic has spotlighted the tremendous opportunity in transitioning professional fleet vehicles to renewable energy — and executives are beginning to take notice. For many suppliers, they also beg the question: what kind of EVs are being or will be purchased? What purpose do they serve now and later, and, perhaps most importantly, who’s buying?
Fleets are ideally suited for transition to EVs u u u
Largely predictable journeys Known daily mileages Ease of smart charging
With nearly 15 million EVs expected to be part of corporate fleets in the US by 2040, it’s clear that EVs will soon become table stakes for companies looking to increase efficiency, lower operational costs, meet ESG targets and generally reduce their environmental impact. EV fleets will transform the automobile industry completely, and suppliers must be ready to maintain growth in today’s current environment, yet also capitalize on these growing trends via a distinct aftermarket and service strategy to help companies build and service their “fleet of the future.”
As demand increases, suppliers must change their product development cycle Since the dawn of EVs, suppliers have traditionally based their product development cycle on the sales rate. This will need to change. In the wake of exponential increases in EV demand around the world, suppliers can no longer take a reactionary view to production and still be sustainable. As demand for traditional products is forecasted to wind down, and demand for EV products and services ramps up, suppliers must embrace a clear, multipronged product development strategy. It will be imperative to take a proactive approach to rapidly evolving EV requirements while still actively managing legacy service businesses. With EV fleet sales quadrupling from 2014 to 2018 alone, it’s time for suppliers to proactively prepare for the heightened interest in this critical area — building their inventory to not just meet but rather outpace current demand. That said, in parallel with an aging conventional (non-EV) vehicle pool, special attention needs to be brought to manage the profitable service business of the legacy vehicles for many years to come.
With the rise of e-commerce, delivery systems will change
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Penalties for ICE vehicles entering low-emission zones Favorable taxation
8 │ OESA News - 2021 Second Quarter
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Bulk purchasing power High daily mileages = operational cost savings
According to the Institute of Transportation Studies at the University of California, Davis, today, the average EV can only travel 250 miles1, which somewhat limits their capacity for long-distance transportation. However, EVs have shown great promise for companies conducting “last-mile deliveries,” as these vehicles are typically used on a standard route and stored at a depot overnight,
