“Electric vehicles are expected to play a significant role in enabling companies to decarbonize their commercial fleets and reduce emissions at a competitive cost,” the report said. “According to International Energy Agency projections, electric vehicles will account for almost 100% of commercial vehicle sales by 2050 in the zero scenario – compared to just 0.1% in 2020.”
According to experts from Deloitte, it is important for organizations that want to reduce their emissions to move quickly when it comes to electrification. They believe that operators already working to electrify their fleets are better positioned to gain an important competitive advantage – and greater market share – as their business customers increasingly switch to more carb-efficient commercial transport companies to reduce their emissions Scope 3.
The shift to electric vehicles is also seen as a way for companies to hedge against fluctuating gas and diesel prices, especially given the impacts of geopolitical events such as the war in Ukraine.
Also, electricity is cheaper than diesel per gigajoule of energy in most of Canada, except for Ontario, New Brunswick, Nova Scotia and Prince Edward Island.
Electric vehicles’ higher energy efficiency means they should be much cheaper to operate, even in jurisdictions with high electricity prices like Ontario or low fuel prices like Alberta.
Carbon tax
The savings associated with electrification are also linked to the fact that Canada’s carbon tax is expected to continue to rise this decade, from $50 per tonne of CO.2eu in 2022 to 170 dollars per ton by 2030 (from 13 to 46 cents per liter). This means that fuel prices are expected to rise faster than electricity prices over the same period.
“Organizations working to transform their fleet’s energy sources today will minimize the disruptive impacts of these regulatory changes on their operations for years to come,” the filing said.
The authors of the report recognize that the transformation associated with electrification involves significant capital investment in vehicles and charging infrastructure. However, they recommend that operators take advantage of the $3 billion in EV grants and incentives currently offered by the Canadian federal and provincial governments, especially considering that these grants and incentives are time-limited, expire in 2027, and limited.
“Those who wait may find that funds are exhausted, leaving them to bear the full cost of their electrification efforts,” the filing said. “Early action also helps ensure that partnerships can be established with electric vehicle manufacturers to provide the vehicles and infrastructure needed at a time when demand for electric vehicles outstrips supply. In addition, first movers can partner early with local utility companies to obtain additional power that may be required for on-site charging infrastructure.”
Maintenance
In addition to considering charging infrastructure, rethinking and redesigning fleet operations, routing and networks to take into account things like charging times and how extreme temperatures affect the performance and durability of EV batteries, Deloitte suggests thinking about the cost of running electric vehicles.
“EVs that require larger batteries to move large loads or travel longer distances on a single charge cost significantly more than ICE vehicles; currently, a Class 8 battery electric truck can be up to four times more expensive than its diesel equivalent,” the filing said. However, “as battery and electric technology costs are expected to fall, most commercial Class 8 EVs are likely to reach total total value price parity by 2030.”
The report states that heavy industries engaged in electrification should also note that the maintenance costs of EV trucks are 30% to 40% lower than those of traditional trucks.
“Maintenance costs for EVs are lower than those for internal combustion engine (ICE) vehicles, helped by the fact that an EV drive has about 20 moving parts – compared to more than 2,000 moving parts in a typical ICE drive,” the document points out. “The total cost of ownership (TCO) for some EVs is already lower than ICEs.”
Finally, the market analyst believes that technological improvements should contribute to lower capital costs and TCO over time, especially considering that battery prices have steadily declined as manufacturing processes have improved and new battery chemistries have been identified.
“According to BloombergNEF, average battery prices could fall to $100/kWh by 2024, which would put the TCO of many EV models on par with their ICE equivalents,” the report said. “Additionally, improvements in battery energy density mean that new EVs will need less battery power to travel the same distance as older EVs – meaning fewer batteries and lower vehicle costs.”
