In November, a group of 70 U.S. utilities announced a major commitment to buying plug-in vehicles (PEVs), an initiative that could have a major impact on the plug-in truck market in the United States. At a White House ceremony, a group of investor-owned utility executives committed to spending 5% of their annual fleet budgets on PEVs. This reportedly will total around $50 million annually spent on PEVs.
It’s no surprise that utilities support the use of PEVs in their fleets, since it allows them to shift fuel budgets from petroleum to their own power. But the reality of utility adoption of PEVs is that, while a handful of very forward-looking utilities, such as Pacific Gas & Electric and Florida Power & Light, have been fairly aggressive about integrating PEVs into their fleets, many others have tried one or two or have been looking to see the results of trials from the first movers.
Trucks, Not Cars
With this joint commitment, utilities can have a much bigger impact on the U.S. market for PEVs. But the best way to spend the money to really move the market for PEVs forward will be to spend it on trucks, not on passenger cars. Passenger cars offer more bang for the buck, and create fewer headaches since passenger car PEVs have already been proven in the consumer market. But for that reason, there is considerably less need for utility purchases to push the market. $50 million would buy around 1,700 Nissan LEAFs, for example. That is less than 2.0% of the total PEVs that Navigant Research projects to be sold in the United States in 2014 in its report, Electric Vehicle Market Forecasts.
If utilities invest in electric trucks, they could have a much bigger impact. Plug-in trucks are still in the pilot, demonstration or very early commercial stage, as discussed in Navigant Research’s report, Hybrid and Electric Trucks. This market suffers from low overall volumes and a splintered market, with many small niches to fill, including urban delivery vans, bucket trucks, service vehicles, and suburban or long-distance delivery. One reason so many e-truck companies come and go is the challenge of achieving sufficient volume to bring down costs through economies of scale. If utilities team up to place larger orders for plug-in trucks, they can have a real impact on the market.
For example, $50 million could buy around 250 plug-in bucket trucks with electric power takeoff, one of the more promising applications for plug-in trucks. While that number may seem small, companies targeting this space are currently seeing orders in the tens – and these are still largely supported by government funding. Whatever the application, a combined effort to place larger orders for plug-in trucks could have a major impact on this still-struggling market – and could pay off for utilities that will benefit from using more fuel efficient trucks should this market succeed.
Tags: Clean Transportation, E-Trucks, Electric Vehicles, Smart Transportation Program, Utility Innovations
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