Navigant Research Blog

Transit Agencies Are Positioned to Shape the Commercial EV Market

— July 5, 2018

Commercial EVs (CEVs) have received a lot of attention recently and are a topic of great interest for many fleet owners and managers who are looking to meet sustainability and emissions standards, as well as the reduced costs. Traditional truck manufacturers like Daimler and Navistar, and newcomers Tesla and Thor all have plans for commercial electric trucks. In addition, electric bus manufacturers such as Proterra, Volvo, and BYD are getting more and more new orders as the demand rises for cleaner, sustainable, and lower total cost of ownership transportation options.

CEVs face similar challenges of the passenger EV—the classic chicken and egg of whether vehicles or charging infrastructure will come first? To make the matter more complicated, charging infrastructure for CEVs will be critical for their use case. Since many CEVs will require substantially larger capacity battery packs, new charging infrastructure will be required to provide charging at significantly higher energy levels. The downtime spent charging must be minimized if CEVs are to be a viable alternative over their internal combustion engine counterparts. That being said, what might the future of CEV charging look like?

Charging Standards Key to Unlocking CEV Potential

The commercial vehicle market has lower production volumes than the consumer market. Because of this, proprietary charging infrastructure systems in use today may prove economically challenging for growing the market of CEVs. While proprietary charging standards like Tesla’s Supercharger network, which limits use to only Tesla vehicles, may be feasible, they are not desirable to anyone but the manufacturer. In addition, the use case for CEVs already faces an uphill battle to justify the costs for a higher capacity fast charging infrastructure for use by a vastly smaller quantity of vehicles—even more so if this fleet is divided by requiring different charging hardware.

It’s not hard to imagine a fleet owner evaluating the electric bus market and deciding they would rather wait rather than potentially buy new buses and charging infrastructure that may prove to be incompatible with future purchases. A unified charging standard will unite the overall fleet and strengthen the business case for all CEVs.

Transit Agencies Are Large Enough to Influence the Developing Market

Transit agencies find themselves with a unique opportunity. Having large fleet sizes and motivations to be some of the earliest adopters of CEVs, transit agencies can throw their weight around and direct the evolution of the CEV market through demand for industrywide charging standards.

Bus manufacturers are beginning to move in the right direction. Last year, Proterra announced that all new buses would use open standards moving forward—J3105 for overhead fast charging and CCS for depot charging. Other bus manufacturers have made similar announcements, with Volvo committing to OppCharge, the European alliance for standardized overhead charging.

Josipa Petrunic, CEO of the Canadian Urban Transit & Innovation Consortium (CUTRIC), highlighted the importance of charging standardization at the TU Detroit conference in early June, as well as CUTRIC’s projects to unite competing manufacturers for the success of the CEV market. As transit agencies develop strategies to electrify their fleets, they should be cognizant that they are shaping the future of CEVs. By demanding their new fleets and charging infrastructure be compatible across multiple manufacturers, agencies are protecting themselves from being abandoned by manufacturers leaving the market and insuring their products are more future-proof as technologies develop and charging capacity inevitably increases.


Sustainable Transportation and Smart Cities Working Hand in Hand

— June 26, 2018

On June 5, the German and American Chambers of Commerce, supported by the Federal Ministry for Economic Affairs and Energy, hosted the Smart Cities and Sustainable Transportation Systems Transatlantic Business Conference in Denver, Colorado. The conference brought together German urban transportation companies and was part of a larger trade mission of German energy efficiency innovators that also visited Chicago. The Denver metro area is of interest to the Chambers of Commerce because of an increase in transportation-related investment since Denver was named a finalist in the 2015 Smart Cities Challenge. Since the challenge, Denver and the state of Colorado have committed to pursuing EV production, charging infrastructure expansion, and automated vehicle use, making it an attractive location for German urban transportation businesses.

Denver and Dortmund

The interest from German companies in US smart city and transportation systems stems from Germany’s own experience and success with smart city projects. The country, with its 4 million miles of road network, stands out as leader in electric transportation and smart city initiatives. The city of Dortmund is currently implementing smart city programs which includes targeting air quality issues, e-mobility concepts, pedestrian accessibility, cycling and traffic safety, and mobility management projects. Dr. Jan Fritz Rettberg of TU Dortmund University discussed the project in detail on June 5, including the installation of an EV charging center in Dortmund powered by solar PV as a way to reduce air pollution and increase e-mobility. Dr. Rettberg also noted that the smart city initiative has several projects under planning such as developing new and priority bike routes, connecting transport modes, electrifying taxis, and reducing public transport rates.

Denver Smart Transportation Projects

Transportation Energy Lead for the City and County of Denver, Mike Salisbury, discussed the sustainable transportation projects Denver is pursuing in order to reach a greenhouse gas reduction of 80% by 2050. Denver’s Smart City Program focuses on accessible mobility, transportation electrification, and intelligent vehicles and transportation systems. As part of the intelligent transportation systems, the Advanced Transportation and Congestion Management Technologies Deployment Program (ATCMTD) is a federal grant aimed at deploying connected freight and fleet vehicles. The ATCMTD Program will implement technologies allowing vehicles to communicate with one another to increase safety and reduce costs for participating fleets. The transportation innovation in Denver and the state of Colorado as a whole makes Denver a prime target for solution-oriented smart city companies to implement their products.

Smart City Companies Expanding Their Markets

As part of the trade commission, companies that have provided solutions for German smart cities programs were present at the conference, and hopeful of expanding into the US smart city market. Colibri Energy GmbH, DataCollect Traffic Systems, eluminocity, ICE Gateway GmbH, MENTZ, and RTB showcased their smart city technologies and products including traffic light equipment, EV charging infrastructure, and traffic management systems.

Overall, at the conference, there was optimism that German and US companies would continue to work together in the future to promote sustainable transportation within the broader smart city sphere. The continued efforts of the German American Chambers of Commerce and other similar organizations point toward exciting collaboration possibilities.


E-Bike Sales Climbing in Major European Markets, US Lags Behind

— June 26, 2018

Increasing urbanization and the rising costs of personal vehicle ownership are creating opportunities for alternative mobility options. Electric bicycles (e-bikes) are uniquely positioned to be a primary benefactor of this trend since they are low in cost relative to cars, do not require licensing or the associated hassles of parking, and can take advantage of existing bicycling infrastructure.

The European Market Is Rapidly Expanding

Over the past 2 years, e-bikes sales have grown considerably across major markets in Europe as commuters ditch their cars for electrified two-wheelers. A combination of government policy, urbanization, improved product offerings, and expanded bicycling infrastructure has led to e-bikes regularly replacing bicycle purchases in Western Europe. E-bikes are evolving from a specialty commuting or recreation device to a standard bicycle form that is accessible to nearly all bike consumers.

E-Bike Unit Sales, Select European Markets: 2016-2017

(Source: Navigant Research, Bike Europe)

As shown in the table above, Germany continues to be the largest e-bike market in Europe. Navigant Research expects the country to top 1 million annual sales within the next 2-3 years. France achieved by far the highest year-over-year growth of the four countries. E-bikes sales expanded by a whopping 90% in the country in 2017, largely due to the government’s introduction of a €200 ($230) e-bike purchase subsidy. Italy’s e-bike sales surged 25% on the back of increased electric mountain bike sales (estimated to account for 65% of total e-bike sales in the country). Historically a laggard in the region, the UK saw solid growth of 22% for 2017 e-bike sales.

US Still Lags behind Europe, but Potential Remains

North America continues to trail Europe considerably in e-bike sales, largely due to lower gasoline prices and consumer awareness, combined with relatively poor bicycling infrastructure. Nevertheless, market conditions are improving, and the Light Electric Vehicle Association estimates that about 260,000 e-bikes were imported to the US in 2017—a modest gain (10%-15%) from 2016 import figures. Of course, imports are different than sales; after conducting interviews with the major e-bike manufacturers in the region, Navigant Research found that slightly over 150,000 e-bikes are expected to be sold in the US in 2016. For more information, reference Navigant Research’s 2Q 2016 Electric Bicycles report.

Lessons from across the Pond

The global e-bike market is expected to be a strong area for investment. The US still has substantial long-term potential due to its enormous bicycle market (roughly 16 million sold per year); however, the country’s current e-bike penetration rate of 1%-1.5% is quite low. There is much the US can learn from countries like Germany, where e-bikes already have a market share of roughly 20% of the total bicycle market. Much of Germany’s success can be attributed to the comprehensive and dedicated bicycling infrastructure in the country. For example, bicycle highways under construction in Germany will eventually span 62 miles of roadway, connecting 10 cities and 4 universities. It is estimated that this will remove 50,000 cars from the road every day. The highways in Germany are 4 meters (13 feet) wide, have several bike lanes, are well lit, and are cleared of snow in the winter. The construction of bicycle highways in North America would go a long way toward increased commuting by bike and e-bike sales. E-bikes help commuters travel longer distances and easily conquer hilly terrain, advantages that work in unison with expansions in bicycling infrastructure to help more commuters make the switch from cars to cycling.


The Case for Electrified Delivery Fleets

— May 17, 2018

With the ever-growing global economy comes larger delivery fleets on the road, in the air, and on the seas. Short delivery times are expected by customers, thanks to shipping programs like Amazon Prime, but with more transport comes more pollution. In 2016, transportation made up 28% of US greenhouse gas emissions, and every package delivered to our doorstep represents a slew of emissions scattered throughout the supply chain.

The Emissions Case

To tackle growing emissions from the transportation sector, we will need to do more than electrify just the light duty vehicle segment. Delivery fleets, in particular medium duty vehicle fleets, may offer an optimal solution to curb emissions in the near term. In fact, to reduce emissions, new delivery alternatives like last mile logistics are being piloted to eliminate the need for a delivery truck to make multiple visits before actually delivering a package. Among these are Amazon Key and other home access options. These programs, in addition to electrifying delivery fleets, will aid in emissions reduction.

Due to the current battery size of Class 3-6 all-electric vehicle options (roughly 100 miles in range, for now), delivery fleets that make frequent stops throughout the day are primed for electric adoption. Class 3-6, or medium duty, vehicles range from 10,001 to 26,000 pounds. The electric delivery vehicles could be used during the day and charged at night, with no interruption to their driving patterns. With nighttime charging comes the potential to use wind energy to charge the vehicles, further reducing the emissions from the transportation sector and integrating renewables.

Workhorse All-Electric Walk-in Delivery Van

(Source: Green Car Reports)

The Cost Case

While electrified delivery fleets have many benefits, the lower cost of operation and maintenance over time helps make the economic case for these vehicles. According to one study, the average cost of gasoline over 300,000 miles at $3.00/gallon comes out to $150,000, while driving 300,000 miles on $0.12/kWh electricity would cost only $42,000. Electric delivery fleets require no oil or fuel filter changes and require fewer maintenance hours off the road, meaning the vehicles would be more reliably utilized. These factors help offset the initial heightened purchase price of electric medium duty vehicles (compared to internal combustion engine vehicles) and receive a ROI more quickly.

The Supply Case

Electric medium duty vehicles are slowly entering the US market (with companies such as Workhorse, Chanje, and Motiv), but are more prevalent across Europe and China. Several recent announcements indicate a larger variety of medium duty vehicles in the US market in the next 5 years. For example, in January 2018, Volvo announced it will sell battery electric delivery trucks in North America in 2020, following introduction in Europe next year. Given that supply constraints currently play a role in market actors’ electrification decisions, the increased market activity will likely spur electrification. Stakeholders—most notably utility companies—can also play a role in incentivizing delivery fleet electrification through subsidized vehicle costs, charging infrastructure incentives, or partnering with OEMs to electrify their own fleets. Stakeholder incentivization could help grow the demand and supply sides of the market, leading to more electrified delivery options and fewer transportation sector emissions.


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