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FLEET ELECTRIFICATION ROADMAP NOVEMBER 2010 Electrifi Cationcoalition.Org Electrifi DESIGN by MSDS | MSDS by DESIGN 202-461-2379 FLEET ELECTRIFICATION ROADMAP ROADMAP ELECTRIFICATION FLEET The Fleet Electrifi cation Roadmap is a comprehensive analysis of the state of transportation electrifi cation in the United States and the next steps needed to deliver on the potential of grid-enabled vehicles. The report explores the opportunities and challenges facing electrifi cation of commercial and government fl eets, identifi es economically attractive opportunities, and outlines a path to driving substantial fl eet demand for grid-enabled vehicles between 2010 and 2015. Fleet Electrifi cation Roadmap REVOLUTIONIZING TRANSPORTATION AND ACHIEVING ENERGY SECURITY Electrifi cation Coalition 1111 19th Street, NW Suite 406 Washington, DC 20036 TEL 202-461-2360 FAX 202-461-2379 Electrifi cationCoalition.org November 2010 NOVEMBER 2010 In partnership with and in consultation with DESIGN BY MSDS | www.MS-DS.COM Fleet Electrification Roadmap REVOLUTIONIZING TRANSPORTATION AND ACHIEVING ENERGY SECURITY November 2010 © Copyright Electrification Coalition. The statements and data expressed in this report reflect the consensus of the Electrification Coalition but do not necessarily represent the business models or individual data of any one company. Although the authors and endorsers of this report have used their best efforts in its preparation, they assume no responsibility for any errors or omissions, nor any liability for damages resulting from the use of or reliance on information contained herein. The authors have sought to obtain permission from all image, data, and chart owners and apologize to any who could not be properly traced for permission and acknowledgement. fleet electrification roadmap 3 Table of Contents Letter from the Electrification Coalition 5 PART three Executive Summary 8 Identifying Fleet Opportunities 94 3.1 Overview 97 3.2 Modeling Assumptions 99 PRIMER 3.3 Key Findings 106 Electrification of the Transportation Sector 17 3.4 Case Studies 111 Overview 19 Sales, Service, Utility Cars 112 The Case for Electrification 31 Light Sales, Service, Utility, Short Haul 115 A Growth Sector for Jobs 40 Light Government 118 Market Outlook 42 Medium Short Haul, Sales & Service 121 Expanding the Demand Side 44 3.5 Fleet Adoption of GEVs in 2015 124 PART ONE PART four The Case For Fleets 46 Policy Recommendations 126 1.1 Overview 49 4.1 Fleet Microsystems 129 1.2 Fleet Demographics 50 4.2 Other Policies 134 1.3 Advantages of Fleet Operators 54 Total Cost of Ownership Approach to Acquisition 56 Route Predictability 58 Conclusion 140 High Vehicle Utilization Rates 60 Appendix A: Top 50 Commercial Fleets 142 Use of Central Parking Facilities 62 Appendix B: Available Vehicle Matrix 144 Importance of Maintenance and Service Costs 65 Key to Terms 148 Lower Electricity Rates 66 Acknowledgements 150 Alternative Business Models 67 Corporate Sustainability Initiatives 70 PART TwO Fleet Challenges 72 2.1 Overview 75 2.2 Fleet Challenges 76 Technology Costs 78 Capital Expenditures vs. Operating Expense 83 Battery Residual Value 84 Fleet Infrastructure Issues 87 Utility Impact of Dense Charge Networks 88 Market Perception 92 4 preface fleet electrification roadmap 5 OUR MISSION LETTER FROM THE ELECTRIFICATION COALITION The Electrification Coalition is dedicated to reducing America’s In November 2009, the Electrification Coalition released dependence on oil through the electrification of transportation. Our the Electrification Roadmap, a comprehensive policy primary mission is to promote government action to facilitate deployment framework analyzing the state of the electric drive vehicle of electric vehicles on a mass scale. The Coalition serves as a dedicated industry and the barriers to achieving higher rates of rallying point for an array of electrification allies and works to disseminate penetration in America’s light-duty vehicle fleet. The goal informed, detailed policy research and analysis. of the Roadmap was ambitious: to transform the U.S. light- duty ground transportation system from one that is oil-dependent to one powered almost entirely by electricity, enhancing U.S. economic prosperity ELECTRIFICATION COALITION MEMBERS and safeguarding national security. The report proposed an ambitious John T. Chambers Ray Lane federal initiative to establish ‘electrification ecosystems’ in a number of Chairman & CEO, Cisco Systems, Inc. Managing Partner, Kleiner Perkins Caufield & Byers American cities. Electrification ecosystems—also known as deployment Timothy E. Conver Richard Lowenthal communities—were designed to move grid-enabled electric vehicles (GEVs) Chairman, President & CEO, Aerovironment, Inc. Founder & CEO, Coulomb Technologies, Inc. past early adopters and into mainstream consumer markets. Peter L. Corsell Alex A. Molinaroli Non-Executive Chairman, GridPoint, Inc. Chairman, Johnson Controls-Saft and President, Johnson Controls Power Solutions The Electrification Roadmap envisioned a competitive selection process David W. Crane President & CEO, NRG Energy, INC. Reuben Munger managed by the Department of Energy (DOE). To compete, applicant Chairman & CEO, Bright Automotive, Inc. cities and communities would need to demonstrate that they had made Alexander M. Cutler Chairman & CEO, Eaton Corporation Jim Piro significant progress toward establishing the regulatory environment President & CEO, Portland General Electric Steven "Mac" Heller in which GEVs would thrive. The most competitive applications would Co-Chairman & Interim CEO, CODA Automotive Mike Segal Chairman & CEO, LS Power Group demonstrate the support of a broad range of public and private stakeholders, Peter A. Darbee including utilities, utility regulators, large local employers, vehicle and Chairman, CEO, & President, PG&E Corporation Frederick W. Smith Chairman, President & CEO, FedEx Corporation charger OEMs, and state and local governments. The winning communities Charles Gassenheimer Chairman & CEO, Ener1, Inc. Eric Spiegel would be eligible for targeted, amplified, temporary subsidies for consumers, President & CEO, Siemens Corporation infrastructure providers, and utilities. The program was proposed to advance Seifi Ghasemi Chairman & CEO, Rockwood Holdings, Inc. Andrew C. Taylor in two phases and expire in 2018. Chairman & CEO, Enterprise Holdings Carlos Ghosn President & CEO, Nissan Motor Company, Ltd David P. Vieau President & CEO, A123 Systems, Inc. Jeffrey R. Immelt Chairman & CEO, General Electric Company 6 preface fleet electrification roadmap 7 Deployment communities were designed to build criti- both at home and in public. The Electrification Roadmap more than 16.3 million vehicles in operation in 2009, the development of innovative business models that bundle cal momentum in the cost and learning curves that oth- also outlined potentially zero-cost programs to support nation’s fleets likely possess enough capacity to drive capital expenses with fuel and operating savings in order erwise are likely to slow the early advancement of the development of a secondary battery market, allowing the initial ramp-up scale in the battery industry and OEM to make the decisions to electrify more transparent and GEV market. Without such an approach, electric vehicles first GEV consumers to feel confident that used large- supply chains. More important, the operational norms accessible for fleet operators. and plug-in hybrid electric vehicles are likely to be rel- format lithium-ion batteries would have resale value. of certain fleet segments may allow them to rapidly sur- Of course, there are significant challenges that could egated to niche status for many years, purchased only Finally, the Electrification Roadmap identified the mount the most difficult challenges facing electrification make fleet operators hesitant to adopt electric drive by environmentalists and technological enthusiasts, in areas in which utilities would need support and flex- in the passenger market. Perhaps most significantly, fleet vehicles. Fears about the reliability of the technology and numbers far too small to meaningfully enhance national ibility to manage the integration of GEVs into the elec- owners may be more willing than individual consumers the ability of electric drive vehicles to meet fleet mission or economic security. In tric power grid. Deployment to focus on total cost of vehicle ownership as opposed to requirements are perhaps the most important issues. April 2010, DOE updated its communities were designed upfront costs. This approach advantages the economic Fleet operators are extremely unlikely to sacrifice over- energy-related scenarios to The Electrification Roadmap to target those regions in dynamics of electric drive vehicles in cases where the all mission for reduced transportation costs. Electric reflect the expected impact which time-of-use pricing higher upfront costs vis-à-vis an internal combustion drive technologies must, therefore, meet two discrete of the American Recovery targeted a substantial shift in and other regulatory support engine vehicle can be demonstrably offset through lower criteria in order to be attractive to fleet operators: they and Reinvestment Act on transportation energy use, such was available to incentivize operating and maintenance costs over time. must save money and allow fleet vehicle drivers to do the entire energy economy. consumers to charge batter- Fleet owners may also benefit from operational their job effectively. Despite specific GEV-related that 75 percent of light-duty ies during off-peak hours. Tax norms such as centralized refueling, high vehicle utili-
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