Are government regulations making fleet electrification inevitable?
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A look at the different ways emission regulations are promoting EV adoption as the future of transportation.
There are many reasons why you might be considering fleet electrification. It could stem from a desire to lower your fleet’s carbon footprint or you see the potential cost savings from adding electric vehicles (EVs). There is however another reason why fleets should start investigating EVs – they may be inevitable.
In an effort to combat climate change, governments around the world have begun laying out targeted initiatives that will impact how fleets operate. They can vary from restricting where an internal combustion engine (ICE) vehicle can operate to ending new ICE vehicle sales altogether. However, governments aren't only focusing on strategies to discourage the use of ICE vehicles, they're also finding ways to encourage the adoption of EVs, through incentives like rebates.
EV initiatives are being implemented at all levels of government and will vary greatly from one region to another. It is important that anyone who owns or operates a fleet researches the specific regulations and incentives that are applicable to them. This article will provide an overview of the types of initiatives being rolled out across the globe. While the majority of these may not apply now, it’s likely they could be applicable in the future.
For more information on adding EVs to your fleet, download our Ultimate Guide to Fleet Electrification.
Reducing emissions by phasing out ICE vehicles
One of the boldest government policies being implemented is stopping the sale of new ICE vehicles. To-date, more than 30 countries have announced they will be phasing out all ICE vehicles and require 100% of new vehicle sales be zero-emission by 2040 or earlier. There are also numerous cities, states and regional governments who have taken the same pledge.
Some governments, like the U.S. at the federal level, are taking a more gradual approach and are creating targets like 50% EV sales share in 2030. That said, if you operate in a state like California that signed the 100% zero-emission pledge earlier, then this gets superseded at the state level.
There are still many questions around the exact details of how this policy will be enforced. Some governments could simply not allow ICE vehicles to be registered, in case they were purchased out-of-state in an area that does not have the same regulations in place. There is also a possibility that ICE vehicles could be registered, but are heavily fined to a point where they are no longer economically viable.
Improving air quality by restricting where an ICE vehicle can operate
A different approach for reducing GHG emissions is the creation of areas that limit or prevent the use of ICE vehicles. These are referred to as Zero-emission, Clean Air or Urban Access zones and are already being piloted, primarily in Europe.
The zones are typically established in more densely populated urban centers, which are more prone to experience the negative health impacts of air pollution. Depending on the specifics of the program, the vehicles that operate in these zones must be zero-emission, or drivers may have to pay a toll or fine. An example of this can be seen in London, England which has two different emissions zones – a Low Emission Zone (LEZ) and an Ultra Low Emission Zone (ULEZ). Each zone has its own restrictions based on the class of vehicle, but a non-compliant vehicle needs to pay up to £300 ($395 USD) a day fee for driving in the LEZ plus an additional £12.50 ($16.50 USD) a day for entering the ULEZ. If the fees aren’t paid in the designated amount of time, drivers are subjected to additional fines.
These fees would significantly impact the bottom line of any fleet operating here. Fortunately, they can be avoided by only using EVs in these areas.
The downstream effect on OEMs
The restrictions on ICE vehicles don’t just impact the people looking to purchase them, they also influence vehicle manufacturers. At this point almost every major manufacturer is offering at least one EV model, and some are taking it a step further.
Over the last few years many OEMs have stated they will exclusively manufacture EVs in the near future. This includes: Bentley, General Motors, Cadillac, Honda, Jaguar Land Rover, Mercedes-Benz, Volkswagen and Volvo. Meanwhile others have simply made aspirational goals, such as Hyundai Motor Group with a goal of EVs representing 20% total Kia sales in South Korea, North America and Europe by 2025.
As with any market, supply and demand will help dictate the overall direction of what becomes available. And the demand for zero-emission vehicles is steadily increasing.
Laying the groundwork for a charging network
An important aspect of EV adoption is ensuring that there is adequate charging infrastructure available. To this end, some governments are mandating either the installation of charging equipment or the ability to install it in the future.
For example, the Canadian city of Victoria, British Columbia has amended its zoning bylaw and requires all new residential buildings to have an electrical outlet, capable of Level 2 (208/240V) EV charging, installed for each parking space. These mandates aren’t just for residential buildings. In California, all new non-residential buildings with 10 or more parking spaces are required to install EV capable infrastructure in roughly six percent of parking spots.
Both of these initiatives will not only increase EV adoption, it will also help streamline the operation of an EV. Whether it’s creating an on-route charging network or making it easier for an employee to be able to charge their company vehicle at home, the more available charging equipment the better.
Providing incentives for fleet electrification
While there are a lot of regulations being introduced to encourage a decrease in ICE vehicle use, there are also a number of positive initiatives being introduced to encourage EV adoption. There are numerous financial incentives, including rebates and tax credits available for purchasing an EV. Municipal governments and public utilities may subsidize the cost of installing charging equipment or provide special electricity rates for EV charging. And, in many states and provinces EVs are granted high-occupancy vehicle (HOV) lane access or toll reductions.
Aside from these programs, there are plenty of reasons why fleets should start investigating adding EVs to their fleet. Under the right circumstances EVs have a significantly lower total cost of ownership (TCO) and can represent significant savings over the lifespan of the vehicle. They reduce noise pollution and noxious fumes, which can contribute to improved driver health. And of course – they offer substantial environmental benefits.
Get ahead of the learning curve
While no-one can say for certain what the future of transportation will look like, it is important that fleets start proactively investigating fleet electrification. You should be aware of any approaching regulations and look to take advantage of any available incentives.
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Cameron Feil is the Marketing Communications Manager at Geotab.
Geotab's blog posts are intended to provide information and encourage discussion on topics of interest to the telematics community at large. Geotab is not providing technical, professional or legal advice through these blog posts. While every effort has been made to ensure the information in this blog post is timely and accurate, errors and omissions may occur, and the information presented here may become out-of-date with the passage of time.
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