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Transitioning to an electric fleet: Lessons from the life sciences industry
Electric fleets are on the rise – but for category managers this new tech poses plenty of questions. Here’s how we’re helping our clients find the answers.
With an increasing focus on reducing carbon emissions, and the promise of lower running costs, procurement leaders, along with the rest of society, are turning their attention to electric vehicles (EVs). Government grants and subsidies – such as exemption from congestion charges, discounted charger installation, and EV-only roads in the UK – add further impetus for change.
In fact, the shift to EVs is now very much a case of ‘when’ not ‘if’, with bans on the sales of internal combustion engine (ICE) vehicles looming on the horizon. So far, 17 countries have announced 100% zero-emission vehicles targets and the phasing out of ICE vehicles by 2050.
However, making the switch to an EV fleet is a big undertaking, especially for fleets that traverse international borders and will inevitably encounter different levels of EV adoption and charging infrastructures. To make the most of this opportunity, category managers need to find a way to assess the current state of EV adoption in their target markets, and calculate the benefits and costs associated with the transition to e-mobility.
The challenges of a fledgling technology
At first glance, the benefits of EVs are clear. Total cost of ownership is lower and maintenance is simpler thanks to fewer moving parts and longer replacement cycles. Vehicles are safer to drive and carbon emissions are eradicated – which can have a huge effect on both sustainability goals and a company’s reputation.
There are, however, a raft of challenges that can stand in the way of achieving these benefits. For one, the initial cost of an EV is still higher than that of an ICE vehicle (for example, a VW e-Golf costs ~20% higher than its ICEV variant), which means category managers have to be sure that their investment will pay off in the long run. So how do you calculate the long-term value of that investment?
Another concern, and perhaps most common among potential EV adopters, is range anxiety. Ensuring that your fleet can complete a journey without running out of charge – or incurring delays due to frequent charging stops – is a huge cause for concern among those yet to take the plunge in the EV market. The issue is dependent on battery life, which continues to improve, but also on the EV charging infrastructure in the countries where your company operates.
The US and most of nations in Western Europe have and will continue to make significant investments in this area. But other parts of the world, such as the Middle East, Asia Pacific, and Eastern Europe, are lagging behind, which makes decision-making more complex. Sure, the needs of your fleet may be met in France, but what happens when your vehicles travel from France to Ukraine?
When you look into the details of these charging infrastructures, you can quickly uncover further complexities, too. Fast charging, for example, is a great benefit for those who need to get from A to B quickly. But it also depletes battery life far faster than regular charging, which will incur costs later in the vehicle’s lifespan. A lack of one-size-fits all EV charger is another issue that makes navigating the EV landscape more difficult than it should be.
It’s factors like these that category managers must develop a firm understanding of before venturing into the world of EVs. But with such a new technology, the information required can prove hard to come by.
The best approach to EV adoption
Major life sciences players such as Amgen, Merck, and Pfizer are taking a phased approach to EV adoption, with some installing their own EV chargers at company premises. By adopting a piecemeal methodology, these brands plan to learn from their early investments to make better decisions later down the line.
However, this measured approach should also be supported by data. By leveraging market intelligence, companies can assess details of the relative EV readiness of their global markets, and prioritise the transition in their key locations based on factors such as regulatory landscapes, charging infrastructures, and the general consumer awareness about e-mobility.
At The Smart Cube, we’ve already assessed the EV readiness for roughly 50 global markets for our Fortune 500 pharmaceutical clients. In doing so, we’ve provided information on the growth of EV adoption, availability of relevant charging infrastructures, latest regulations and incentive schemes, total cost of ownership, and the outlook of future policy support.
As part of this research, we’ve been able to identify those regions that are best prepared for EV adoption. Currently, China, the US, Netherlands, France, Germany and Switzerland have already made huge infrastructure investments. This means, companies operating in these countries can look to start rolling out EVs straight away.
Contrarily, Italy, Spain, Ukraine, Australia and Thailand are among the laggards, and are not likely to catch up anytime soon.
At a time when many companies are reluctant to make the first move on e-mobility, and want to see how their peers fare in this uncharted territory, these insights can help you take data-driven decisions, so that you start experiencing the benefits of EVs sooner, giving you a competitive advantage.
And, if a particular target market appears to be lagging in terms of its EV adoption, these insights will provide the opportunity to take contingency steps. For example, companies can partner together to lobby governments to introduce necessary reforms. Or if necessary, take the decision to devise different strategies for the various geographies in which they operate.
The future of electric vehicles
One thing is clear, the future of transport is electric, and that means a big change is on the horizon. Years from now, we will see the emergence of new technologies such as smart highways that can charge EVs as they drive, and vehicle-to-grid charging technology that will subsidise grid operators and help fulfil surges in electricity demand.
For now, though, it’s important that category managers are able to identify the state of the EV market in the regions they operate in – and start formulating a phased plan for adoption.
The Smart Cube can help you gain an insight into the EV-readiness of your market, and the best approach for your organisation. Visit our Category Intelligence solution page to read more.