Increasing supply and demand gap for electric light commercial vehicles
Demand for light electric delivery vehicles is soaring, but finding the vehicles is proving to be a tough task
Electrically powered Light Commercial Vehicles (LCVs) are hot commodities right now finds Reuters reporting, but getting hold of them is proving tricky for businesses.
According to an industry survey conducted for Reuters Events, Supply Chain and Ford Motor Company, Electric Vehicles (EVs) are now more likely to be purchased by commercial delivery fleets than internal combustion engines-equipped alternatives.
This is part of a wider transition, that will see electric light commercial vehicles rapidly become industry standard in most urban environments, working alongside a wider array of smaller vehicles.
However, Reuters interviews with a variety of automotive insiders and fleet managers reveals that there is a supply crunch that will likely see the market remain tight and commercial operations chasing new EVs as soon as they are available.
The transition to EVs has already happened, well at least on paper
The electric revolution in logistics is already well on the way according to a 2022 Reuters Events, Supply Chain industry survey, which can be accessed in this report.
The research found that fleet managers are already more likely to acquire electric LCVs than those with internal combustion engines in 2023 and 2024. Fifty-four percent said that they intend to purchase electrified LCVs in the next two years, versus 40% for their conventionally powered counterparts.
This marks a dramatic change in fortunes for electric vehicles in commercial fleets over the last four years, from virtually no adoption at commercial scale and low demand to the current state of rapid adoption. This trend shows no signs of stopping with the constraints slowing it down based around vehicle and charger availability. Therefore, we will see EVs become industry norm, particularly in urban scenarios, where they function best.
The rapid transition extends into other vehicle classes, with alternative electrified delivery vehicles also part of fleet operators plans. In the survey, operators heavily favoured acquiring electric bikes, with 11.8% planning on acquiring e-bikes and 8.6% electrified motorcycles, compared to just 5.7% looking at petrol-powered motorbikes.
Two prominent delivery companies affirmed this commitment to electrification in the report. “Going forward, all of our final mile assets as we replace them will be electric,” said Trevor Hoyle, the Senior Vice President Ground Operations Europe for FedEx.
Likewise, Olly Craughan, Head of Sustainability for parcel delivery company DPD, noted that “we have not purchased a final mile diesel vehicle since June 2020, and I don't intend to”. Instead, DPD are aiming to expand the EVs in their delivery vehicle fleet to over 5,000 in 2023.
An electrifying set of delivery advantages
The research noted that electrified LCVs are now the last mile sector’s go-to option as they offer numerous advantages, especially over defined, shorter delivery routes.
The survey uncovered that 64% of fleet managers expect electrification to reduce operating costs, 42% anticipate being able to access more locations and 39% think that vehicle connectivity and management will improve.
Furthermore, the report highlighted that reduced emissions, better compliance with governmental regulation and reduced maintenance cycles were other key advantages.
An availability hurdle
These advantages have put EV delivery vehicles at the top of wish lists and generated competition for supply finds Reuters.
Reuters reporting found that demand is far outstripping supply within Europe currently, allowing competitors from less established automotive firms to compete for commercial buyers.
The article said that fleets are struggling to source supplies of vans, with Tristan Thomas, CEO of UK last-mile delivery startup Packfleet, finding that "as soon as vans arrive dealers call us and we have to move quickly," as "if we don't, they're gone in days”.
"There is no magic wand to fix this, we just need to get the manufacturers up to speed," said Tim Albertsen, CEO of ALD (ALDA.PA), one of Europe's largest vehicle leasing firms. "For the next couple of years there will not be enough supply of ECVs."
An additional constraint is the availability of charging infrastructure, with the Reuters report using European research to find the continent is likely to fall short of its stated goals of charger installations across the continent by millions of charge points.
“Charging infrastructure, both public and private, is, to my mind, probably the constraining factor that will limit the speed at which EVs are adopted,” commented John Lippe, Director, City Engagement for report partners Ford Motor Company.
“What's the solution to that? In the case of commercial vehicles, it's obviously solutions like depot charging,” said Lippe. This is recognised by fleet operators, with 61% in the report survey predicting that they will need to invest in infrastructure in their facilities in order to successfully transition.
Overall, it seems like the will is there to go electric among LCV operators, but the infrastructure and automotive industry is yet to catch up to this changing reality.