5 minute read 10 Aug 2022
Electric vehicles charging station on a background of a row of vans

Strategies for transitioning fleets to zero-emission vehicles

By Violetka Dirlea

EY-Parthenon Principal, Strategy and Transactions, Ernst & Young LLP

Co-creating and delivering innovative solutions to enable our clients to envision and capture new strategic opportunities.

5 minute read 10 Aug 2022

Zero-emission vehicle transformations are complex, interconnected transitions with long-reaching impacts.

In brief

  • Establishing relationships with partners will provide access to industry-leading practices, innovative solutions and an understanding of the latest offerings.
  • A zero-emission vehicle transformation ecosystem interconnects functions as a network to facilitate interaction and continual coordination.
  • Developing and refreshing the zero-emission vehicle transformation plan integrates the goals, knowledge and experience of all stakeholders. 

What comes to mind when people think of a company — the service it provided, the image it evoked, the feeling it provoked? What do people perceive about a company when they see a company vehicle – old vs. new, dirty vs. clean, electric vs. gas engine – on the road or in their community? With more than 8 in 10 US adults reporting that they drive most days in a week¹, and in addition to advertisements, a company’s fleet vehicle is one of the few things that have the potential to be viewed by customers daily. Customers remember how the vehicle looked and the impressions it created in their minds.

Companies that are brand savvy and champion corporate social responsibility keep their fleet in top shape and are leading the transition to zero-emission vehicles (ZEVs) to demonstrate their commitment to zero carbon emissions.

It takes bold vision, strong commitment and successful execution to make the LEAP to a zero-emission fleet. Key steps in executing LEAP:

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Launch the right team 

The ZEV transition is a complex, interconnected process with decision impacts that stretch well beyond a single team. In fact, having the right team is the key to a successful transition. 

While ZEV transitions are generally led by the fleet organization, leadership must identify all internal stakeholders who will be impacted, leverage their expertise, and get buy-in from the start. Early engagement of a cross-functional stakeholder group (the ZEV team) is essential for employee adoption and scaling the fleet electrification. The ZEV team begins by collaboratively setting the vision supported by clearly defined roles for each stakeholder. By committing to the vision up front and strategically tapping into each stakeholder along the journey, the entire business can adapt to and navigate through the transition challenges.

While each cross-functional stakeholder represents their specific function, employee engagement in the ZEV transitions spans further. It engages leaders as well as vehicle and charger operators, repair and maintenance technicians, facility managers, and other operations-focused personnel. Listening and observing at the field level allows leadership to gain visibility into operational needs and ZEV suitability. Concurrently, these discussions drive a sense of strong employee engagement and buy-in throughout the ZEV transition.

Internal stakeholders who need to be engaged include procurement, analytics, innovation team and corporate EV strategic partnerships, fleet asset management, fleet operations, fleet business operations, business units, facilities, compliance, regulatory, transformation management office, HR, and corporate communications.

The right internal and external team

Figure 1: The right internal and external team

Beyond the internal stakeholder team, external partnerships are leveraged to provide additional areas of expertise along with an outside perspective. 

  • Vehicle original equipment manufacturers (OEMs) and upfitters: partner with legacy OEMs with an established market position to ZEV disruptors offering innovative solutions with efficient speed to market to retrofitters.
  • Charging and key suppliers: leverage service offerings from charging experts and other supporting ZEV suppliers to manage aspects beyond the vehicle transition.
  • Peer and non-peer organizations: establish a hybrid of cooperation and competition with industry peers and other sustainability-driven organizations. 
  • Industry bodies and coalitions: connect with a diverse group of partners to drive economies of scale and mutually share leading insights.
  • Sustainability leaders: establish partnerships with companies with leading sustainability goals focused on understanding tactics and opportunities to achieve leading sustainability ambitions

Establishing relationships with a variety of partners unlocks access to industry-leading practices, innovative solutions, and an understanding of the latest market and service offerings. The ever-evolving ZEV landscape requires the transition team to stay informed and continuously adapt their plan. 

Governance

A well-defined and all-inclusive governance model aligns internal and external stakeholders. Throughout the transition, internal stakeholders collaborate and drive accountability. Clear goals, champions and a common “way of working” enable the necessary cooperation. Setting clear reporting lines and establishing defined decision-making processes across all stakeholders streamlines the required approvals and checkpoints. Finally, transparency and responsiveness fortify the governance pillars. Clear communication pathways with transparent reporting allow for timely identification and resolution of barriers and bottlenecks..

 

Enable the transition 

Traditionally, companies have structured their strategic processes and decision-making linearly. The ZEV transitions ecosystem requires a network to harness interaction and enable continued coordination, innovation and execution. 

Each ZEV function is responsible for executing in their defined focus area and must deliver on their part of the ZEV transition. Their decisions must be made collaboratively to optimize the overall system. For example, when determining which ZEV will replace an existing internal combustion engine (ICE) vehicle, the charging and operational requirements are factored in the vehicle procurement process. The key enablers to increase collaboration in this decision-making and vehicle vetting process include executing a vehicle pilot with the mechanics and vehicle operators while also piloting chargers. Beyond the operational requirements, there are elements of digital enablement, financial prudence and change management from effectively transitioning from an ICE vehicle to a specific ZEV.

 

Key ZEV enablers

Figure 2: Key ZEV enablers .

Anticipate changes and risks

The EV market is continuously evolving and that requires constant screening, checking and understanding new developments. The ZEV transition team needs to stay on top of new technologies and products. 

Leveraging partnerships to access innovation and ideas, allows the team to test new technologies within the confines of its operations. Testing and piloting of diverse vehicles generate relevant impacts and enables a head start at adapting the necessary processes across the ecosystem. Pilots allow small scale experimentation and low risk learning while preparing the organization for transition. 

Counter to new market developments, the team must also understand risks related to new ZEV technologies. External risks include vehicle and charger performance issues, recalls or supply chain constraints (chip shortage, long lead times, limited substitutes). Internal risks consist of resistance to adoption, downtime or lack of chargers needed in emergency, for example. While the team should not stray away from being an early adopter or advocate because of the risks, it needs to leverage potential issues and concerns, define mitigation strategies to strengthen the ZEV ecosystem and processes. 

In alignment with Xcel Energy’s ambitious corporate commitment to power 1.5 million customer electric vehicles by 2030, Xcel’s fleet organization is dedicated to leading by example.
Sangram Bhosale
Vice President of Supply Chain, Xcel Energy

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Plan the transition to a fully electrified fleet

Developing and refreshing the ZEV transition plan integrates the goals, knowledge and experiences at a point in time of stakeholders including available existing vehicles and infrastructure. This transition plan needs to be constantly refreshed as new knowledge and offerings are available, and experiences amassed. Learning from others should be planned and planned adapted to reflect the learnings. 

The living and changing transformation plan

Figure 3: The living and changing transformation plan

Bringing together the experiences and applying the lessons into a structured road map guides the team on the ZEV journey. The roadmap is strategy and people-driven, utilizing the charger and vehicle procurement plans, among others, to map initiatives and key milestones with clear trajectory toward achieving the ZEV vision. To ensure the team remains steady on the trajectory, the roadmap should also have a phased approach, segmented in discrete waves to regularly confirm alignment while designed to build upon each other.

The ZEV world is constantly evolving, and the team is agile. The team learns from all experiences and applies those lessons as the ZEV transition strategy continues to evolve. The team builds on successes and constantly updates the plan and road map adapting to the changing EV world around.

A company taking the LEAP 

Xcel Energy, an electric and natural gas energy company serving customers across eight states, has made a commitment to electrify a substantial portion of its fleet. 

“In alignment with Xcel Energy’s ambitious corporate commitment to power 1.5 million customer electric vehicles by 2030, Xcel’s fleet organization is dedicated to leading by example. We’re driving the transition by electrifying a significant portion of our companies fleet vehicles by 2030, and have broken our goal into three waves,” said Sangram Bhosale, Vice President of Supply Chain at Xcel Energy.

The company’s three waves include:

  • Electrifying all sedans by 2023
  • Electrifying all light-duty vehicles by 2030
  • Electrifying 30% of medium- and heavy-duty vehicles by 2030

Each wave will leverage knowledge related to vehicle procurement and deployment, charger procurement, installation and deployment, and completion of training and tooling to help confirm that the fleet operates safely and efficiently. 

“Xcel Energy Fleet is on the path to being a top-quartile leader in reducing fleet emission, integrating leading-edge technology, collaborating with like-minded partners, and challenging ourselves becoming trailblazers,” Sangram said.

Thank you to Jacob Bierschenk, Senior Consultant, for his contribution to this article.

Summary

Utility companies are investing in transitioning their fleets to zero-emission vehicles. By launching the right team, enabling the ecosystem, anticipating market developments and risks, and planning the transformation to a fully electrified fleet, companies can have a successful transformation.

About this article

By Violetka Dirlea

EY-Parthenon Principal, Strategy and Transactions, Ernst & Young LLP

Co-creating and delivering innovative solutions to enable our clients to envision and capture new strategic opportunities.