The IEA (International Energy Agency) reported a 40% year-on-year global increase in electric car sales in 2019.
Electric vehicles' clean and green approach, coupled with the government's push for policies and incentives, has caused a growing shift in electric vehicles' favor. With trucks too becoming electric, the shipping industry won't be left behind.
Given manufacturer production plans, consumer preferences, and political realities, is the switch to Electric Vehicles viable? Several questions arise, such as how the government will handle excise duties, whether infrastructure required for charging electric vehicles will be in place on time, and whether consumers are ready for the lower second-hand value caused by battery costs.
This article discusses the government’s push towards electric vehicles, the business opportunities it provides, and what it means for the shipping industry.
How Electric Vehicles Work
Electric vehicles are partially or wholly powered by electricity.
EVs have different capabilities to accommodate varying drivers' needs, but still, a common feature is that you plug them in to charge, which is the feature that distinguishes an EV from a hybrid.
Hybrid vehicles have a battery to supplement the internal combustion engine, but the difference with this battery is that it can’t be plugged in.
There are two types of Electric Vehicles:
1. AEVs (All-Electric Vehicles)
AEVs include Battery Electric Vehicles (BEVs) and Fuel Cell Electric Vehicles (FCEVs).
Apart from charging from the electric grid, they're charged partly by regenerative braking. Regenerative braking produces electricity that is gained from some of the energy usually lost when braking.
All AEVs run solely on electricity with one or more electric motors powering them. Most have a range of 80 to 100 miles, while some luxury models can range up to 250 miles.
It takes a day for a depleted battery to recharge using a level-1 charging, although it all depends on the battery and charger type. However, it takes about 30 minutes to recharge a depleted battery using fast charging.
AEVs don't consume any form of petroleum-based fuels and they don't produce any tailpipe emissions.
2. PHEVs (Plugin Hybrid Electric Vehicles)
PHEVs run on both electricity and gasoline. They run on electricity for a range of 6 to 40 miles and then switch over to an internal combustion engine that runs on gasoline if the battery depletes.
Such flexibility allows you to use electricity as much as possible while still allowing you to switch over to gasoline if the need ever arises.
The fact that it runs on electricity reduces fuel costs, fuel consumption, and tailpipe emissions compared to conventional vehicles.
Also, depending on the model, the combustion engine powers the vehicle during rapid acceleration or when you're using the air conditioner or heating.
PHEVs can also run on alternative fuels such as biofuels or hydrogen instead of gasoline in fuel cells. Some types of PHEVs are known as extended-range electric vehicles (EREVs).
Government Push for Electric Vehicles
The following are some recent developments in the government’s push for electric vehicles:
- New York City plans to spend about $1 billion to expand the state’s car-charging facilities by building 50,000 more charging stations and other infrastructure. New York comprises multi-unit and high-rise apartments, and there's a dire need for car charging facilities. The construction of these charging facilities is scheduled to commence in 2021 and end in 2025.
- The state made a similar announcement on setting up charging stations and other infrastructure required for Florida.
- A federal tax credit of up to $7,500 claimed when filing for tax is applicable for all new electric vehicles purchased in 2010 and after. However, factors such as the vehicle’s battery capacity determine the amount of tax credit offered.
- In several states, solar incentives in the form of rebates are available to EV buyers. In several states, solar incentives in the form of rebates are available to EV buyers. These rebates take the form of price reductions in the purchase price or some refunds claimable after purchase.
- Non-cash incentives such as carpool lane access and free municipal parking are available in many states. These federal and state EV tax credits and incentives make the cost of purchasing EVs easier to take.
Electrical Vehicle Businesses Opportunities
Electric vehicles also offer those in the know potential business opportunities.
1. EV Charging Stations Setup
According to buyers considering a purchase in China, Germany, and the United States, insufficient access to charging stations ranks third after price and driving range as the most severe EV purchase barriers.
Vehicles traveling long distances and EV owners without home charging facilities will need to charge their cars, presenting business opportunities to provide one-stop charging centers where EV users can relax and wait for their cars to charge.
These charging facilities can be cafes equipped with restaurants, launderette, shopping complex, and even a cinema consumers can use as they wait for their cars to charge.
2. Fleet Charging Stations Setup
There’s been a continued rise in appreciation of commercial electric vehicles. This is because although they cost more, their greater efficiency coupled with the reasonable cost of electricity will enable fleet operators to recover the extra purchasing costs.
A huge amount of energy will be required to power these vehicles, necessitating mass deployment of charging infrastructure.
This mass deployment of charging infrastructure will create business opportunities to run the charging infrastructure equipment efficiently and cost-effectively. These opportunities include:
- Procuring electricity directly from the source to power the Electric Vehicle fleets.
- Offering energy-management services such as off-peak hours powering to produce cost savings.
- Providing auxiliary grid services to minimize loads on the grid and enable electric vehicle owners to make the most out of high electricity prices.
3. Fleet Software Development
Telematics solutions, software for operating systems, and vehicle performance simulation to provide smart and connectivity features are some technologies required for electric vehicles.
Virtual prototypes are required to explore subsystem topologies and design tradeoffs to detect faults and bugs are required. These eliminate the need to reconfigure the hardware and help detect implementation problems early, allowing for improvements before building any hardware prototypes.
Virtual prototypes are availed to programmers to enable early software development, resulting in faster, efficient, and cost-effective EV development processes.
There's a business opportunity for software companies to provide a mix of technologies such as electromechanical components and complex interaction between embedded software and hardware components.
4. Fleet Spare Parts Supplies and Diagnostic Centers
Especially in the shipping/logistics industry, vehicle parts wear out and are often in need of repair or change.
Also, electric car parts such as power electronics controllers, onboard charger, charge port, and traction battery park will soon be in high demand with the impending full adoption of electric cars.
This demand will create a need for electric car spare part manufacturers, dealers, and diagnostic centers. Electric vehicles design utilizes sophisticated technology, requiring a diagnostic center with sufficient technology to detect and solve issues.
5. Fleet Dealers and Automobile Body Work
With EVs being something many are purchasing and using for the first time, most will be unsure about how to go about it, presenting an opportunity to sell these vehicles.
Even better, you can establish yourself as a credible dealer and then partner with electric car brands to sell and deliver trucks and commercial vehicles to clients.
Another business opportunity is to set up a specialized panel-beating service dedicated to electric trucks and commercial vehicles to help vehicle owners who need work done on their vehicle's body for one reason or another.
6. Battery Scrapping
It's predicted that by 2030 electric vehicles will have penetrated the market globally, meaning huge batteries manufacture.
A lithium battery on a well-cared-for 2-wheeler should last approximately 1,000 charges, meaning depending on usage, this battery will need replacement within 2 to 5 years.
Failure to replace it renders the battery very inefficient but not dead entirely. You can use these old batteries as power banks to store up energy for other uses. You can liken such use of old batteries to a server where much like a server houses data, this battery houses power.
Think of such an application on a large scale and how you can use these batteries to prop up the grid.
Once batteries completely can't charge anymore, you can recycle them and recover metals like steel, copper, and aluminum.
7. Raw Materials
Surprisingly, according to the Wall Street Analyst, the carmakers aren't necessarily the best stock investment opportunities when it comes to investment in EV.
Manufacturers of computer chips (parts that enable electrification) and metals like lithium that enable longevity in batteries offer better investment opportunities.
Semiconductor makers like Nvidia (NVDA), which produce chips that act as the EV’s brain, are also great investment opportunities.
You could also invest in low-cost lithium production or buy shares of such producers. Lithium is a crucial component in EV batteries, and by putting your money in a company like Albemarle (ALB), a leading producer of lithium, you could never go wrong.
8. Battery Swap Hubs
In China, for example, there are more than 300 electric 2-wheelers on the road with several hubs available where when your battery charge depletes, you can replace your battery with a fully charged one.
With time when electric vehicles become more affordable and widespread, people will undoubtedly embrace the use of electric 2-wheelers. Hubs for charging the 2-wheelers will also be required, presenting a business opportunity to set up battery replacement stations. The beauty of this is that the way 2-wheelers are built makes it possible to swap the batteries, offering a business opportunity of renting out fully-charged batteries.
However, there's a caveat to this that battery design isn't standard. Instead, batteries are designed according to different requirements, meaning you'd have to stock various battery types, which can be a challenge.
9. Bike Rental
With time, electric vehicle prices will go down, and their use will become widespread, leading to greater uptake of the vehicles. When this happens, bike rental will be the next big thing to offer solutions to challenges like last-mile connectivity.
These bikes are electric 2-wheelers, which would be used after longer trips so that upon reaching your destination, you hop onto a bike or scooter to get you to your destination.
You could opt to operate only in a particular area, in which case you would geo-fence the bikes to ensure they don't run out of range or get misused.
Impact of Electric Vehicles on the Shipping Industry
Electric trucks are just around the corner, and the shipping industry is gearing up for this unprecedented change in the coming years. In fact, the shipping industry unanimously agrees that electric truck rollout will take place over the next decade.
Below are some effects of electric vehicles on the shipping industry:
1. Costs Control
Fuel costs have always negatively affected shipping/logistics companies who are often at the mercy of fuel costs and the constant fluctuation of these costs.
Shipping companies have no control over fuel costs and their volatility; larger global economic factors determine these.
However, with electric trucks, shipping companies can anticipate cost control, with truckers no longer having to battle oil prices. The result is:
- Shipping companies are now on the path to improved operations.
- Shipping companies now can anticipate electric vehicle costs and, therefore, haulage rates and margins.
- Improved profitability because now there are competitive cost structures in place due to the independence from fuel.
Also, electric trucks can travel longer distances without needing fuel breaks, and the technology is said to involve fewer maintenance costs.
2. Introduction of Autonomous Vehicles
Today there's a growing demand for autonomous trucking with massive investments in autonomous trucking initiatives. Moreover, the ability to rely on an automated truck is largely pegged upon the truck's ability to power itself, in which case electricity is the answer.
Tesla, Daimler, and Waymo are major players in creating such tech, and they're likely to solve the challenges faced with electric vehicles, introducing their autonomous solutions to the market.
3. Emissions Reduction
Fuel emissions cause global warming, a real threat facing our world today. And with shipping emissions accounting for about 25% of all emissions by vehicles, it’s no wonder it’s a significant EPA concern.
For this reason, the shipping industry presents a ripe segment for emission reduction, making electric drive chains a major focus for improvement to curb emissions. These improvements include practical range and battery technology, which will address concerns relating to the trucking industry.
It’s Time To Go Green with Electric Vehicles
Despite some bottlenecks that present challenges, the switch to electric vehicles brings about several benefits. Besides helping save our planet by living cleaner and greener, electric vehicles' use presents several exciting business opportunities to be leveraged, not to mention the considerable improvements in the shipping industry.