The Heat is On: 5 Reasons to Make to Move to Electrification
The move to clean energy is on. Our customers, commercial dealers, OEMs and upfitters, are looking to retain – and gain – a competitive edge in the marketplace. They know that the future includes sustainable energy initiatives, and the initial move is to electric vehicles.
Companies are starting to learn more about battery electric vehicle (BEV) planning and hear about “E2E EV solutions.” The acronym, jargon filled as it may be, stands for “end-to-end electric vehicle solutions.” It is an all-encompassing term that refers to EV sales, installation of charging infrastructure, and everything in between.
Today, companies are considering more than just their return on investment; many have their own carbon neutral and sustainability goals they are trying to reach. They are reading, researching, running numbers, and struggling with when to start making the transition to EV. The answer, however, is simple: The time to act is now. Let’s take a look at why.
1. Favorable costs. As with many things in life, the costs associated with electrification will likely never be less expensive than they are now. While over time battery pack prices are expected to decline, it is projected that infrastructure hardware, software, and installation costs will continue to rise.
In 2021, approximately 72% of vehicle applications have positive BEV total cost of ownership and that number is forecasted to increase to 100% by the year 2030 according to a summary of findings from Power Up – Global Commercial Electric Vehicle Forecast: ACT Research.
2. Market opportunity for BEVs. The market opportunity for dealers, OEMs, and upfitters is massive. The global BEV market, valued at $150 billion (USD) in 2020, is anticipated to reach $300 billion (USD) by 2027. The North American electric vehicle (EV) market alone was valued at $12.8 billion in 2020, and is expected to expand at a compound annual growth rate of 37.2% from 2021 to 2028.
While the overall BEV market experienced a slowdown in demand during the pandemic, it created unprecedented demand in the final mile industry. Customer preference for EVs, stringent emission regulations on fossil fuel-powered commercial vehicles, and supportive government policies are once again fueling growth.
3. Market opportunity for charging infrastructure. Buying and selling BEVs is one thing. Charging infrastructure is another. This equipment – often referred to as charging stations, EV chargers or EV supply equipment – supplies the electric power for charging the vehicles. As demand for BEVs surges, so does the need to implement charging infrastructure sooner than later.
Developing this infrastructure can be complicated and time consuming, and companies trying to tackle this on their own can find it daunting. Considering the logistical, technical, and financing perspectives, getting charging infrastructure in place can take 6-18 months. The payoff possibilities are significant, and it’s important for dealers, OEMs, and upfitters to start the process now while the incentives and rebates are in place to assist with the financial transition.
4. Incentives. It is important that companies contemplating the transition to EV understand that there are two types of incentives available, one for charging infrastructure and one for the electric vehicle. Currently, the U.S. federal government offers a tax credit for EV charging hardware and installation costs – covering up to 30% of the costs (maximum $30,000). Many state and regional authorities, and utility companies, also offer incentives. Altogether, in some cases, these programs can cover 50-100% of the full project costs. Programs are continually changing, though. Some may expire, and at the state level, it’s often a “first-come, first-served” situation. Moving ahead as soon as possible will allow dealers to leverage as many incentives as possible.
5. New revenue streams. For dealers, there is an additional opportunity, which is to become a certified charging reseller. Dealers could earn additional margins by providing ongoing service and support for the charging infrastructure. Beginning the process now can help establish dealers as the top provider of EV solutions in their market.
Mitsubishi HC Capital America can provide the advisory services for E2E EV solutions, and our partners' specialized focus can help ease the transition to electrification.
Ready to get started? Due to the complexity and rapidly shifting dynamics of commercial vehicle electrification, working with a knowledgeable industry consultant can be the most efficient way to complete your transformation to electrification. Mitsubishi HC Capital America’s Mobility Solutions business provides comprehensive, cross-functional expertise, financing and support for OEMs, dealers, and upfitters. If you’re ready to learn more about your opportunities in electrification visit mhccna.com.