Episode 060: Beating the Dead Horse of Electrification

Welcome to the Fleet Success Show, a podcast dedicated to talking about the fundamentals, standards, and best practices that empower today's fleets to achieve fleet success. Let's get into the show.

All right. Welcome back for another episode of the Fleet Success Show. I'm your host, Josh Turley, joined today by Jeff Jenkins.

Hey guys, guess what today is?

What is today?

Episode number 60.

Boom! Feeling like we should do another Top Gun shout out just because, you know, that movie's taking over the country right now.

I'm okay with that.

All right, we'll think about it. So today we really wanted to just beat the dead horse that is electrification. Uh, we're just coming back from GFX, and you know, obviously electrification's on everybody's mind there. And every trade show I feel like we went to this year electrification has always taken over whatever the topic of discussion was supposed to be about. It always shifted back to electrification.

It's hijacked every topic.

Every single one.

Yep.

And for good reason, right? And I know a big driver of this right now is you have California, you know, with their CARB standards coming out and saying, "Hey, 2024, every public fleet needs to be electric." Yep. Which is super aggressive, right? Like the calendar flips and it's, "Hey, we need everybody on electric." And maybe it's not everybody on electric or it's like 50%, but it's supposed to be a significant adoption.

Well, it's 50% and then it goes up.

Each year.

Each year.

Right.

I think you'll— so I think that by the time it's 2026, right? It's 'cause it's 25% additional.

Then it's 100%.

Yeah.

So you definitely have a big legislative driver behind this, right? And that's always something you need to look at is, you know, What's the legislative environment looking like? But as we're going through this and looking through, there was a lot of things that I learned that I don't think we're looking at as fleet managers when it comes to electrification. You know, there's been a lot of talk about, well, there's a vehicle supply shortage, we can't get the vehicles we need. There's been a lot of talk about, well, you know, the infrastructure's not ready for it. Like there's not enough power stations to power the grid.

[Speaker] Yep.

But it even goes deeper than that. And so we wanted to hit a few of the things that I don't think anybody's thinking about that were eye-openers to me. And so we wanted to share them with our audience.

And this will seem like we're playing devil's advocate because there are things that no one's ever— like, you don't— you brought up some of these things and I was baffled.

You're like, oh yeah, how does that impact this?

Exactly.

I hadn't thought about that before.

And they're huge things because mostly all we think about is just the infrastructure. Right now you have a, you know, a regular vehicle with an internal combustion and you just go to a gas station and get fuel.

Right.

So we think about, okay, how are we gonna charge electric vehicles? But you're right, it goes a lot deeper.

Yeah. So let's talk first about, you know, like charging stations on the property, right? Like not, you know, going out in the infrastructure in the general public, but just putting charging stations in your property.

Yep.

One of the things I hadn't thought about was real estate and how much space those charging stations take up. I mean, like you have a fuel depot and a fuel island, right? But that's, you know, like you can pull through, you fuel up and another vehicle comes in. It's quick. Charging station, if you're slow charging or you're trickle charging, right, like it takes longer. And so those vehicles need to be parked for maybe up to 45 minutes, an hour, which means that it really has to be a part of your parking infrastructure, not a like a charging, you know, depot like you would see with a fuel island.

Well, and most organizations for efficiency are going to say, hey, we're just going to charge at night.

Yeah. So if that's the case, you've got peak hours and— Correct. And we're going to spread the charging out so we can lower our demand charges. Uh, there are systems out there that do that. Like Fermata Energy has a whole thing about avoiding demand charges and spreading out your peak load. But the thing that we don't think about is, well, what happens if your yard isn't big enough? You know, like if you don't have enough space, like physical space, you're in a landlocked area and you don't have enough physical space. If you take a charger that is now 3-foot wide, you went from lane lines that were 6 inches wide. Now a charger has to sit between two cars, and now you've got 3 foot of dead space between those cars.

Yep.

How many parking spaces does that eat up? Uh, if you add 3 or 4 chargers, well, you've just lost 2 parking spaces. Um, and you do that over and over again, right? And it starts eating up into your space. Now, you may not have that many chargers you need right now, but imagine a day where you are fully electric and you have 300 spots. Well, now you're only going to have maybe 225, 250. You know, you're gonna lose a ton of parking space in order to get the charging infrastructure in.

And a lot of organizations to mitigate parking shortages is they allow people to take vehicles home.

Right.

At night. So I think about when I'm driving through my neighborhood every day, there's a fire, a Peoria Fire vehicle in the neighborhood.

Yep.

I see a police vehicle in the neighborhood. So those have to be considered as well.

Yeah.

What are you gonna do with those that actually take the vehicles to their house?

Well, and it's interesting. So who pays for the electricity in that case? Are you doing reimbursements like you would do for fuel reimbursement?

Right.

If you're not doing electric reimbursements, 'cause odds are is they don't have a smart charger at home. Who pays to put that infrastructure in their home? Who owns that infrastructure if they leave? Right. Do you have to pull it back out? Is it temporary?

Who pays for that?

And then the other thing that I hadn't thought of that they brought up was what's the impact on if you're unionized and you have a collective bargaining agreement? And now are they expected to charge the vehicle? Are they getting paid to plug the vehicle in and monitor the charging? Is there an insurance risk that they need to take on at their home in case there's an electrical fire? Like there's a whole lot of things that I hadn't thought about from taking a vehicle home. EVs may not work in a take vehicle home scenario. Not yet.

Not until it's more commonplace.

Yeah.

And there's a better way to reimburse for electrical if you're gonna do that.

Right. And if there's, you know, like there's public charging stations or something like that, and then they just have to fuel up before they go. But when it takes 45 minutes, well now are they getting paid to charge? Like they would be paying for gas? So I mean, there's definitely some ramifications there.

There's a big difference between a 5-minute fill-up with your car. Yeah. And a 45-minute charge.

Right. Like you just got to top it off, you know. Now most chargers are doing that where you can do a quick top-off where it'll hit 80% within 20 minutes. And then to get the extra 20%, like it takes another 30 minutes.

Right.

So they are doing some of that fast charging. But yeah, it's definitely one of those things that just I hadn't thought about the take-home impact. The other thing that I've been seeing a lot lately is like there's a shifting standard. In the voltage requirements. And so as more vehicles are coming out, like I even saw this with the Lightning versus the Chevrolet, the e-Silverado, e— the Evilanche. What are they calling that thing? I think it's Electric Silverado.

I don't know, it's Chevy side.

It's totally an Evilanche, right? Like, that's what I call it. And so like the Chevy, they went with the higher voltage charging capacity, which means that it can charge faster, it's more reliable, and you don't get as much drain. Whereas Ford went with a little bit lower voltage, more of the current standard. And so as you're investing all this money and time into electrification, what— how long is it going to be before your charging stations are also obsolete? And you think about like the permitting process to get those installed. And if you decided today, we're going to go ahead and we're going to get these installed, it's going to take you, you know, especially if you're a government fleet, you're probably looking at a permitting and a construction process that's 2 or 3 years out. you know, just to get those things going.

Yeah.

Um, and by that time, like, when it's finally installed, the technology you decided to purchase might be obsolete. That's painful to think about.

Well, that's really painful, and that doesn't even include the cost, right? Like, when you're going and you're looking at, okay, now we have to budget to add how many charging stations, right? Wow.

Yeah. So this is really just an exercise in risk management and resource efficiency. I am a big proponent from an economical standpoint on electric. I love the power, I love the torque, I love the application of it. Like, it's definitely got a future, but there's a lot of little things like this that we just have to think about differently than we've ever thought about before with vehicles. And there are things that, you know, when you look at a standard like California coming out with their, you know, the Air Resource Board, And they're coming out and saying, oh well, 2024, like it's just not feasible for it to happen. One of the biggest, like just boom, here's a sledgehammer to your head. These government fleets were telling us that there's only so much capacity, you know, forget about the power station capacity and the grid capacity. Like at your local substation, there's only so many, you know, I wanna, what do they say, watts that they have available to you.

Yep.

And, you know, in this case they said, well, Amazon stood up a parking garage right next to our facility. And you know what they did? They installed a bunch of charging stations because they're Amazon and they can get 'em installed right away. They don't have all the red tape to cut through.

Yep.

Well, you wanna know what happened to all of our extra circuit capacity?

Gone.

Gone. Amazon took it all. And so, you know what now PG&E has to do? They have to run more lines, more wires, more substations. They can't run wires to that location anymore. So now the government is having to look at, well, do we need to move? Like, do we have to go acquire more land? And this is San Jose, this is not cheap.

Yeah, yeah.

Right? Like, now we gotta go buy, you know, land in a very real estate dense environment just so we can get to a spot where there's grid capacity available. You know, let alone talking about, you know, can the power plants handle the demand? Let's assume they could. It's the local substations. Then you're fighting for, power amongst your peers and amongst your neighbors. So hopefully you don't have an Amazon plant or like we've got Taiwan Semiconductor coming in north of Phoenix. Yeah, those guys are gonna suck up a ton of electricity.

Oh, it's gonna be big.

Right? And where's that gonna come from? Now you wanna throw like a charger on everything. So it definitely, you have to be aware of those things. You know, what's your, and you have to get them involved proactively. This is why we talk about risk management being a proactive identification and assessment and mitigation of threats to the organization.

I bet if anybody listening, they've never even considered this, talking about really grid power or substation power, what the availability is. I haven't.

And that's— I just assume you can plug something into the wall and as long as there's electricity, you're good.

But think about California. Every summer they have rolling blackouts.

Right.

What happens then too?

Yeah.

I mean, and you're talking about adding a lot more capacity. So it's going to be even more frequent rolling blackouts.

Yeah. So if you haven't had a proactive conversation with your power company and your utility company about this, you have to get them involved early because they may just be the ones that are like, yeah, it doesn't matter what you do. If you can get a hold of chargers, if you can get a hold of a vehicle, you can get all the permitting, we can't deliver power. You're going to have to figure out a whole different solution.

Well, and think about the money if you don't contact them that you're wasting going through all those processes and you had built it. And let's say that you have a smaller fleet, so you just decided you're going to install 20 charging stations, right? And then they're worthless.

When you think about— and I don't think this was a mind-blowing number to me, uh, the type of draw that we're putting on the grid. If you had 50 Class 8 trucks all charging at the same time, right, they're coming in, they plug in at night, and they're all charging at the same time. Those 50 Class 8 trucks are drawing the same amount of power as the entire Empire State Building.

Empire State Building is how many floors?

Oh, I have no idea. 100? 100+ office building.

Let's just call it 100. I think it's like 120 or something like that, but let's call it 100.

102.

All right, close. So it's 102 total.

Special shout out to our producer Kara.

Thank you, appreciate the stats. Think about the air conditioning alone, just that one bit of power, the air conditioning or the heating that has to take place in that building. Yeah, to keep 102 floors cool.

Yep. Dang. And now you're only talking about like the offset of that is 50 trucks, right? What was the smallest fleet that you ran?

Uh, the smallest I ever ran, probably 300.

Okay, 300 trucks is now 6 Empire State Buildings that you've just thrown on the grid in Lubbock, Texas on a daily basis. On a daily basis. Insane.

That is crazy.

Like, you just don't realize how big of a draw this is. And like, I think this is something that's a little bit mind-numbing. We almost take it for granted, like water pressure. You know, you just assume you turn the faucet on, you plug in the electricity, it's there. You don't realize what it takes to deliver that to you. Is why, like, I am firmly in the camp that the only way we get, if you want fully electric adoption, the only way we get there, and this means this is 10, 15, 20 years out, Nuclear.

All nuclear.

All nuclear. Because it's the only thing that can keep up with the demand consistently. You know, I'm all for like supplement with solar and wind and all that, but nuclear is the only one that's going to really generate the pop, the ROI. It's just crazy when you think about it like that.

Well, and that— you're right. And the, the steps it takes to actually build, permit, get approval for a nuclear—

well, that was the other thing that was crazy to me. Sorry, not talking about nuclear. The other thing, when you talk about permitting This agency said that in order for them to install an electrical infrastructure, right, get their charging stations all set up, they had to talk to no less than 23 different agencies in their fleet. Like, different stakeholders. Like, you talk about stakeholder satisfaction. Like, 23 different agencies had a hand in the process of selecting, procuring, delivering the infrastructure, project management. I mean, like, 23 different agencies that they had to consult and involve in the process of delivering infrastructure to, to get, you know, like a serious infrastructure. And that's the other thing they noticed too, is that if you— the most expensive installs are going to be if you only do a couple chargers or if you're doing as many chargers as you can. The sweet spot seems to be kind of like a mid-range, you know, well, we only need this many chargers, like, yeah, we have 400 vehicles, let's just do 50. You know, if you do kind of like a mid-range where it's more than a few, but it's, it's less than, a ton.

Well, if that's the case and you have parking, you would actually probably have to pay somebody to switch out vehicles throughout the night. Like, that'd be a whole position. Oh yeah, doing nothing but going and driving around, parking, recharging.

Yep, swap it out. If— especially if you don't have enough chargers for the number of vehicles you have in your fleet.

And yeah, and no one's thinking about that cost, I'm sure.

No. Well, and that was something else they brought up is, well, you know, we do a lot of hot seating. Right? So where you've got a police cruiser comes in, they don't get assigned to a driver.

Yep.

It comes in, they swap it out, and the next officer takes that vehicle back on the road. And all they do is it's fuel and go, fuel and go. You're not doing that with electric. You know, like you're going to have dedicated cars for each driver. They talked about road crews, like they share vehicles and how do they handle that? You know, like they've got to have time now to charge in between. Which means you've got to have a really good infrastructure to do fast charging. And even then you're still down for 30, 45 minutes to get a full charge for the day if the prior crew ran it all night. Yeah. You know, so like those are things to think about. The other thing I thought was interesting, we had talked about the technicians and getting them trained on repairing electric vehicles.

Uh-huh.

But you don't have to have everybody certified in electric vehicles. You know, you can have like the vendor can take care of a lot of that. You can outsource it. You can have, you know, a few key technicians who are electric certified and know how to repair it. But I'll tell you what, even if they're not doing the electrical repairs and you have other people doing other routine maintenance around it, you still have to teach them all about the safety because there's high voltage electrical lines running just behind the firewall, just behind the seat, underneath the floorboard. You make one wrong punch and instant kill, just dead. And so like, there's a whole safety aspect. You have to train all of your techs on how to safely work and where they can touch and where they can't touch, what they can unscrew and not unscrew. And you have to do that, you know, on a vehicle-by-vehicle basis. So hopefully your fleet is somewhat standardized and you're not doing something crazy like getting Mach-Es and Leafs and just taking whatever's available. Yeah, because, you know, that'll be a total nightmare.

So buffet.

I thought was really interesting, they talked about was the only, the other people they had to train was their local fire department because their fire department hadn't dealt with electric vehicles.

Right.

And so they're like, oh yeah, we talked to the fire department and they said, well, you know, how would you put out a fire in an electric vehicle? Well, we just spray it down with water. Nope, nope, don't do that. You gotta use foam. You know, like there's specific, firefighting techniques you have to use on these vehicles.

Do most fire trucks have a foam?

I don't think so.

So that would have to be added as well.

And you'd have to have that on site, you know, like a fire suppression system. And we do this in the computer industry, right? Like we have, you know, Halon fire extinguishers because you can't run the water in a data center. You're going to have to have this very similar thing for your electrification. So. Things that people don't think about. I didn't know this, because you look at the Ford Lightning, the base fleet vehicle they're throwing out right now is $40K.

Yeah.

Whereas the Lariat's $80K. You look at a regular F-150, and that's close. A base-level F-150, probably, what, $20,000, $25,000? Yeah, probably. So it's like a $15,000 premium. You know, but a Lariat or a Platinum F-150, you know, you're getting $70,000, $80,000. So it's pretty close, you know, lightning to ice on that side. What I thought was interesting was that when you start talking about bigger vehicles, medium-duty, heavy-duty vehicles, you're actually looking at like 2 to 5 times the cost just to purchase that vehicle.

Yep.

Like just outright, you know, and that's the thing when I come back to like being pragmatically economical about it. Is this the right fit and application, or are we just electrifying to electrify?

So it's probably an answer on both. Yes, I think some people are doing it just to do it and say they have.

But Steve and I talk about the best way to lower cost in a fleet is to not buy a vehicle. Yeah, right. Because the number one cost in any cost of ownership calculation is the cost of acquisition. And so if you're telling me the cost of acquiring that vehicle is 2 to 5 times higher than its ICE equivalent, right away the cost, you know, if I did a TCO analysis between two different vehicles and ran them out and said, well, if you had a fleet of 100 Teslas versus a fleet of 100 Ford Fusions, this is what your TCO is going to look like. One company is going to be 2 to 5 times higher just because they chose to go electric. And it won't be fuel cost and maintenance and all that. Like, that doesn't offset that acquisition cost because it's so huge. And that's something that people don't think about.

Well, they don't. And you think about your budgeting, right? So let's say you have a replacement at 10 trucks or 10 vehicles every single year. Well, if you're saying, hey, I'm going to now adopt electrical, but my budget's the same, you're now cutting that in half at the minimum. Yeah, I'm not replacing 10. I'm now— I can only get 5 or 3 depending on what you end up purchasing.

Yeah. So you need to get really proactive with your finance and your procurement department and say, hey, we have this mandate coming out. We have to do this. We're going to have to find ways to pull the money from something else. You know, we're going to have to have a conversation with your departments and say your replacement fee is going up so we can replace it with an electric vehicle that costs 2 to 5 times as much. That's just crazy to me. That number is crazy.

It is crazy. And I'm wondering, and like, how does California justify saying, hey, all of you have your budgets and guess what? You now have to spend, let's call it, 3 times more on vehicles than you ever did in the past, not to mention infrastructure. Like, where does that money come from? They already are the highest tax state.

Well, and they, you know, like you go through the bankruptcy at the state level and things like that too that don't help things.

Right. Yeah.

Like, that's a question they're going to have to answer. Honestly, if your power company is telling you you can't get electric power at your location within 3 years and you have a mandate from the state— and I think that's the thing that bothers me, right? And this isn't a political thing at all, but The thing I don't like is when you can't speak and can't have like a, hey, we need to adjust and be pragmatic. You look at what happened with GM, right? You had the Trump administration coming out and basically rolling back the CAFE standards where they were saying, hey, you don't have to hit 26, we just need to do 24 for miles per gallon. And GM got behind that rollback. California removed them from the state bid. Just flat out, like it was a political decision.

Yep.

And California, they're in charge of their political decisions. I'm okay with that. What I don't like is that it sends a message to everybody else is that you either are going to support what we're doing or we're not gonna do business with you at all. And so as a political entity, you have a situation now where I have the entire power and utility industry that can't speak up and say, we can't meet this mandate for your people. 'If we speak up, then we're going to get blackballed, we're going to get shunned, right? We're not going to be treated favorably in the Senate and the legislature. And so we can't speak up.' And so you have this whole mandate. Everybody sees it's coming. Everybody knows it's too soon, it's too fast, but nobody will say anything. They just keep toeing the party line, because they're afraid of getting censored and silenced.

You know what this kind of reminds me of?

Zombified. The what? Zombified.

Great song. A little bit. No, it reminds me when, you know, DEF was first mandated and it came out and that first year of the trucks, no one was ready for it. They weren't prepared. There was nothing but issues. I mean, it cost trucking companies millions and millions of dollars.

Right.

Right. And but it was all private companies. It wasn't, you know what I'm saying? It wasn't government entities that felt this effect. Now, there were some that said, hey, you're your trucks or whatever else, your F-150s, your Silverados, they have to have it as well. But they didn't have anywhere near the regen issues, you know, that Class A trucks had.

And school districts and buses and everything else, terrible. Yeah, they had a lot of problems.

I mean, we all remember because we went through it, but that's what it reminds me of. It's when, hey, it's a good idea to do this because, you know, we're trying to protect the environment, but there wasn't enough time, right, put into actually doing it the right way.

Like, just slow down. Let's get to the end. If we need to, let's just slow down and say, hey, we can buy a couple more years. Now, I will tell you, the one thing that gives me hope is we got through the DEF crisis. We got through that. There was a lot of learning curves, and you had the Gen 1, Gen 2. There was definitely some modifications that had to be made to the system.

Gen 4 is when they got it finally.

Right, but it took them a little while. But had they not had the mandate in place, they might not have realized that— we're a big fan of— RTA anyway, we ship software. And I always say, well, version 1 is better than version none.

Yeah.

But I'll tell you what, when you talk about real cost, like, that's expensive to do it that way. So I'm all for like, hey, ship it, get it out, go quick. But at the same time, you've got to be pragmatic. You can't just like, nope, we're committed to the cause and we're going to die on this cliff. Because you look at this and there's no reason why every one of these agencies and every one of these utility companies should be saying something and getting the legislature to to say, we can't meet this deadline. We can't get the vehicles. And even if we could get the vehicles, we can't get the infrastructure. And if we could get the infrastructure, we can't get the charging station. Construction permits won't be done in time. Like, there's just no time.

Um, I, I don't see there's any logical way it actually goes into effect. No, they're gonna, they're gonna, they're gonna get sued. I mean, California will stay strong, but they'll get sued. It'll get pushed back.

And I'm okay with like, don't push it back forever, right? Don't get rid of it, but like push it back and just be pragmatic about it. And I think that's my biggest thing is—

or lower your first-year threshold to 10%.

Yeah. You know, wait until the grid and then invest in the infrastructure, invest in the grid.

Yep.

So, well, that's, I think that's going to wrap it up for us today. So just as a reminder, we've got the Fleet Success Playbook. If you want to go check that out or request a copy of that, you can go to fleetsuccessplaybook.com. And then we'll start throwing in a little pitch for next year. Save your calendars. I'm going to say early spring, March-ish, out in Las Vegas. We're going to be doing Fleet Success Summit 2023. Going to bring the show back.

We are. We're going to actually start posting some snippets of the summit on social media.

Yeah.

So people will be able to see what they missed if they weren't able to attend.

It was so awesome. There's so many good speakers at that event.

It was good. You felt I don't know if numb's the right word, but you felt a little numb walking out because of how much information and how much you had to process.

Yep. And you definitely felt, right? Like you felt through that. Like there were so many heartfelt stories and inspirational stories. And it was definitely— when I set out and I said, like, look, I don't care if we lose $100,000 on this, I wanted to walk out of that building feeling inspired. And I will say it was like promise delivered. That's exactly what happened. So you don't want to miss this next year. Get it in your budget, get it in your calendar. You'll see resources and information up on fleetsuccesssummit.com. Start planning for it now. 2 days, 1 stage. Who knows how many speakers we'll do this year, but I imagine it's going to be about 12, just like last year. You just come prepared to be inspired as a fleet professional, you know, somebody that's going to speak to you in your job, not some generic leadership conference. It's a fleet leadership management conference. Like, it's— it really is just an amazing experience unlike any other that I've been to. And we've been to a lot of trade shows.

We have.

And a lot of keynotes, and I've seen some good keynotes. There's been nothing like I've seen on that stage.

I 100% agree. And which isn't bad for a first show from a bunch of amateurs. So one of the things that I would ask for our listeners, if you did attend and there was certain speakers or topics that you enjoyed, shoot us an email, let us know. We'll see if we can run back some of the same speakers if people enjoyed them that much and they got that kind of value out of them.

Yeah. And you can do that. You can send that to podcast@rtafleet.com. You know, any— anything that you want to add to that, we'd be happy to share that with people as well. So as always, fleetsuccesssummit.com. Jeff and I signing out.

Later, skater. Thanks for joining us on this episode of the Fleet Success Show. If you liked our show, we'd appreciate your 5-star review. Be sure to subscribe anywhere you listen to podcasts and come hang out with us anywhere on social media at Fleet Success. See you next time.