Commercial Fleet Electrification and Financing Structures

Speakers:

Robert Gurman, Managing Consultant, Proenergy Consulting

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Robert Gurman, a Johns Hopkins SAIS alumnus joined a webinar to discuss the emerging commercial sector of the electric vehicle landscape.

After distinguishing between commercial and personal electric vehicle markets, Gurman detailed the three key stakeholder groups involved in the commercial fleet adoption: fleet operators, original equipment manufacturers (OEMs) and charging infrastructure providers.

As defined by Gurman, fleet operators include companies that operate delivery vans, trucks, transit and school buses. OEMs are manufacturers of electric trucks and charging infrastructure providers deploy the infrastructure necessary for charging electric fleets.

Gurman argued that fleet operators looking to electrify their fleet are not convinced that the two other stakeholder groups are committed to large electrifications. On the other hand, OEMs require huge amounts of capital to rapidly scale production, but markets are not convinced there is significant demand. He noted that charging infrastructure providers are also reluctant to install at scale until fleet operators commit to large scale electric vehicle deployment. Gurman defined this as a 3-dimensional “chicken-and-egg” situation where each stakeholder is committed toward large scale electrification but requires the other two groups to demonstrate similar commitment.

Gurman outlined five drivers of commercial electric vehicle fleet adoption: technological innovation, costs, sustainability, policy support and private sector support. He however noted that there are major barriers, including lack of charging infrastructure, commodity prices, regulatory uncertainty, immature supply chains, nascent business models and availability of financing.

To conclude, Gurman detailed a project finance scheme for commercial fleet charging infrastructure, underlining value proposition and contract structure.