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How to make the business case

    Are you a future transport leader? Or just interested in Electric Vehicles? The following is an overview of how to make the EV fleet transition happen.

    In this article we will go through the key steps to building the business case for electric vehicles in fleets. The BetterFleet tool, part of the Charge Together Fleets program, is designed to help you to complete many of these steps. 

     

    The steps to building a business case: 

    1. Find the champion
    2. Determine the audience for your plan
    3. Establish your priorities for your fleet purchasing decisions
    4. Determine the appropriate planning period
    5. Decide on how you will set up your projects (locations, existing fleet, groups of vehicles)
    6. Set up your underlying assumptions
    7. Look at different vehicles and different scenarios  (Get to know the vehicles, find comparables etc)
    8. Perform sensitivity analysis
    9. Present reports to management  – review, rinse, repeat

     

    1. Find the champion/s

    It cannot be stressed enough that finding a champion for the project is critical. This is both a member of the operating team with a passion for future transport and reducing emissions and also an executive sponsor who will drive the project forward. Part of this involves ensuring there is alignment around the “why” of the project.

    Electric vehicles deliver great environmental benefit but there are other drivers for transitioning. When a migration is planned well, EVs can also deliver economic benefit. Additionally, and for the average fleet, other benefits may include: safety, driver comfort, vehicle performance and reputational drivers.

     

    2. Determine the audience for your plan

    The next step is to determine the audience for your plan. It may be your CEO, Mayor, Executive General Manager,  Finance Manager, Fleet Manager (if you are in sustainability or procurement) or Sustainability Manager (if you are in fleet). It could also be engaging with your Fleet Management Operator (FMO) if you outsource functions to them. 

     

    3. Establish your priorities for fleet purchasing

    Many fleets have established a priority system based on a range of factors. 

    These include: 

    • Environmental
    • Economical
    • Health
    • Safety 
    • Vehicle performance
    • Driver comfort 
    • Reputational 

    However, for those who haven’t or for the purpose of refreshing your knowledge in relation to electric vehicles, a good starting point is developing a clear sense of these drivers and the relative weighting your organisation will put on each. The weightings could then be developed into metrics for evaluation. 

    • A simple weighting system may be appropriate. However, most fleets will require a few “gates” that disqualify a vehicle for noncompliance – for example, a poor vehicle safety rating or a required range. 
    • A more advanced approach to recognising the value of electric vehicles would be to put a specific price on carbon, which would then flow through to the economic outputs.

    4. Determine the appropriate planning period 

    It is important to consider the time-frames of of your EV plan. Are you preparing a one year plan, a five year plan or a ten year strategy? There should be a good balance between short term operational realities, and “wins” and opportunities that will materialise in the long term.  

    You may choose to hold electric vehicles for longer periods, during which time electric vehicle pricing is likely to reduce. Therefore, a 5 year plan to determine the right timing for the migration of vehicles and infrastructure would be appropriate. 

     Electric vehicles require new infrastructure, staff engagement and an interactive approach. As such, we strongly recommend that you do not treat it as a ‘vehicle-by “vehicle” process – but rather as a mid term strategic roadmap based on a series of individual projects. 

     

    5. Decide on transition projects (locations, existing fleet, groups of vehicles)

    Any transition is effectively a set of projects. The BetterFleet platform enables your organisation to create a set of projects that target different transition opportunities. For some organisations, the project may be “pilot project” and involve one vehicle and one charger. For others it may be “transition all pool vehicles in North Sydney”, or “ creating SUV options for mid level executives in Victoria”.  

    The type of project you create depends on the size and complexity of your fleet. If you only have 5 vehicles it is likely to just be “shortlisted vehicles 2019”. However, if you have thousands, the projects will need to be more granular. Important factors when creating a project include when you are aiming to replace the vehicles, and the default holding period. 

     

    6. Agree on your underlying assumptions 

    The global settings in BetterFleet allow you to establish the underlying default settings which will create the baseline for your analysis. 

    These include petrol and electricity prices. The amount of green power you assume will be used for electricity can also be established here.  These settings can be altered for specific projects. 

     

    7. View different vehicles and different scenarios  (Get to know the vehicles, find comparables etc)

    One you have established a project you can add vehicles. Some fleet managers will know which vehicles they would like to compare, while others (sustainability managers for example) may not know which vehicles are appropriate as comparables. 

    We have created a vehicle guide to help you understand the attributes of the different electric vehicles available, and we have created an article to help you understand which vehicles to compare. 

    The reason we have used scenarios rather than the typical “compare car” is that it allows users to modify all options of each vehicle. If you want a better fleet – it will take some flexible thinking in terms of how long you keep vehicles, how you buy them, and what you believe the residual value will be. 

     

    8. Perform sensitivity analysis

    When technologies are new it is important that you create a “risk” adjusted view that provides senior decision makers with an understanding of the “likely” outcomes and an understanding of best and worst case scenarios.

    The BetterFleet tool provides you with the ability to automatically run the following sensitivity analysis:
    (a) TCO by years owned
    (b) TCO by kms driven
    (c) TCO price of fuel
    (d) CO2 emissions given different % green power

     

    9. Present reports to management  – review, rinse, repeat

    BetterFleet allows you to print a management level report  which will facilitate discussion in your organisation. The ease with which you can create reports with varying details allows you to iterate ideas until you arrive at your first potential  vehicle procurement. 

    The EV industry is rapidly changing with new vehicles arriving all the time. There will be constant opportunities to evolve and refine the business case and we encourage you to use this process and the tool as you move towards a lower carbon future. 

    Good luck!