June 17, 2019 | Hugo Pereira
As more drivers switch to electric vehicles, companies must start evolving the role they play for the new era of electric mobility. This evolution goes beyond simply installing reliable charging infrastructure for employees and guests. Electric mobility will affect companies when it comes to fleet policies, awareness, and employee transportation benefits.
Many businesses are already aware of the importance of sustainable mobility. A key figure from the latest report by EV100 is that 145,000 fleet vehicles from just 23 companies are expected to be electric by 2030. While 2030 seems far away, Bloomberg New Energy Finance (BNEF) conservatively predicts that there will be 30 million electric vehicles on the road by 2025.
Figure 1 - Key findings of EV100 by The Climate Group on electric vehicle uptake by 23 companies.
Electric vehicle uptake on its own is rather easy to comply with—what most businesses is consider concurrent to electrifying their fleet is providing charging infrastructure for their employees at home, and employees and guests at work. But fleet electrification and charging infrastructure is just the tip of the iceberg. A hidden impact of the transition to electric mobility is that it increases awareness of sustainable practices.
The latest survey conducted by CleanTechnica shows that the most self-reported reason for purchasing an electric vehicle is reduction of environmental impact. This shows that electric vehicle drivers tend to be more conscious about their carbon footprint and non-sustainable habits.
So, what does this mean for businesses? Here’s my take.
The MIT Sloan Management Review published a report on The Business of Sustainability back in 2009, concluding that many companies struggle with the concept of sustainability, and may have difficulty creating (or even finding) a compelling business case for sustainable practices. The survey revealed a pervasive lack of understanding among business leaders when it comes to corporate sustainability.
MIT developed the following framework for understanding the drivers and impacts of a sustainability effort by separating objectives into four categories.
Figure 2 - Framework for drivers and impacts of a sustainability effort by BCG and MIT Sloan Management Review
Ten years passed since that report and business practices have gone through many changes. Sustainability is no longer just about environmental responsibility, and now includes ethical, social, and governance factors such as workplace and community relations, and compliance and reporting.
The social behavior of organizations is scrutinized from all corners of the marketplace—including by investors, employees, regulators, competitors, customers, and communities—and is factored into investment, business, purchasing, and employment decisions.
Stakeholders—including customers, shareholders, and governments—are paying more attention to sustainability and putting pressure on companies to act. Various policies and CO2 targets are being set to prompt companies to become more sustainable, and contribute to how our planet and quality of living will evolve.
Setting sustainability goals and performance indicators as part of key business metrics will help businesses gain an edge on competitors. Additional benefits include:
A recent survey by ING Bank found that 30% of Europeans with a driver’s license are interested in car sharing services, and more than 60% are prepared to share their car for money. The same survey reports that the total shared car fleet will grow from 380,000 to 7.5 million in 2035. In the US, MarketWatch reported that the car sharing market will surpass $11 billion USD worldwide by 2024.
Figure 3 - Car sharing sentiments by ING International Survey participants
With the acceleration of electric mobility, not only may the internal combustion engine (ICE) cease to exist, but there also may be fewer cars on the road.
Businesses can help combat congestion by empowering employees to choose services beyond car ownership. Companies such as Netflix and Uber provide a travel budget for employees to use car or ride sharing services during their employment (including weekends), reducing the need for (large) car fleets.
Public transport is also improving across the world, providing businesses with yet another means of transportation to tap into while developing appealing ways for people to use public transport.
Figure 4 - electric car charging in at Amsterdam Schipol Airport
Amsterdam is a great example of such an ecosystem and is becoming a leader in smart mobility. The city boasts everything from reliable public transport and numerous of bicycles paths, to electric car sharing solutions and both corporate and consumer incentives to adopt electric mobility.
With cities becoming smart and companies going electric, energy sources also start to take an important role.
One challenge business leaders face when electrifying their fleet, business, or building a business around electric mobility is the belief that electricity consumption will drastically increase. While there is some truth in this, the reality is that energy consumption will not increase nearly as much people generally believe.
Examining several studies on the impact of EVs, Redburn expects that the average global electricity consumption from EVs will grow from around 8TWh in 2017 to 1,800TWh by 2040. While this is indeed a massive increase, it only represents 5% of the projected global electricity consumption in 2040. Electric vehicles (EVs) are extremely energy efficient, and certainly when compared to ICEs.
The implementation of a scalable, smart, and easy-to-use charging infrastructure is a key first step, followed by renewable energy sources. One of the hidden positive impacts of electric mobility is that the demand for renewable energy will exponentially increase. Current consumers going electric mainly do so for sustainability purposes—to contribute to a better air quality while reducing CO2 consumption.
As a business, this is an important aspect to take in consideration when adopting sustainable mobility, as it help accelerate the transition to a zero-emission world.
There’s more to electric mobility than just cars. On a broader level, electric mobility is about raising questions regarding sustainability practices, both on business and individual level.
On a personal note, prior to joining EVBox, I rarely questioned the type of transportation I used, the food I consumed, or the sustainability practices of the companies I worked for. Four years after joining the organization, I am much more conscious about the type of transport I use (avoiding flights or trying to offset my CO2 emissions if there is no better alternative), the food I consume (reduced meat consumption), and prompted EVBox to look into what sustainability means to us (via our products, actions, and even when choosing our new headquarters).
Being part of this transition toward a zero-emission world changed my perspective—not just about the cars we own and use, but also about the whole ecosystem. While nothing is perfect, this transition looks like a brighter option than the system we have currently in place.
Businesses can help accelerate this transition. It’s only matter of time…and choice.
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