Even if we don’t see a real breakthrough in battery tech, it’s still a Wild West out there for electric vehicle residual values.
 - Photo of a electric vehicle charging station in Hillsboro, Oregon. Courtesy of Visitor7 via Wikimedia Commons.

Even if we don’t see a real breakthrough in battery tech, it’s still a Wild West out there for electric vehicle residual values.

Photo of a electric vehicle charging station in Hillsboro, Oregon. Courtesy of Visitor7 via Wikimedia Commons.

By the end of next year, there are supposed to be over 50 types of plug-in electric vehicles for sale in the U.S. At some point in the recent past, it appears that everyone decided the time is now for electric vehicles.

Our federal and state lawmakers are certainly doing their part with $7,500 incentives at the federal level and many states chipping in another $2,500 - $5,000. With all that support, we’re still a long way from lifecycle cost parity with traditional ICE vehicles. Unfortunately, politicians are leading the charge here and they have little to no concern about being economically rational.

The current deluge of electric vehicles has resulted in a rather chaotic product development cycle. Add the current fascination with autonomous vehicles, and we all should have some real sympathy for the product planners at the major vehicle manufacturers. As fleet managers, many of you are probably looking for some sympathy too. We’re a long way from fleet-friendly electric vehicles today.

Fleet careers are made on managing costs and delivering predictable results. It’s a real challenge to deliver either of those with the crop of new electric vehicles coming our way. Battery improvements at this point are gradual and evolutionary but if we do get to the point where there is a revolutionary change, the lithium batteries in today’s vehicles are going to be worth next to nothing.

Even if we don’t see a real breakthrough in battery tech, it’s still a Wild West out there for electric vehicle residual values. We saw some incredible early interest in BEVs over the last few years.

But now that the tax credits are fading and the early adopters all have one already, it’s going to be very interesting to see what the demand curve looks like going forward. Maybe there is a whole new wave of buyers ready to adopt the EV lifestyle, but that’s a risk most fleet managers can’t afford to take.

One of the great unrealized downsides to the recent push for instant electrification is that the major vehicle manufacturers are all now forced to spend the vast majority of their R&D dollars on technology that is legislatively driven rather than market driven. The technological leaps we have seen in the last few years with gas and diesel powered vehicles has been almost breathtaking.

We have full size pickups getting 25 MPH and more. We have incredibly versatile full-size work van platforms that deliver amazing efficiency while providing a safe and ergonomically functional work environment. Imagine what the tens of billions of dollars being thrown at EVs could have done if the manufacturers were allowed to continue down this path.

If you thought managing a fleet in the past was a big challenge, you’ll be even more impressed with the complexity we are all facing in the near term. It’s no longer enough to worry about safety, job suitability, residual values, and in-cab technology. Proper fleet management today also requires a view toward the future and a crystal ball that can give you insight into the constantly changing political environment that now drives so many of our decisions

Related: No Pain, No Gain

Originally posted on Automotive Fleet

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Sherb Brown
Sherb Brown

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Sherb Brown is the president of Bobit Business Media. Sherb has covered the auto industry for more than 20 years in various positions with the world's largest fleet publisher.

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Sherb Brown is the president of Bobit Business Media. Sherb has covered the auto industry for more than 20 years in various positions with the world's largest fleet publisher.

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