Adoption of electric vehicles has skyrocketed in recent years. Car sharing businesses remain the prime drivers of this adoption, as customers demand more environmental friendly transportation modes, and EVs offer lower operational costs to business. Car sharing companies have been able to properly mitigate all issues associated with EVs, including their high unit price, charging infrastructure and range anxiety. Today having electric vehicles in a shared fleet is a customer expectation that is hard to bypass.
Several countries have particularly focused on adoption of EVs, both as national transportation polices and private initiatives. In Germany, for example, the EV market share has increased by 1.5% in the last 4 years, while 30% of Norway’s fleet and every second new vehicle is electric. The country wants 100% of all new vehicles to be electric by 2025. In the US around 2% of the market is for electric vehicles. The Chinese market expanded by more than 70% over the previous year, making China the biggest EV market. Domestic EV producers dominate this market with 94% share.
While the numbers on market share of EVs don’t seem so impressive compared to the internal combustion engine based vehicles, the acceleration of the growth has been nothing short of astonishing. The growth can be particularly attributed to the adoption of EVs in car sharing operations. Almost all car sharing operators now have some share of their fleets electric. Car sharing companies are able to mitigate some of the issues that prevent wider adoption of EVs and offering EVs as part of their mobility service has almost become an expectation on the user side. Car sharing customers often tend to be concerned about the environment, therefore offering electric vehicles seems very reasonable and attractive primarily to satisfy customer expectations and to show the brand culture as forward-thinking and future-oriented.
Several reasons have been prominent in the prevention of higher penetration of EVs on the private market. Price of each vehicle, spotty charging infrastructure and range anxiety have been universally proclaimed as obstacles to EV adoption. However, car sharing companies are able to mitigate these issues with clever distribution of cost of each unit across all services, operating station-based charging points and clever management of charging vs. renting times. Range anxiety plays a much smaller role in urban environments, and almost all carsharing operators have internal combustion engine based vehicles to cover mid- and long-distance trips. Solving these problems allows companies to attract more customers who wish to test electric vehicles but don’t want to commit to buying one, as well as, solving the so-called chicken-and-egg problem with charging infrastructure – when there are not enough vehicles to justify building a big infrastructure, and there are not enough EVs because there is no charging infrastructure.
Price of electric vehicles remains much higher compared to their fossil fuel-based counterparts. Many analysts predict that the EVs can become truly price-competitive at around 2024 if the battery prices continue to fall. Currently, 48-55% of the EV manufacturing cost comes down to battery costs and there are severe constraints on the materials for batteries and as a result, the supply of batteries. However, battery costs are dropping at 19% per cumulative doubling of manufactured capacity. Many OEMs try to deal with the issue by forming partnerships with battery companies. For example, Nissan and Renault partnered with CATL, the largest battery producer. In car sharing, companies are able to balance the price of each unit with the operational costs of each unit which tend to be smaller for electric cars. A 2018 University of Michigan study showed that electric vehicles cost less than half as much to operate as petrol or diesel-powered vehicles. Smaller operational costs, paired with a low price per mile, as well as, dispersing the fears of environmental impact lead to higher utilization rates.
Charging is another big issue preventing the adoption and utilization of EVs. Customers have range anxiety – fear of being stranded without battery, while car sharing operators fear that they won’t be able to fully utilize their units because of battery drainage. Charging of each unit takes a long time, which means, unlike fossil fuel based vehicles that can be refilled at a moment's notice, electric vehicle fuel levels have to be actively managed by the operators. This requires careful balancing of utilization and rental times with charging period. Several academic papers, as well as, business tools have been developed to address this issue. Car sharing operators now measure energy used per mile and manage to get one to two full charge range utilizations per day. This is easily done for station-based car-sharing businesses, as stations are equipped with charging outlet so the problem of battery drainage rarely arises. The issue is more complex with free-floating operations, as the main goal of operators, in this case, is to encourage drivers to park vehicles near charging stations or sometimes even move vehicles if their battery levels get too low. However, this issue is also solved through fleet management systems and careful prediction of fuel level depletion based on each trip length.
General charging infrastructure is being improved by OEMs and governments in some countries. For example, Germany is planning to spend upwards of €300 million on charging infrastructure. Volkswagen, Mercedes, and BMW have joined forces to build fast-charging networks along Germany’s highways. Up to 500 EV charging stations will be installed by the year 2020. In the US, Electrify America backed by the Volkswagen group is one of the most significant initiatives to expand infrastructure. Audi and Amazon partnership aims to make charing more convenient for private owners. Japan has been a leader in EV adoption. There are more electric charging points in Japan than petrol stations – more than 40 000 charging stations compared to 34 000 gas stations.
Most of the new charging infrastructure now is equipped with fast charging technology. This infrastructure compliments the electric vehicle management systems, further mitigating any risks of vehicles being left with empty batteries. Most fleet management systems check the fuel levels of individual vehicles, in case of electric vehicles active monitoring and management of battery level is a requirement.
As technical problems of fast charging are being solved by OEMs, battery companies and the general infrastructure issues are tackled by governments, car sharing businesses remain the main drivers of EV adoption. Whether station-based or flee floating, city-based car sharing companies are able to mitigate any risks related to range through proper balance of EV and gas-powered vehicles and proper management of re-charging operations. Providing electric cars as part of the fleet is now a requirement for all car sharing services, as environmentally aware customers expect car sharing services to have a positive impact on the environment and to represent the future of transportation.