Implications of the Biden Bill & Executive Order

The U.S. Senate made history on August 10 by passing the $1Trillion Bipartisan Infrastructure bill and moving it to the House for final passage. The legislation includes $550 billion in new infrastructure-related spending, including $73B for power grid modernization and $15B for electric vehicles. The figures are significant, even though they pale in comparison to the initial proposals by the administration.

Still, passage of the bill sends important signals to federal government agencies and the broader marketplace about the broad consensus that exists around electrification of transportation. When changes to major segments of the economy are perceived as bipartisan, they tend to reverberate much more quickly across mainstream America. In the case of acceleration of EVs, that seems to be happening, rather dynamically, across states today. Virginia, Florida, Missouri, and Montana are engaging as a robust spectrum of states that are creating their own EV-friendly and supportive policies, which complement the Federal legislation. Indeed, a fairly long list of both red and blue states are either proposing or amid signing EV bills today.

There are roughly 645,000 vehicles in the federal fleet, including 225,000 postal vehicles. Even before the Administration proposed the Infrastructure bill, President Biden signed an Executive Order back in January 2021 directing federal officials to devise plans for converting all federal, state, local and tribal fleets to “clean and zero-emission vehicles.” While this was an important symbolic victory for the EV-industry, there are a lot of questions to be answered and work to be done to convert the federal fleet in a sustainable way.

Paul Schuster, an Accenture leader focused on the Biden bill and implications for clients across industries says, “This is more than just swapping out internal combustion engine (ICE) vehicles for EVs. It’s easy to say that we are going to purchase EVs now instead of ICE vehicles in a 1 for 1 way, but the reality is that we have built an infrastructure to manage gas-fueled vehicles. Now we need to build and manage this for electric cars.” As federal clients increasingly engage Accenture in their ambitions and questions around fleet electrification, we are cutting through the complexity to help them make tangible decisions where they can today and put plans in place to take advantage of developments that will become more clear tomorrow. Accenture invites all federal agencies weighing their options for electric fleet conversion to engage us in the process. We are eager share everything we know about how to make the most pragmatic decisions as we help clients around the word with this challenge.

Accenture & Federal Leaders are Working Through Challenges to Electrify Fleets

There is universal concern amongst public and private fleet managers around a few things when it comes to electrifying transportation. One is operational reliability. There is a big set of concerns and desires to ensure that EVs will be able to operate as required for mission-critical roles. Whether it’s military or FEMA services or corporate telecommunications, operational reliability is incredibly important. Also falling into the category of operational reliability for fleet leadership are questions about range, capacity to idle and capacity to deal with “abnormal” situations. Another related concern is around infrastructure and understanding what required electrical systems and chargers are needed to support both short term and long-term vehicles. A fleet could have 15 EVs but then expand to 100 in a decade. How much charging infrastructure does one start with and then how is that scaled? These are new questions for a lot of fleet managers, who have historically been good at managing vehicles but have not had to manage infrastructure.

The transition to EVs would not be complete without addressing cost reliability. Fleet directors need to constantly ensure that their operations are as cost-efficient as possible. The budgets don’t allow for a lot of surprises. With so much unknown around EVs and the chargers, including infrastructure and battery replacement scheduling, there is a lot of concern that budgets are going to be blown up.

Most federal and private clients find it difficult to get to a defensible business model for EVs. There are many things that they aren’t considered when thinking about the “total cost of ownership” of an EV versus an ICE vehicle. The biggest one is downtime. As George Hobbs, an Accenture consultant leading the EV practice in Europe states, “EVs break down so much less than ICE vehicles. The data is still being amassed, but we have a client that has been running 150 EVs for 6 years and none of them have broken down or had any significant maintenance issues to date.”

Federal clients are often concerned about starting the transition to EVs because of a lack of data about their existing fleets. Fortunately, we do not need telematics data to gain real insights about existing fleets and opportunities to electrify. But moving to telematics and more sophisticated data systems makes this collection and tracking a lot easier, especially as fleet conversion progresses. Public sector clients are often concerned about the quality of their data, especially for vehicles and fleets where a lot of things are manually processed and stored in different places. Accenture views this as an opportunity to reevaluate data systems overall and make the business case for upgrading data & analytics systems and tools.

eIQ Mobility, an Accenture partner who has best-in-class EValuate software to support fleet electrification decisions has already assessed over 150,000 vehicles, using readily available fleet data such as fuel usage, VIN information, vehicle location, O&M costs, or telematics. Accenture is developing strategies with eIQ Mobility to help clients assess the EV models required for fleet transitions, the best locations for EV chargers, and the number of chargers required for each location, including all the systems integration and digital factors that go into managing and optimizing EV fleets and infrastructure. Accenture brings the best of its human-centered consulting approach, to make sure the driving, charging and management experience is optimized for comfort and cost-savings. eIQ Mobility, along with parent company NextEra Energy, is bringing its ability to provide the needed EV feasibility assessments, electrical infrastructure, solar & generation systems, energy management and financing to ensure operational reliability on a guaranteed basis for clients. As Yann Kulp, Co-Founder of eIQ Mobility explains, “At the end of the day, the vehicle is a battery on wheels, and that’s a very new type of fleet. Clients increasingly want to think about EVs as a similar asset to solar where NextEra finances, deploys and manages infrastructure and provides guaranteed operational uptime. Operational and financial risk is now on our shoulders and we have demonstrated over the past 100 years that we can do this. It’s very exciting for clients!”

Another opportunity for “reimagining” the electrification space is in determining the size of fleet more accurately, rather than replacing “like for like” vehicles. As Erika Myers, Global eMobility Director of the World Resource Institute points out, “We need to help the federal government right-size the vehicles for need versus purchasing what an employee wants to drive. If we replace a Ford F150 ICE vehicle with a Ford F150 EV, we must ask if that expense is necessary. Could we replace it with a smaller vehicle to reduce the overall footprint? This is a chance for the federal government to hit the re-set button and achieve a fleet that is fit for purpose.” Asking questions and analyzing route data to determine typical patterns can help with determining range needs and avoiding expenses for EVs with ranges that aren’t needed. If we don’t re-think our fleet as we electrify it, we will not get as much carbon-reduction benefit, and it will be more expensive for taxpayers.

Accenture’s Approach to Federal Fleet Conversion

Today, Accenture is most often working with federal agencies on their electrification strategies and building related business cases for the conversion. This involves conducting feasibility assessments and scenario modeling for transition across vehicle classes, across geographical locations and across different timelines. Accenture amasses the financial and sustainability implications of the conversion to create business cases. Decision-making tools like eIQ Mobility’s EValuate software often come into play to weigh options and understand the implications (financial and otherwise) of selecting different OEMs and vehicles for replacement in different localities. EValuate software also takes grid conditions into consideration, from a cost perspective but also weighing congestion concerns and identifying areas where mitigations like microgrids may be needed to ensure a reliable and resilient source of power for the vehicles. Overall, we are producing comprehensive strategies that include the vision, goals, and KPIs to be leveraged, and we package them so C-suite executives can digest the issues and make practical investment decisions.

Accenture often orchestrates analyses of key vendors for charging infrastructure, related digital platforms, and the vehicles themselves, for agencies to make decisions on equipment to buy or companies to partner with.  A premium is placed on the human experience with EVs, making sure that vehicles are available when needed, the charging experience will be optimal, that driver training is put in place to ensure expected returns from the EVs and that the management dashboards are intuitive and meet the needs of fleet leaders.  We specialize in developing the digital capabilities associated with the EV transition, including processing telematics data, and of course Accenture is highly proficient with managing the needed systems integration work with the building infrastructure. Accenture wants federal clients to have a seamless experience from the strategic process to the actual implementation of technology and we orchestrate a range of technology partners to accomplish that.

It Makes Sense to Jumpstart Fleet Electrification Strategies

Some agencies and companies are mobilizing slowly and cautiously to evaluate a fleet conversion, citing concerns about availability of vehicles, costs, and range. While the complexities are real and it’s important to assess the economic impact to individual operations as well as the broader economy, the experts suggest it isn’t wise to sit on the sidelines right now.

As Yann Kulp points out, “Public Fleet leadership’s job is to ensure they have a highly reliable vehicle portfolio that is cost-effective for taxpayers. We see time and again for state and federal fleets that the economics are excellent right now for a substantial portion of the fleet. If you could decide now to decrease cost and increase uptime, why wouldn’t you start right way?” It’s true that infrastructure remains a hurdle. It takes time to get permits, map out the needed charging systems, and organize to get it deployed. Kulp argues this is even more reason to start now. He says, “If you wait for something better down the road you are delaying the inevitable and your pain will be much higher because you are behind everyone else. Your access to vendors and utilities will be much less.” George Hobbs agrees on the access point. He notes, “Amazon ordering 100K EVs puts massive strain on the supply chain. The slower you move to make orders, the longer it’s going to take to get the vehicles. Look at the demand curve and get in line!”

Molly Bauch, an Accenture Innovation Leader focused on energy transition takes a more macro-view of the need for speed in converting the federal fleet. She notes “It can take up to 18 months to install a L3 fast charger and 5 years to upgrade utility feeders to handle them. Do the math, we don’t have time to move at typical market speed. We need the US government to incentivize and mobilize a US supply chain for EVs… yesterday.”