The Impact of Electric Vehicles in the Transportation Industry

Oct 25, 2023 | Industry News

Electric Vehicles (EVs) are continuing to evolve throughout the globe and in various industries. The number of electric vehicles used worldwide has increased significantly, from 1.3 million in 2015 to an estimated 40 million in 2023. The drive for the adoption of electric vehicles is environmental concerns, government policies, and overall consumer preferences.  

Article Overview

Passenger vehicles are leaders of EVs, but electric semi-trucks are also the future of the transportation industry. In 2022, studies showed that the US transportation industry consumes 2.8 million barrels of oil daily. As oil and gas prices increase, the trucking industry focuses on EVs for potential cost savings. But will this electric shift provide the cost-savings they’re looking for? 

The EV revolution is reshaping the transportation sector and will significantly impact infrastructure and supply chains in the future. According to Gartner, 80% of supply chain leaders prioritize emissions tracking, but 1 in 3 believe it would be an additional cost to their business. Understanding environmental and economic factors can offer companies a glimpse into the ever-evolving landscape of the transportation industry.  

Electric Vehicle Market Growth 

There’s one thing to be said about passenger EVs, but it’s a completely different topic when discussing Over-The-Road (OTR) trucks and semi-trucks transitioning to EVs. This market shift is significant for transportation companies, as it represents a change in the demand and supply of traditional services.  

The transportation and commercial vehicles for EVs have a market size of $384.65 billion in 2020 and are projected to grow to $1,579 billion by 2030. While EVs offer some benefits, such as lower fuel and maintenance costs, there are challenges to consider, such as limited range and insufficient EV charging infrastructure. 

Logistical Challenges 

The transition to EVs is a considerable undertaking, and numerous challenges must be addressed before new electric trucks can be widely adopted, including limited range, battery costs, infrastructure, and government regulations.  

  • Raw Materials for Batteries 

The most significant hurdle in the widespread adoption of EVs is battery manufacturing. Battery production can be complex and costlier than traditional trucks. Metals such as cobalt, lithium, manganese, copper, and graphite play a role in rechargeable batteries.  

The raw materials for EV batteries are not easily replaceable, making it challenging to ensure a reliable supply. Only four countries, Argentina, Chile, Australia, and China, dominate the lithium industry, accounting for 92% of the world’s production. Along with limited production, the battery process is very time-consuming, making it difficult to distribute batteries efficiently.  

  • Government Regulations for EVs  

Government regulations further compound the challenges. With a limited supply of raw materials required for EV batteries, mandating companies to convert to EVs becomes more challenging. Several countries in Europe, Asia, the UK, Germany, and more have already pledged to ban the sale of internal combustion cars by the end of the decade.  

To supply countries with enough EVs, mining for lithium and cobalt will need to quintuple, and the amount of EVs produced will increase to 10 million per year.  

While government regulations play a vital role in the transition to electric vehicles, it’s essential to consider the potential challenges companies may face with these mandates.  

Key Considerations 

When it comes to the widespread adoption of EVs, either as passenger vehicles or as transportation vehicles, there are three points that companies identify when converting over to electric vehicles. 

  1. Price  

Cost remains a primary concern for individuals investing in electric vehicles. However, EVs are becoming increasingly competitive with traditional transportation pricing.  

  1. Range 

The range is extremely important for the trucking industry. As most truck drivers cover nearly 600 miles a day, there are currently no electric semi-trucks that can reach that range on a single charge. While brands like Tesla Semi advertise a 500-mile range, various factors impact the practical range, including load weight, terrain, and weather conditions.  

  1. Infrastructure 

If electric trucks could achieve the necessary range, the infrastructure for charging stations is still underdeveloped and presents a significant hurdle to the adoption of EVs.  

Environmental Challenges 

As individuals and companies continue to pivot towards electric vehicles for cleaner transportation, it’s essential to recognize that this shift comes with its own set of environmental challenges. While EVs themselves produce zero tailpipe emissions, there are complex environmental factors. 

Outsourcing Carbon Emissions 

One environmental concern with EVs is outsourcing carbon emissions. While electric vehicles don’t produce direct emissions on the road, the electricity they rely on may come from fossil fuels. This means that carbon emissions are essentially shifted from the tailpipes of vehicles to power plants, where electricity is generated.  

The raw materials needed for EV batteries are often sourced from countries with less environmental regulations. This can lead to carbon emissions being outsourced to regions with fewer standards. While some companies may claim zero emissions within the US, it’s essential to consider the broader picture and the potential environmental impact on the entire EV supply chain.   

Power Grid Impact 

The adoption of electric vehicles poses challenges to the existing power grid infrastructure. While this shift represents a cleaner and more sustainable mode of transportation, it also requires a substantial increase in electricity demand and could potentially increase power grid outages. 

If all vehicles transitioned to electric batteries, the current United States power grid would face significant challenges, emphasizing the need for infrastructure development.  

Progression towards EV Adoption 

The shift towards EVs in the trucking industry will be an ongoing process with several factors and challenges to consider.  

Government mandates will push the industry towards EVs. Here’s a list of countries that have started to progress towards EVs.  

  1. Canada: British Columbia plans to ban new internal combustion vehicles by 2040, and Quebec is phasing out sales of new gas cars by 2035.  
  1. Germany: In September, the German Parliament passed a resolution to approve only emission-free cars by 2030.  
  1. Norway: With 60% of new vehicle sales already electric, Norway plans to ban sales of gasoline vehicles by 2025.  
  1. United States: By 2030, half of the vehicles sold should be battery-electric, fuel-cell electric, or plug-in hybrid.  
  1. United Kingdom: By 2035, all new electric cars and vans must be fully zero-emission at the tailpipe.  
Infrastructure, Mandates, and Benefits

Transitioning to a more sustainable future requires proper infrastructure to support electric vehicles. Governments mandating electric vehicles need to ensure sufficient charging stations are available. Another factor that will drive adoption is clear cost benefits, such as reduced fuel usage and maintenance expenses.  

Recognizing that the shift to EVs is a gradual process that requires careful planning. A phased approach is critical for businesses looking to shift to EVs. Transitioning an entire fleet to electric vehicles involves more than just purchasing new vehicles.  

Acknowledging that transitioning to EVs is a gradual process, adopting a phased approach for businesses considering shifting towards EVs is essential. Transitioning an entire fleet to electric vehicles involves more than just purchasing new vehicles. 

Sustainable EV Transition Success 

If approached effectively, the logistics industry’s transition to EVs holds a more sustainable future. However, overcoming barriers, enhancing adoption drivers, and addressing key factors are essential steps that need to be considered. The logistics industry can reap the benefits of EVs while addressing the environmental, economic, and infrastructural hurdles that come with this transition. For more information about electric vehicles, their impact on transportation, and the logistics industry, check out our podcast, Shifting Gears.  

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