When Should Businesses Switch to Electric Vehicles? Pros, Cons, and Opportunities

Contents:

• Advantages of Electric Transport for Business
• Challenges in the Implementation of Electric Vehicles: What Difficulties Do Innovators Face
• Who Can Already Switch to Electric Vehicles?

Vladislav Mazov, CEO of the Artis electric vehicle charging station network, shared his experience.

Since the beginning of 2023, Russia has seen a significant increase in the number of electric vehicles - they have increased by one third. More and more organizations are realizing that switching to electric transport is not just a tribute to fashion, but an effective way to reduce costs. Savings on fuel, reduced maintenance costs and the possibility of obtaining tax incentives make this direction very attractive. However, as with any situation, there are certain challenges: the initial purchase costs remain high, and the range of available models is not yet very wide.

If you are considering upgrading your fleet, it makes sense to familiarize yourself with the pros and cons of such a move in advance. In this article for the Skillbox Media Business editorial team, I will share the features and advantages of using electric vehicles in commercial operations.

• Electric transport offers many advantages for businesses. Firstly, it helps to significantly reduce operating costs. Using electric vehicles can significantly reduce fuel costs, especially in the context of rising oil prices.

  Secondly, electric vehicles have lower maintenance costs compared to traditional cars with internal combustion engines. This is due to fewer moving parts and the absence of the need for frequent oil changes.

  Furthermore, electric vehicles can enhance a company's image. The transition to environmentally friendly technologies helps demonstrate a business's responsibility to society and the environment, which can attract environmentally conscious customers.

  We shouldn't forget about the opportunities that electric transport offers in terms of government subsidies and tax breaks. Many countries support the transition to green technologies, which creates additional financial incentives for businesses.

  Finally, the use of electric vehicles can improve logistics and reduce noise levels in cities, making them more attractive for delivery and transportation. Overall, integrating electric transport into business processes can not only optimize costs but also increase a company's competitiveness in the market.

• The introduction of electric vehicles faces a number of challenges. Firstly, one of the main problems is insufficient charging infrastructure. Many regions do not have a sufficient number of charging stations, which complicates the use of electric cars.

  Furthermore, the issue of charging time also plays a significant role. Unlike traditional cars, which can be quickly refueled, electric vehicles require significantly more time to recharge, which can be a problem for users, especially on long trips.

  It is also necessary to take into account the cost of electric vehicles, which is currently often higher than their gasoline counterparts. This may scare off potential buyers, despite the possible long-term economic benefits in the form of low operating costs.

  An equally important aspect is the need to develop battery production technologies. Issues of their disposal and environmental safety also require attention, since inefficient handling of batteries can lead to negative consequences for the environment.

  Thus, despite the obvious advantages of an electric fleet, its implementation is associated with many difficulties that require an integrated approach and the active participation of both public and private entities.

• Who can consider switching to electric vehicles?

Advantages of electric vehicles for business

One of the key advantages of electric vehicles is the reduction in fuel and maintenance costs compared to traditional cars. For example, an electric car eliminates the need for oil changes, spark plugs, and other consumables. According to a study conducted by the British company Geotab, one electric car can save up to £13,279 over a seven-year period.

The cost of electricity is significantly lower than that of gasoline and diesel. According to a study conducted by the University of Michigan, the average annual cost of charging an electric car is $485, while fuel costs for a traditional car reach $1,117.

New opportunities may also open up in the future. For example, in Russia, initiatives to support taxis and car-sharing services using electric cars are being actively considered. The Ministry of Transport proposes to reimburse part of the costs associated with the purchase of electric vehicles and the installation of charging stations.

Certain benefits have already been introduced at the city level. Currently, it is possible to receive the following services completely free of charge:

• In Moscow and St. Petersburg, it is envisaged to park electric vehicles in public parking lots.
• recharge them at 290 points as part of the "Energy of Moscow" initiative;
• If you have a car manufactured in Russia, you will be able to travel on toll roads free of charge until the end of 2025.

The transition to the use of electric vehicles is often seen as an important element of a sustainable development strategy (ESG). This has a beneficial impact on the social, environmental and corporate spheres, which, in turn, helps improve the company's reputation. For large organizations, this often becomes an integral part of their strategic plan, while for small businesses, such a step can serve as a means of increasing customer and business partner loyalty. Of course, not all organizations are capable of upgrading their vehicle fleet. In regions without their own electric charging stations, a mass transition to electric vehicles is currently not feasible. Without investing in the appropriate infrastructure, businesses will not be able to confidently utilize this mode of transport.

Determining the long-term cost-effectiveness of fleet replacement is challenging. There is currently a lack of sufficient historical data to demonstrate the return on investment in electric vehicles, taking into account the costs of charging infrastructure, depreciation, and potential fluctuations in electricity prices.

The Challenges of Electric Vehicle Adoption: What Difficulties Innovators Face

I will consider three key challenges a company may face: high costs, insufficient infrastructure, and technology limitations.

High Costs. The entry price of electric vehicles is often higher than that of gasoline-powered vehicles. For example, in 2023, the average price of an electric vehicle was $50,799, while combustion engine vehicles cost $48,759. However, more affordable models are starting to appear on the market, such as the Chevrolet Bolt EV, which costs $26,500, or the Nissan Leaf, which costs $28,140. Either way, these are significant investments, especially if you're talking about more than just one car.

Insufficient infrastructure. In Russia, charging stations are not available everywhere, and the electrical grid needs updating. However, the situation is gradually improving. Over the past five years, the number of fast charging stations has increased 17-fold. By 2030, the total number is expected to reach 72,000. This looks promising, but it may prove insufficient. Furthermore, the distribution of charging stations remains uneven: most are located in large cities.

Technological barriers. Some models still have limited range, and in winter, batteries lose their performance due to low temperatures. Furthermore, the selection of commercial electric vehicles on the market remains quite limited.

However, solutions capable of addressing these challenges are already beginning to appear on the market. One example is the Ford E-Transit Courier—a compact van that offers a range of up to 180 miles, making it ideal for urban logistics tasks. However, its payload capacity is only 1,500 pounds, which may be insufficient for some types of work. For heavier loads, consider the GMC Sierra EV Denali, which has a range of up to 450 miles and a towing capacity of nearly 11,000 pounds.

Who can already switch to electric vehicles?

Organizations with a fleet of vehicles within city limits and established logistics already have the opportunity to safely switch to electric vehicles. Electric vehicles are ideal for delivery services, taxis, and companies operating on pre-determined routes. Predefined routes help efficiently manage mileage and schedule recharging times. For example, the international biopharmaceutical corporation AstraZeneca initiated the process of updating its fleet in Russia, switching to electric vehicles, back in 2022. By 2025, the company will have more than 200 electric cars, which has allowed it to reduce its carbon dioxide emissions from vehicles by 16%. At the same time, the Kaliningrad company Koenig-Rent launched an electric taxi service based on Amberauto models. Within the next two years, they plan to convert half of their fleet to electric traction. Organizations with their own parking spaces also have the opportunity to switch to electric vehicles, as charging stations can be installed directly on their premises. A similar scheme operates in logistics centers, warehouses, and production areas. For example, Rusnano is actively developing electric vehicle charging infrastructure in various regions in collaboration with local administrations.

It should be noted that the previously mentioned conditions are not suitable for businesses located in regions with harsh climates. At low temperatures, the efficiency of electric vehicle batteries is reduced, resulting in reduced range and increased charging time. For example, at temperatures around -5°C, an electric vehicle's range can be reduced by up to 40% compared to normal conditions. Therefore, the use of electric vehicles remains predominantly in cities with warm climates.

Additional resources from Skillbox Media for businesspeople.

• Various programs aimed at supporting small businesses will be in effect in 2025. These initiatives span the federal, regional, and industry levels.
• An Undervalued Resource: How Relevant Is Social and Philanthropic Activity for Business in the Modern World?
• Seven Misconceptions About Mobile Development: When a Company Should Build Its Own Apps, and When It's Not.
• Augmented reality (AR) technology is an innovative approach that combines virtual elements with the real world, enhancing the user's perception of reality. It uses devices such as smartphones, tablets, or special glasses to overlay digital information onto images the user sees in real time.

  For business, AR offers significant opportunities. This technology allows companies to create unique and interactive experiences for their customers. For example, in retail, shoppers can visualize how a particular product will look in their home before making a purchase. This significantly increases the likelihood of a successful sale, as consumers have more confidence in their choice.

  Furthermore, AR can be used to train employees, allowing them to interact with virtual models and scenes, which improves information and skill acquisition. In manufacturing and equipment maintenance, augmented reality can guide workers by displaying instructions and prompts directly on their device screen.

  Thus, AR technologies not only enhance customer interaction but also contribute to the efficiency of internal business processes, making them an essential tool in today's competitive world.

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