The Evolution of Electric Vehicles and Their Technicians
Exploring the adoption of battery electric vehicles and the consequences for heavy-duty technicians.
Episode 278: Get ready for an electrifying discussion with James Cade, the founder of AMI on the future of Battery Electric Vehicles (BEVs). We dissect the mandates shaping the BEV landscape and their immense implications for vehicle adoption. California, a pioneer in this field with its far-reaching regulations, also comes under the spotlight, as we analyze its regulatory influence on other states.
Shifting gears to the pressing matter of training for electric vehicle technicians: Is it better to elevate our existing technicians or to hire new ones? As we grapple with this conundrum, we also recognize the goldmine of knowledge held by our seasoned veterans who are nearing retirement. Furthermore, we underline the necessity of a robust infrastructure to support the implementation of electric vehicles.
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Transcript of Episode
Jamie Irvine:
You are listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and this is the place where we have conversations that empower heavy-duty people.
Welcome to another episode of The Heavy Duty Parts Report. I’m your host, Jamie Irvine. Today we’re going to talk about battery electric vehicles. This is a subject of concern for people who operate commercial equipment, people who repair commercial equipment, and people who supply parts for commercial equipment. This is a subject we’ve talked about in the past and I’m very happy to have our guest on. He’s a repeat guest, James Cade is the founder of Asset and Maintenance Insights. If you recognize his name, he was on our live program back in Episode 38 of HDPR Live where we discussed the fleet’s perspective on heavy-duty parts. He was a returning guest on the podcast in Episode 231 where we talked about how fleets can get started with EVs. James is someone who provides subject matter expertise on BEV’s, so I’m very happy to have him back on the show. James, welcome back to The Heavy Duty Parts Report.
James Cade:
Thanks, Jamie. Thanks for having me back. Appreciate it.
Jamie Irvine:
So we get a chance to talk about Battery electric vehicles. BEVs. Again, you might also hear the acronym ICE, that’s an internal combustion engine. Just to get everybody straight on the terminology, let’s start by talking about the current mandates by the government for BEVs in the United States as it relates to commercial trucks. For those who maybe aren’t aware, what are the current mandates?
James Cade:
There’s really not a nationwide mandate. It’s more of a patchwork of regulations across the USA. So as I said, there’s no federal mandate, although there is a, as part of the Federal Inflation Reduction Act, there was lots of incentives that were provided, which included tax credits, grants that were really meant to encourage the adoption of hybrid electric vehicles, battery electric vehicles and fuel cell electric vehicles. Another term you’ll hear a lot about, but the current leader in implementing mandates for EVs is California, which is really not a surprise to anybody, and California is mandating the use of zero emission vehicles, which they lump together with battery electric vehicles or beds and fuel cell electric vehicles. FCV California has put in three main regulations in the last few years in an attempt to regulate and really phase out ICE vehicles. As Jamie mentioned, internal combustion engine vehicles.
The first one, which has been around for a little while was the advanced clean car rule, which requires that all cars sold in California by 2035 to be zero emission or one of those two categories of vehicles I mentioned before. There’s also the advanced clean truck rule, which is directed towards the OEMs, meaning the manufacturers of the vehicles, and it requires an increasing number of zero emission vehicles to be sold in California starting as early as 2024. It affects the industry in different ways, and it’s a very complicated process, but roughly about 50% of all new vehicles sold in California, I’m talking about trucks sold in California, must be zero emission by 2035 and a hundred percent by 2045. The flip side to that is the advanced clean fleet rule, which directs fleets, is to purchase these zero emission vehicles or battery electric vehicles and fuel cell electric vehicles.
Again, it follows the same, basically the same rules or timeline as the clean truck rule, which the OEMs have to follow. Same thing again, it basically says that all new trucks purchased in the state of California by 2035 have to be zero emission vehicles and a hundred percent by 2045. Again, as I mentioned earlier, is there is a phased in approach and it affects different industry or sections of the industry in different timelines. So you have to really check the regulations to see where your particular types of vehicles follow in. The most critical piece going to be implemented. The first I guess is the drayage industry in California. As of January 1st, 2025, all new vehicles, and it’s all new vehicles to be registered for use in the drayage industry must be zero emission vehicles, which again goes back to they have to be battery electric vehicles or the fuel cell electric vehicles.
And then finally, the most recent one, which was just actually this month kind of a surprise to everyone, was that California and the major truck OEMs entered into what’s being called the Clean Truck Partnership. And in that is that California, it was kind of a compromise for both sides, is that California actually agreed to bring their regulations in line with the federal EPA not to decrease NOx emissions until 2027, which means it’s good for the industry because it creates one, and this is on diesel engines, bring their regulations for knocks on diesel engines in line with EPAs and that it’s good for the country and that we create one standard. But really the OEMs gave up some opportunities as well. So still trying to sort through all that, but the big thing is is that by 2027, by requiring the reduction in NOx emissions will increase the cost of a diesel powered vehicle significantly, and then it’ll narrow the price gap between an ICE vehicle and an EV or BEV vehicle.
I’m sure most of your audiences listening to this and saying, no big deal, that’s California. That doesn’t really impact me for most of your listeners anyway. But the issue is, is that 17 other states either are actively, are thinking about, implementing California’s rules, states such as New York, Massachusetts, and many others have actually implemented the rules and they actually have laws or regulations on the books that says, whatever California does, we’re going to do the same. So again, I would caution your listeners to look at their state regulations and see where they are because again, a lot of states are following California’s lead in this area.
Jamie Irvine:
What impact does all of these mandates have on the adoption and acceptance of BEV? In other words, if it wasn’t for the mandates, what adoption rate do you think we would have versus what we’re going to have?
James Cade:
The mandates are definitely having an impact. California’s requirements, I mean that’s especially in the state of California and the other states that may be following California’s lead, definitely has an impact. There’s other factors involved is in a recent survey published by Smart Energies Decisions, they found that when they went out and surveyed companies operating fleets is they found that they’re getting a lot of pressure from governments through the mandates, but also the financial community is talking to them about ESG requirements. Shareholders are also interested in reductions in emissions. Even the employees are helping to drive those discussions, but I think that probably is just as important as all the pressure they’re getting is the availability in volume of EVs now, especially in the light and medium duty sector, there’s a lot of vehicles being built and purchased and going into service this year.
So there’s a lot of that going on. And you look at the investments that’s being made, Ford just announced a $50 billion investment in battery technology, GM $35 billion, and I think that’s helping a lot of people allay their fears that EVs are just a passing fad. And that’s all being helped by the fact that you see a lot of big companies like Amazon, which is a lot of press on their a hundred thousand vehicle order, Walmart recently placed a 4,500 truck order with Canoe and FedEx is piloting many, many vehicles around the country. But I think also the federal tax credits, state incentives in California, which is way ahead of everybody else in California, is offering $120,000 in incentives to purchase a battery electric vehicle and $240,000 for a fuel cell electric vehicle. So it’s not just the government mandating, they have a big impact on it, but I think there’s lots of other factors that are driving the acceptance of EVs in our industry.
Jamie Irvine:
I want to talk to you a little bit about the go-to go-to-market strategy for BEV or BEV vehicles, the manufacturers of those vehicles. I noticed that when you listed those big mega fleets, you didn’t list that they were buying a Kenworth or a Peterbilt or they weren’t buying an electric Cascadia, they’re buying new brands. So what’s the difference in the go-to-market strategy of these new battery electric vehicle manufacturers who are entering the market? How does that differ from the traditional market or the traditional go-to-market strategy?
James Cade:
Well, it’s definitely, you have what I call the legacy players, Daimler, Navistar, Volvo, Paccar. They’re doing the traditional thing. They look at the BEVs being just, or the EVs just being another product in their portfolio and using established dealers to sell and service the vehicles. But the one, and I want to make a point about this is one of the things that I’ve seen difference with the legacy players is that they understand the marketplace. They’ve been in it for years. They understand how fleets work, they understand what fleet needs are, and most of them have made the decision that they’re going to help fleets transition through the adoption of BEVS by offering services and helping to assist fleets through that process. The other side of the coin, which you mentioned was the startups. Startups have a different problem is that most of them don’t have existing dealer networks.
And in what I found is that most cases they don’t understand fleet operations and they have a huge learning curve and in some cases as required, they come out with a vehicle, pilot it, whatever, and find that they really miss the mark and they got to go back and redesign the vehicle in some cases. So there’s a real lack of resources for the startups as well. I think they concentrated so much on developing the vehicles that they have really not thought about the service side or the parts side or whatever. So it’s really challenging for them for several reasons and they I think are really looking at a different approach to fleets like Walmart, FedEx, and others that the legacy fleets, legacy players don’t have to go through.
Jamie Irvine:
Is it true though that they, by and large, these startup companies are looking at more of a direct to consumer, vertically integrated model and really cutting out in their mind the need for dealerships and aftermarket distributors and repair centers?
James Cade:
In general I would say yes, that is pretty much what I’ve seen is that they’re developing their own service networks with third parties with and market strategies. Overall parts I think is really a problem for the startups is they don’t have the built in network distribution that a legacy player would have, and they’re really struggling with that, and a lot of them are trying to control parts themselves. You can’t go down to your local NAPA and get a AC to DC converter for an EV. You have to go back to the manufacturer and hoping that they have that part available. One of the things that I am seeing with the startups, especially the startups, is that their downtime is not very good for a vehicle because if they have to wait on parts and other things, so again, I think the legacy players have some upside because they already have the network in place.
Jamie Irvine:
Yeah, it’s all fine and good to vertically integrate, but the reality is then you’re bumping up against right to repair rules and you’re not going to ever stamp out the entrepreneurial spirit of Americans. So when there’s a need, if people can’t supply the part through a vertically integrated distribution network, they’re going to go make it themselves and figure it out. So I can see a lot of dynamics there where there’s going to be a new competitive landscape for the trucking industry as we move into this new world.
James Cade:
It’s going to be a challenge. I mean, especially with a lot of these parts are especially made for these vehicles all the way down to the common body parts and everything else is, again, it’s what I see right now is the startups are controlling a lot of those parts distribution.
Jamie Irvine:
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We’re back from our break. Before the break, we were talking about government mandates the impact that that is having on the adoption of battery electric vehicles or BEVs. We were talking about the differences in the way that the legacy manufacturers go to market versus the startups, and I’d like to spend a bit more time talking about parts and service. James, one of the things that we talked about is there’s really two camps when it comes to how to approach service on BEVs. Could you explain to us what those two camps of thought are and maybe then tell us which one you think is the better one?
James Cade:
I’ve had many discussions over the last year or two regarding how to develop and train technicians for working on battery electric vehicles. There is a certain percentage, I don’t know what it is, but there’s a certain group within the industry that believes we should go out and hire and develop battery electric vehicle technicians solely for battery electric vehicles. And going further, they believe that those technicians should be certified and even regulated by government agencies such as like today you would do with an electrician or any other regulated trade. The other side is kind of where I fall is that we need to, we’ve already have this big workforce of technicians that are out there. They’re doing the work every day. Let’s train those people to become the battery electric vehicle technicians of the future. And I feel this way for a couple of reasons. One is you just can’t throw away a whole workforce.
It’s got years of experience and knows your company inside and out. So I think that’s part of it. But again, the thing is is that you have, even a battery electric vehicle still has components and systems that are similar to that of ICE vehicles. So tires, wheels, brakes, body components, whatever. So those are still skills that we’ll need. So why would you go out and hire a battery electric, this regulated technician and then teach them how to do the other things that we’re already doing? It makes more sense to me to take our existing technicians and train them, give them the skills to be the battery electric vehicle technicians of the future.
Jamie Irvine:
Yeah, I mean, it’s not like we have a shortage of people right now in our industry or anything. I mean, we’re short technicians as it is. So then to try to spool up a whole other workforce, and we’re talking about service technicians, but this also extends to the parts people that have to learn a completely new vehicle. But if you know how to identify parts, then you’ve developed a core skill set that allows you to identify parts no matter who the manufacturer is or what the part is. You can’t just walk away from 20 or 30 years experience and expect someone with zero experience to be able to step into that person’s shoes and take over.
James Cade:
With parts identification is a skill that has been developed over years. It will come with the same challenges with the battery electric vehicles and parts people and will need to be able to pick up a part, identify it, and be able to order that part from the manufacturer. So definitely is, there’s a lot of skill there as well with the parts of people that we need to keep going forward with battery electric vehicles.
Jamie Irvine:
And I mean, the one thing I will say is we know that there’s a large group of people that are very experienced that are on the cusp of retiring between now and 2030. The last of the baby boomers will all be roughly exiting the workforce by then. So I do see some logic in maybe having some of your younger people who are mentoring under these experienced technicians have a maybe lean towards a specialty of learning BEV as well. But to lose that, what some companies call tribal knowledge, that knowledge that has been accrued over decades of experience and to not have that transfer over to the next generation, that’s just crazy to me. I think that just spells doom and all kinds of problems for a lot of people.
James Cade:
Well, and the other side of it here is that Mike growth from mentions all the time is that we’re in the middle of a messy transition. It’s going to be years in the process, years in getting from where we are to where we need to be and we’re going to need all the people that we can to be able to do this. And we need the skills that we have for ICE vehicles because they’re going to be around for many, many years, yet it’s not going like tomorrow we’re going to wake up and they are going to be gone. They’ll be around for years and years and we need the skills and the capabilities of those technicians. Many fleets will continue to operate ICE vehicles with BEV vehicles in the same fleet, in the same location. Probably drivers transferring between them two. So again, they’re going to be around for quite a while and it just makes sense to me to have the people we’re using today transition to the vehicles up tomorrow.
Jamie Irvine:
Right. Well, let’s talk a little bit about some of the hurdles that would prevent us from flipping a switch and just making the switch to BEV. What would be the biggest issue with BEVs in the near to midterm future?
James Cade:
For me, it’s infrastructure development. To me that’s the largest challenge to battery electric vehicle adoption. You take anybody, whether you’re operating your own car or you want to be able to get the power to be able to run that vehicle, and you don’t want to wait all day in a place to get in line to get power. So the infrastructure is really a challenge. And there’s two sides to that, and I think John O’Leary, the CEO of Daimler North America during the recent ACT Expo said it best is that we need to be doing this at the speed of right, meaning we need to let the market drive the innovation here instead of trying to meet some arbitrary regulations. And there’s a couple of reasons for that. And one of those is that to meet the existing government regulations, there’s been several studies made by all kinds of different pro and against electric vehicles looking at how much electricity is going to need to be available when we transition the entire US vehicle fleet to electricity.
And what they found is that somewhere between 45 and 50% of today’s current generation of electricity in the US would be needed to drive electric vehicles. And we’re sitting here today already struggling to meet the energy demands of today. I just read an article this morning. It’s talking about State of New York is facing a 446 megawatt shortage of electricity by 2025. How will that gap be filled with all the restrictions on fossil fuels, nuclear and other sources? And they’re struggling to figure that out. So again, is just being able to provide the amount of electricity that’s going to be needed is a big infrastructure gap that I see today. The second side of that is, okay, assume we have all the power that’s available. We’ve solved that problem, how are we going to distribute? And if you look at it today, there’s 162,000 chargers available in the US today with 78% of these though being level one or level two home chargers, meaning they’re in somebody’s garage and only used for their purpose.
And to fully meet the needs of electrified vehicle fleet, the US will require about an estimated two and a half million chargers, more than 15 times the number of chargers available today. And that’s according to Global Think Tank. Another organization, Atlas Global, an industry resource organization, estimates that it’ll require more than 87 billion. Billion, that’s with a B in investments to build out the required charging network to meet the EV demands in by 2035. And where is all that capital is going to come from is the big question. I go back to I think that John O’Leary’s comment about doing at the speed of right is the correct approach to the infrastructure.
Jamie Irvine:
Yeah. And when you start talking about some of the major players having issues with getting finances, getting capital because of ESG compliance and that coming through the financial sector, you can start to see where there is so many layers to this. So you’ve got the environmental people talking about climate change and really taking a catastrophe kind of viewpoint. You’ve got the financial sector with their ESG angle. What I worry about is I worry about some of these really critical decisions being made from an ideological perspective, and I think that’s where we have an opportunity for huge mistakes to be made that could really hurt a lot of people. So my last question to you, James, is do you see a scenario where the transition to BEVs lead to human flourishing for everyone? Because to me that is the speed of right. What’s your thoughts on that?
James Cade:
Yeah, I do. As I mentioned, this transition’s going to be messy. It’s going to be frustrating. There’s going to be a lot of differences of opinions, but I see a time in the future where BEVs, battery electric vehicles and maybe other competing technologies will certainly improve the health and wellbeing of our population. Although we face a lot of challenges in the coming years, I believe BEVs will have a positive impact on people’s lives.
Jamie Irvine:
I feel like there’s a ‘but’ there.
James Cade:
Yeah, I mean, it’s just like anything. You’re going through a transition. There’s a lot of challenges, a lot of frustration. And I think calling it the messy middle is a good, that’s the reason I refer to it all the time by, and that’s Mike wrote, is I think it’s a good description, because it’s going to be a messy transition. You don’t do something like this in the timeframe that’s been applied here without it being getting really messy. But I think we all have to keep our eye on the end or the prize, I guess, which is helping the reduce emissions, whether it’ll impact global warming, that’s another issue. But again, I just think from reducing the emissions, we’ll have a positive impact on people’s health and livelihood in the future.
Jamie Irvine:
You’ve been listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and we’ve been speaking with James Cade, the founder of Asset and Maintenance Insights. To learn more about AMI, visit fleetami.com. James, thank you so much for being on The Heavy Duty Parts Report. Again, it was a real pleasure speaking to you today.
James Cade:
You too. Thank you.
