City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Final Report City of Minneapolis Fleet Services Division October 2017

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM Quality information Prepared by Checked by Approved by Dan Nelson, AICP, ITS Planner Ryan Winn Daryl Taavola, PE, PTOE Katrina Lewis, Senior Analyst Revision History Revision Revision date Details Authorized Name Position 1.0 6/22/2017 1st draft for City of Mpls. Review DN Dan Nelson 1.1 07/13/17 Track changes version with AECOM and City comments DN Dan Nelson 1.2 07/24/17 Additional track changes per City comments at July 14th meeting.

Appendices added to document and benefit-cost assessment updated with new information DN Dan Nelson / Katrina Lewis 1.3 07/27/17 Additional changes made based on feedback gathered at July 26th meeting with City in reviewing report. DN / KL Dan Nelson / Katrina Lewis 2.0 09/11/17 Additional changes made based on comments received from various City departments after reviewal DN / KL Dan Nelson / Katrina Lewis 2.1 10/04/17 Changes made based on comments received from City sustainability office; EV type for SUV updated; other updates to estimates and scenarios in Appendix E DN / KL Dan Nelson / Katrina Lewis Distribution List # Hard Copies PDF Required Association / Company Name

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM Prepared for: City of Minneapolis Fleet Services Division 1200 Currie Avenue Minneapolis, MN 55403 Prepared by: AECOM 800 LaSalle Avenue Minneapolis MN, 55402 USA aecom.com Copyright © 2017 by AECOM All rights reserved. No part of this copyrighted work may be reproduced, distributed, or transmitted in any form or by any means without the prior written permission of AECOM.

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM Table of Contents Executive Summary ___ 6
1.

Introduction ___ 8
2. Literature Review and Staff Interviews ___ 8
2.1 State of the Industry / Literature Review ___ 8
2.2 Common Themes and Points ___ 9
3. Vehicle Types ___ 9
3.1 Types of Vehicle Fleet ___ 9
3.2 Purchasing Process for Vehicles ___ 10
4. Costs / Benefits Assessment ___ 12
4.1 Environmental Benefits with Fleet Transition ___ 12
4.2 Cost Considerations ___ 13
4.2.1 Payback Periods ___ 15
4.2.2 EV Charging Infrastructure ___ 16
4.2.3 Technician Training ___ 17
4.2.4 Replacement Considerations ___ 17
5. Conversion Approaches and Transition Timelines ___ 18
6.

Next Steps ___ 22
6.1 Monitor Electric Vehicle Usage in Winter Months ___ 22
6.2 Monitor Potential Sources of Funding for EV Purchases ___ 23
6.3 Review Vehicle Replacement Approach for New EV Models ___ 23
6.4 Prepare Infrastructure and Maintenance Staff for EV Operations ___ 23
6.5 Monitor Industry Progress with Electric Vehicles ___ 24
6.5.1 Cummins Powertrain Notice ___ 24
6.5.2 Volvo Notice of Electric / Hybrid Vehicles in 2019 ___ 24
6.6 Consider Key Objectives and Constraints ___ 24
Appendix A Staff Departments Interviewed ___ 25
Appendix B Description of Vehicle Types ___ 30
B.1 Light Duty Vehicles ___ 30
B.2 Heavy Duty Vehicles ___ 32
B.3 Non-Road Vehicles ___ 33
Appendix C Cost Benefit Analysis Inputs ___ 36
Appendix D Maintenance Savings Assumption Sensitivity Analysis ___ 40
Appendix E Optimized Transition Scenarios ___ 41
E.1 Scenario 1 ___ 41
E.2 Scenario 2 ___ 42
E.3 Scenario 3 ___ 43
E.4 Scenario 4 ___ 44
E.5 Scenario 5 ___ 45
E.6 Scenario 6 .

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM Figures Figure 1. Annual CO2 Emissions Reductions by Electric Vehicle Procurement Scenario ___ 7
Figure 2. Total Costs by Year for Business as Usual (BAU) and EV Procurement Scenarios ___ 7
Figure 3. Level 2 Charging Station ___ 17
Figure 4. Police and Interior Vehicle Electronics ___ 26
Figure 5. EVSE Equipment in Jerry Haaf Memorial Parking Ramp ___ 27
Figure 6. Chevy Bolt ___ 28
Figure 7. Sedan, Ford Focus (2017 ___ 30
Figure 8. Ford Escape SUV for Traffic Control Department ___ 31
Figure 9.

Light Pickup, Chevrolet Colorado ___ 32
Figure 10. Heavy Pickup, Ford F-250 for Maintenance ___ 32
Figure 11. Western Star SB4700 ___ 33
Figure 12. Solid Waste Vehicle ___ 33
Figure 13. Volvo Wheel Loader L-90 ___ 34
Figure 14. Bobcat S185 Skid Steer Loader ___ 34
Figure 15. Polaris Ranger ___ 35
Tables Table 1 Most Common Vehicle Make / Model from City Vehicle Inventory ___ 10
Table 2 Quantities of Vehicle Types from City Vehicle Inventory Data ___ 10
Table 3 Estimated Annual Carbon Dioxide Emissions per Vehicle in 2018 (pounds ___ 12
Table 4 2017 Capital Cost Estimates ___ 13
Table 5 Fuel Economy Estimates ___ 13
Table 6 Annual Fuel Estimates ___ 14
Table 7 Potential ICE Vehicle Maintenance Costs ___ 14
Table 8 Annual Maintenance Estimates ___ 15
Table 9 Payback Period Estimates by Vehicle Type (2017 Capital Costs ___ 16
Table 10 Required Capital Costs for 8 year Payback Period by Vehicle Type (2017 Capital Costs ___ 16
Table 11.

Total Number of Vehicles Included in Electric Vehicle Proposed Transition Timelines by Year ___ 20
Table 12 Transition Scenario Comparisons ___ 22
Table 13 Impact of Maintenance Cost Reduction Assumption Changes (1/3 ___ 40
Table 14 Impact of Maintenance Cost Reduction Assumption Changes (2/3 ___ 40
Table 15 Impact of Maintenance Cost Reduction Assumption Changes (3/3 ___ 40
Table 16 Scenario 1 Procurement Plan ___ 41
Table 17 Scenario 1 Procurement Plan Annual Financials ___ 41
Table 18 Scenario 2 Procurement Plan ___ 42
Table 19 Scenario 2 Procurement Plan Annual Financials ___ 42
Table 20 Scenario 3 Procurement Plan ___ 43
Table 21 Scenario 3 Procurement Plan Annual Financials ___ 43
Table 22 Scenario 4 Procurement Plan ___ 44
Table 23 Scenario 4 Procurement Plan Annual Financials ___ 44
Table 24 Scenario 5 Procurement Plan ___ 45
Table 25 Scenario 5 Procurement Plan Annual Financials ___ 45
Table 26 Scenario 6 Procurement Plan ___ 46
Table 27 Scenario 6 Procurement Plan Annual Financials .

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 6 Executive Summary This report has been prepared by the City of Minneapolis Public Works Department and the Fleet Services Division as requested by the Minneapolis City Council on the replacement of the currently used City-wide fleet of internal combustion engine (ICE) vehicles with electric vehicle (EV) fleet technology based on the anticipated costs and environmental benefits of this transition over the coming years.

This report presents multiple different approaches the City could take in the transition to an EV fleet of vehicles, which can be chosen based on the availability of funds to procure an EV fleet within the current purchasing model of vehicle replacement utilized by the City’s Fleet Services Division.

These approaches will help the City continue its previously stated mission of reducing greenhouse gas emissions over the coming years by reducing the consumption of fossil fuels that contribute to those emissions. Several factors were considered in the recommended approaches in this report which include the following: 1. Current state of the automotive industry with respect to EV fleet vehicles and EV charging equipment currently available. This was gathered through a literature review conducted prior to this report that also presented how other municipalities have been preparing for an EV fleet transition.

2. Input gathered from several City departments that utilize fleet vehicles to complete daily activities for their respective departments. Feedback was gathered from departments on how the vehicles are used by staff during all periods of the year throughout the City.

3. Detailed data on the current fleet of City vehicles and the anticipated replacement timeline of those vehicles over the coming years. The current model of vehicle purchases and replacements is also considered in the recommended approaches. Upon review of the detailed data on the current fleet of City vehicles, these vehicles were assigned into various categories and types to allow for a quantitative analysis of the costs and benefits of replacing the vehicles with an EV fleet of vehicles over the coming years. This is presented and described in Sections 3 and 4 of this report. The rate at which the City chooses to transition its fleet towards EVs depends on the driving objective of the conversion, as well as financial and technical constraints.

Given the per-vehicle costs and benefits presented in Section 4, six different optimized procurement scenarios were analyzed. The results of the analysis in Section 5 of this report compared a business-as-usual approach of purchasing ICE vehicles over time with each of six recommended approaches across a variety of metrics. The comparison of the six scenarios to a business-as-usual procurement allows the City to see how the procurement strategy would change depending on stated objectives and financial and technical constraints. Each optimized scenario is designed to result in a greater Net Present Value (NPV) than business-as-usual procurement.

NPV takes into account the various costs and environmental benefits that are realized with a transition to EVs. Costs include the addition of electric vehicle supply equipment (EVSE) required for vehicle charging, as well as the use of electricity for vehicle charging. Benefits considered in the NPV estimate include reduced fuel consumption and vehicle maintenance costs, as well as the environmental benefits of reduced CO2 emissions with the use of EVs.

The most conservative transition approach is outlined in Scenario 6, which assumes that no EVs are allowed to be purchased until 2020. This approach would allow the City to save funds to cover the capital cost premium of purchasing EVs. However, this scenario only constitutes the transition of 8% of the replaceable fleet and the reduction of 4,700 metric tons of carbon dioxide (MTCO2) over the next 10 years. However, Scenarios 1, 2, 4, and 5 outline more aggressive approaches that can lead to up to a 47% replacement of ICE vehicles with EVs and 10,800 MTCO2 reduced. Obtaining a clearer understanding of the funding available to implement EV fleet transition is key to determining the appropriate pace of the transition and which vehicle types to target.

Figures 1 and 2 on the following page illustrate the differences of the scenarios in terms of CO2 emissions and total costs over the next ten years. The final section of this report presents a summary of next steps that can be taken by the City to prepare for a transition to EVs. These include performing a more detailed assessment to measure vehicle operations in cold winter months to determine if EVs can perform on a single charge during heavy usage of vehicle heaters and operation in cold climate conditions. The City’s recent procurement of a number of Chevrolet Bolts can offer an opportunity to observe the vehicle performance under cold weather conditions.

Other steps include monitoring the automotive industry and its progress in making EVs as an affordable option to ICE vehicles.

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 7 Figure 1. Annual CO2 Emissions Reductions by Electric Vehicle Procurement Scenario Figure 2. Total Costs by Year for Business as Usual (BAU) and EV Procurement Scenarios

City of Minneapolis Electric Vehicle Study

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 8 1. Introduction This final report presents recommendations on the transition of City of Minneapolis fleet vehicles to electric vehicle (EV) fleet technology over the coming years.

No municipality has made a full transition to EVs, but some have been phasing in plug-in hybrid electric vehicles (PHEVs) or alternative fuel vehicles (AFVs) to lower operating and fuel costs while being able to perform all the necessary duties required for various vehicle types. Although EVs typically have a higher initial capital cost to purchase or lease the vehicles compared to internal combustion engine (ICE) vehicles, EVs can cost less in the long-term due to lower fuel costs, different maintenance required, and longer vehicle lives. Therefore, it is important to consider the entire lifespan of a vehicle when investing in fleet vehicles.

There are also limiting factors of EVs to consider, such as range and power needs of certain fleet vehicles, as well as the near-constant changes in the electric vehicle and infrastructure technology.

Based on current technology, transitioning from ICE vehicles to EVs makes more sense in urban areas compared to rural areas due to the shorter average trip length and additional benefit of reduced noise pollution in residential areas. Overall, the market is transitioning mostly light-duty vehicles (with some exceptions listed below) as battery technology is still being developed for heavy-duty vehicles. This report summarizes the Literature Review and interviews with various municipal department staff to gather insight on how each individual department utilizes their fleet vehicles to determine if a conversion to EVs is feasible.

Next, the types of existing City fleet vehicles are described followed by a cost/benefit assessment of a fleet transition. This report concludes with three possible transition timelines (aggressive, moderate, and conservative) and the next steps required if the City decides to convert to EV fleets.

2. Literature Review and Staff Interviews Prior to making the recommendations contained in this report, a Literature Review was conducted on the current state of the electric vehicle industry. A summary of this review is provided in Section 2.1 below. In addition, several City departments were interviewed to gather their input on how the use of electric vehicles would potentially impact their department staff that utilize vehicles in the performance of their daily work. This information is contained in Appendix A of this report. A summary of key themes and points heard City departments is provided Section 2.2.

2.1 State of the Industry / Literature Review A literature review was completed in April 2017 and provided to the Fleet Services Division as a separate report. That report detailed the various municipal EV fleet types that have been implemented to date. While no municipality has made a full transition to EVs, some have been phasing in PHEVs or AFVs to lower operating and fuel costs while being able to accommodate all the necessary duty cycles required for various vehicle types. The review noted that while EVs typically have a higher initial capital cost compared to ICE vehicles, EVs can cost less in the long-term due to lower fuel costs and different maintenance required. Additionally, there is near-constant change in the electric vehicle and infrastructure technology manufactured by the vehicle industry. For example, in 2012 there were only a few EV models available, all of them small sedans with a range under 40 miles, and with only Level 1 charging available, and a very high sale price. In the last five years, there are many more consumer and multipurpose EVs available with many models exceeding hundreds of miles of range. It is anticipated that the electric vehicle industry will continue to advance the technology to make it more affordable to the general public and to Government fleets over the coming decade. Currently, the industry provides more EV options for light-duty vehicles, given that battery technology is still being developed for heavy-duty vehicles. Key points summarized in the review are listed below:
  • The higher the utilization rate of EVs, the greater return on investment in those EVs.
City of Minneapolis Electric Vehicle Study
  • City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 9
  • EVs might not be appropriate for all types of fleet vehicles, especially for vehicles that need to travel long distances, or heavy-duty vehicles due to lack of affordable battery technology.
  • There is an uncertainty about how electric vehicle equipment will affect the vehicle performances, as well as the amount of modifications that will be needed to current City vehicles to support the operation of electric vehicles
  • When planning for EV charging infrastructure, it is smart to proactively plan for the number of Electric Vehicle Supply Equipment (EVSE) stations needed by installing more electrical equipment (e.g. transformers and conduits) than required for the initial purchase of EVs. It is more cost effective to install excess electrical equipment during the initial installation than having to add electrical conduit and wires each time additional stations are required. This electrical equipment installation does not include purchasing all the EVSEs that can fit with that equipment, but instead having the electrical capacity to purchase EVSEs to meet future capacity needs without additional construction.
  • EVSEs should be placed at approximately a 1:1 ratio with the number of EVs in the fleet so that all vehicles can be charged adequately overnight. Level 2 EVSEs provide good value for infrastructure investment when factoring in cost and time required to charge.
  • Fleet management software is highly recommended to provide services including telemetrics, advanced booking and scheduling, real-time tracking of vehicles, keyless entry, and more. 2.2 Common Themes and Points Multiple City of Minneapolis departments were interviewed near the beginning of this project. Appendix A includes detailed input gathered from those interviews on how each specific department would be impacted by EV fleet conversion and how the vehicles would be utilized. A summary of the agencies interviewed is listed below:
  • Finances
  • Public Works Traffic
  • Traffic Control Division of Regulatory Services
  • Police Department
  • Community Planning and Economic Development (CPED)
  • Street Maintenance
  • Solid Waste
  • Fleet Services Division
  • Fire Department In summary, there were two common themes and points that were heard from City departments through the interviews conducted in April and May 2017, and these are summarized below. 1. Staff generally prefers the higher profile of a SUV type of vehicle, as it eases the physical strain of repeatedly entering and exiting vehicles throughout the day in the performance of their various activities for the City 2. City staff were all very open to the idea of using electric vehicles in their daily performance as long as the electric vehicle can operate within the current environment of how vehicles are currently used. This includes the use of heating / air conditioning throughout the day, amount of space available inside the vehicle for the use of other equipment, and ability to drive / perform in a similar manner.
  • 3. Vehicle Types This section presents further details on the current vehicle types utilized by various departments throughout the City of Minneapolis. 3.1 Types of Vehicle Fleet Vehicles utilized by the City of Minneapolis are divided into the following categories:
  • Light Duty Motor Vehicle – Light duty motor vehicle means a light duty truck, passenger car, or passenger car derivative capable of seating up to 12 passengers. This type of motor vehicle is rated at 8,500 pounds gross vehicle weight rating (GVWR) or less. This category includes sedans, passenger vans, minivans, sport-utility vehicles (SUVs), pickup trucks, etc. Beginning in 2004, all the new passenger vehicles including SUVs, minivans, vans and pick-up trucks are subject to the same pollution standards as cars.
City of Minneapolis Electric Vehicle Study
  • City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 10
  • Heavy Duty Vehicle – Heavy duty vehicle means any motor vehicle expected to be used for motive power and is rated at more than 8,500 pounds GVWR. This category includes large pick-ups trucks, delivery trucks, heavy trucks, semi-trucks, etc.
  • Non-Road Vehicle – The four types of non-road vehicle category described by EPA are non-road compression-ignition (CI) engines and equipment, non-road large spark-ignition (SI) engines and equipment, non-road small SI engines and equipment, and recreational engines and vehicles. This category includes vehicles, engines and equipment used for construction, agriculture, industrial, marine, and other purposes. Examples include excavators, paving equipment, tractors, Skid steers, forklifts, compressors, lawnmowers, etc.

For simplifying the cost-benefit assessment presented in Section 4 of this report, the most common vehicle type that has been observed within City vehicle data provided for this study has been selected and utilized to compare future costs and benefits of ICE vehicles with same type of costs and benefits of EV replacements. These most common vehicles are depicted in Appendix B of this report. A summary listing of these vehicle types is provided below for reference. Table 1 Most Common Vehicle Make / Model from City Vehicle Inventory Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light Pickups Heavy Pickups Trucks / Cargo Vans Garbage Trucks Heavy Construction Vehicles Light Construction Vehicles All other Vehicles Most Common Vehicle Make / Model Ford Focus Ford Escape Chevrolet Colorado Ford F-250 Western Star SB4700 Crane Carrier LET2-40 Volvo Wheel Loader L-90 Bobcat S185 Polaris Ranger A summary table of the quantity of these vehicle types that is used in the cost-benefit assessment and transition timelines presented in Sections 4 and 5 of this report is included below in Table 1.

This dataset of vehicles was derived from City of Minneapolis vehicle inventory looking ahead at estimated vehicle replacement years for these vehicle types. Vehicles observed to be overdue for replacement were excluded from the data in Table 1 given challenges in how to estimate when those vehicles would be replaced. Focus was given to the vehicles with an estimated replacement year of 2018 or later.

Table 2 Quantities of Vehicle Types from City Vehicle Inventory Data Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light Pickups Heavy Pickups Trucks / Cargo Vans Garbage Trucks Heavy Construction Vehicles Light Construction Vehicles All other Vehicles Total Vehicles 297 160 16 240 191 55 29 18 3 3.2 Purchasing Process for Vehicles The Fleet Services Division manages the purchasing process for a large majority of the City’s vehicle fleet by replacing older model vehicles at the end of their recommended life cycle with newer model vehicles that can still meet the basic needs of the City staff that utilize those vehicles to perform their daily operations.

The Division collects a monthly fee from City departments which is saved into a separate vehicle account to support the purchase of a new replacement vehicle.

These monthly fees are based on the anticipated replacement cost of a vehicle at the end of the current vehicle’s life cycle. These fees are re-calculated on an annual basis to account for any increases or decreases in anticipated replacement costs. Public works department staff familiar with the vehicle cost allocation model that maintains these cost values for different vehicles were interviewed on May 10th to better understand the model and how it is utilized. It was noted that the monthly fees collected from City departments accrue in a separate savings account that is used to purchase

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 11 a new vehicle when it is needed.

It was also noted that there often is a small gap between the cost of a new vehicle and the amount of money saved up to support that new vehicle’s purchase. However, there are multiple ways in which the cost model could help close this gap and support the new vehicle purchase. Prior to purchasing a new replacement vehicle, the Division does conduct interviews with City staff to understand their future needs with respect to their daily tasks performed for the City. Based on the input gathered from staff, vehicle options that meet those needs can be presented. If there is the opportunity for the use of a hybrid or even an electric vehicle, the Division may propose the purchase of that vehicle type to the City staff prior to deciding on that type of purchase.

The general fund is supported by the City property tax and is more flexible in providing for ways to fill the gap between the higher replacement cost of an electric vehicle than a fossil fuel vehicle. Enterprise fund departments are supported by service fees paid by City residents for those services, such as Solid Waste and Recycling, and these departments would have to consider raising the rates charged to residents to support a higher electric vehicle cost. Finally, it was noted during the May 10th that the current vehicle cost allocation model would support an approach of saving additional funds to support the anticipated higher cost for future electric vehicle purchases.

This approach could be applied to some of the recommended approaches presented in Section 5 of this report.

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 12 4. Costs / Benefits Assessment This section provides information on the costs and benefits associated with a transition of the City of Minneapolis vehicle fleet from fossil fuel vehicles towards electric vehicles. The Cost Benefit Analysis incorporates monetized benefits covering environmental and economic changes from the current fleet operation as compared to the proposed fleet conversion scenarios over a 10 year period (2018-2027). A cost-benefit analysis measures the dollar value of the benefits and costs to all the members of society.

Analyses evaluate and compare alternative investment decisions based on a set of quantified benefits, costs, and avoided costs. The alternative with the greatest net benefits compared to net costs may justify public investment. The sections below describe the benefits, costs, and high-level assumptions. For detailed assumptions and sources refer to Appendix C.

4.1 Environmental Benefits with Fleet Transition Transportation is responsible for nearly seventy-five percent of total U.S. petroleum consumption. EVs can help reduce U.S. reliance on petroleum and associated pricing volatility and supply disruptions because they are capable of operating entirely on electricity, which is produced from natural gas, coal, nuclear energy and renewable resources.1 On average, EVs in the U.S. emit fifty-four percent less carbon emissions than ICE vehicle counterparts within their lifespan2 and produce zero tailpipe emissions. A caveat to consider in assessing the environmental impact of EVs is the variation of electricity generation sources in a given area.

The state of Minnesota relies mainly on coal, natural gas and nuclear energy. However, the share of these fuel sources as a percentage of total generation is decreasing at an average annual rate of 3% since 2010. Alternative energy sources such as wind and solar are increasing rapidly, with wind growing at an annual rate of 3.5% since 2010. Overall, Minnesota ranks in the fiftieth percentile among all U.S. states for greenhouse gas emissions from electricity consumption.3 Three key factors contribute to a vehicle’s annual CO2 emissions: average miles driven/hours operated, fuel efficiency, and CO2 emissions factor of fuel source.

Based on data provided by the City of Minneapolis, research from the Environmental Protection Agency, and various other public sources, AECOM estimated emissions per vehicle type for both ICE and EV vehicles (See Table 3). Transitioning the vehicles with the highest percent reduction in CO2 emissions can help the City design a more impactful transition plan.

Table 3 Estimated Annual Carbon Dioxide Emissions per Vehicle in 2018 (pounds) Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles ICE 3,200 8,000 12,100 10,400 49,700 66,400 39,600 12,400 1,600 EV 1,100 3,000 4,900 3,100 24,800 23,900 23,800 7,500 700 Carbon Reduction from EV Conversion -66% -63% -60% -70% -50% -64% -40% -40% -56% Note: Values Rounded to the nearest 100. Note: As electricity generation becomes increasingly renewable, the carbon reduction from EV conversion will increase.

1 https://www.afdc.energy.gov/fuels/electricity_benefits.html 2 https://www.epri.com/#/pages/product/3002006881/ 3 https://www.eia.gov/electricity/state/minnesota/index.php

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 13 4.2 Cost Considerations Capital Costs EVs typically have lower fuel and maintenance costs than ICE vehicles, but higher capital costs. There is industry consensus that the cost of EVs are trending downward as production volumes increase and battery costs decreases.4 Capital costs can sometimes be offset by state and local incentives that encourage alternative fleet implementation through funding and technical assistance. However, it is difficult for municipalities to access many of these incentives.5 To conduct the cost-benefit analysis for the various transition scenarios, capital costs were estimated using City of Minneapolis data, government, academic, and other public sources.

Specifically, replacement costs for ICE vehicles were estimated using public sources such as Kelly Blue Book as well as City of Minneapolis average purchasing cost data for typical vehicles in each vehicle type (see Table 4). For EV Sedans and Light Pickups, capital costs were estimated by assuming a typical vehicle type and using its average capital cost. However, capital cost estimates for SUV/Minivans, Heavy Duty, and Non-Road EVs are less accessible as these technologies are nascent. Recent announcements of luxury brands releasing electric SUVs suggest a premium over their ICE counterparts of between $5,000 and $20,000.

As such, a price premium of $20,000 was used to estimate the eventual price of an electric SUV. For Heavy Duty Vehicles, research articles on the potential costs of similar vehicles were used as proxies for capital cost estimates. For Non-Road EVs, there was insufficient costing data to use proxies. As such, a 50 percent cost premium was added to corresponding ICE capital costs to serve as an estimate. These assumptions can be further refined as additional information becomes available (See Table 4).

Table 4 2017 Capital Cost Estimates Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles ICE $20,554 $23,400 $26,200 $31,600 $160,000 $280,000 $150,000 $31,900 $9,000 EV $36,000 $43,400 $52,000 $59,800 $200,000 $420,000 $225,000 $47,900 $11,299 Note: Values Rounded to the nearest 100 Fuel Savings EVs typically achieve better fuel economy and have lower fuel costs than similar ICE vehicles. For example, the 2017 Chevy Bolt has a combined city-and-highway fuel economy estimate of 118 miles per gallon equivalent (28 kWh/100 miles), while the estimate for the 2017 Ford Focus (four cylinder, automatic) is 30 miles per gallon.

A comparison of assumed fuel efficiencies is shown on Table 5. Fuel efficiencies for ICE vehicles were provided by the City based on vehicle specification sheets and performance. Fuel efficiencies for EVs were estimated using public sources, vehicle specification sheets, and academic research. It is assumed that electric heavy and light construction vehicles will be 50% more efficient than their ICE counter parts.6 Table 5 Fuel Economy Estimates Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles ICE 25 mpg 21 mpg 19 mpg 14 mpg 7 mpg 5 mpg 8 gph 1.2 gph 31 mpg EV (kWh/100 miles) 28.5 38 45 45 200 200 n/a n/a 30 EV (mpge)* 118 89 75 75 17 17 n/a n/a 112 *Approximate Conversion 4 https://www.afdc.energy.gov/fuels/electricity_benefits.html 5 Municipalities may be eligible for incentives under the Diesel Emissions Reductions Act (DERA).

Through DERA, the EPA allocates funds to U.S. states through the State Clean Diesel Grant Program. This program may fund up to sixty percent of the labor and equipment costs of replacing a diesel vehicle with an electric vehicle. Other incentives, such as the federal Qualified PlugIn Electric Drive Motor Vehicle Tax Credit, which offers a tax credit of $2,500 to $7,500 for new EV purchases, is not available for municipalities to leverage.

6 https://www.fueleconomy.gov/feg/evtech.shtml#end-notes, http://electriccarsreport.com/2017/03/volvo-ce-unveils-next-generationelectric-load-carrier-concept/

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 14 On top of fuel efficiency improvements with EVs, the cost per kWh of electricity tends to be lower and more stable than the cost per gallon of gasoline, diesel, or bio-diesel. The City currently pays a fixed price of $2.15/gallon for gasoline and $2.27/gallon for B-10 Diesel. Xcel Energy currently offers a special tariff for EV charging by time-of-use.

If the City charges its fleet at night, it can pay as low as $0.03/kWh for electricity. The cost-benefit model assumes that the City would pay an average of $0.06/kWh. This assumes that 75% of the fleet is charged at night and 25% of the fleet is charged during the day. To estimate potential fuel cost savings, the annual fuel consumed by vehicle type was calculated using City of Minneapolis fleet data on vehicle miles traveled and assumptions on fuel efficiency for each vehicle type. Saving estimates are in Table 6.

Table 6 Annual Fuel Estimates Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks/ Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles ICE $365 $903 $1,373 $1,184 $4,481 $5,990 $3,570 $1,122 $178 EV* $76 $212 $345 $219 $1,745 $1,681 $1,673 $526 $49 Fuel Savings from EV Conversion -79% -77% -75% -81% -61% -72% -53% -53% -73% *Assumes 75% of vehicles are charged nightly (between 9 pm and 9 am) and 25% are charged during the day Maintenance Due to a more streamlined vehicle system, EVs contain fewer moving components that are vulnerable for repair in ICE vehicles.

With over a dozen moving components, ICE vehicle repairs on the engine, transmission system and gearbox are likely over the vehicle’s lifespan7 . The following table lists potential maintenance, repair and replacement costs that are not a concern for EVs: Table 7 Potential ICE Vehicle Maintenance Costs Component Average Cost Frequency Oil change $25 - $55 Every 3,000 – 5,000 miles Exhaust System replacement $100 - $250 Typically lasts 40,000 – 80,000 miles; dependent on driving conditions Automatic transmission fluid change $75 - $150 Every 30,000 miles Engine repair/replacement $1,000 - $4,000 Typically lasts the lifespan of the vehicle; however, a broken rod, damaged valve or oil leak can cause it to occur sooner.

Head gasket repair/replacement $1,200 - $1,600 Typically lasts the lifespan of the vehicle; requires maintenance if the engine overheats and/or coolant leaks. Transmission repair/replacement $1,000 - $3,500 Typically lasts the lifespan of the vehicle; can occur if transmission fluid changes are neglected. In addition, brake system maintenance costs are about fifty percent less in EVs due to regenerative braking. Regenerative braking is the recovery of kinetic energy during braking. In ICE vehicles, the majority of kinetic energy is converted into heat and emitted unused into the environment during friction braking.

EVs can use the electric motor to recover a portion of the kinetic energy for reuse. Regenerative braking provides an extended range while lowering fuel consumption and GHG emissions8 . Therefore, EVs only require one maintenance visit for brakes at $200, while ICE vehicles require two visits at $400. 7 http://www.olino.org/us/articles/2009/02/17/costs-of-the-electric-car 8 http://products.bosch-mobilitysolutions.com/media/ubk_europe/db_application/downloads/pdf/safety_1/en_4/C C_Regenerative_Braking_Systems.pdf

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 15 Over five years, EVs can save an average of thirty-five percent on maintenance in comparison to ICE vehicles9 . Another case study conducted by the U.S. Postal Service found that they saved forty-six percent on maintenance10 . Maintenance costs for ICE vehicles were calculated using labor and parts cost data from the City of Minneapolis for its fleet. These costs were reduced by a factor of 35 percent to estimate the potential savings from transition to EVs. A sensitivity analysis of this assumption can be found in Appendix D.

Table 8 Annual Maintenance Estimates Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles ICE $686 $1,648 $1,447 $1,188 $14,370 $13,975 $25,342 $3,388 $1,432 EV $446 $1,071 $940 $772 $9,341 $9,084 $16,472 $2,202 $931 Charging Infrastructure Another consideration for charging infrastructure is the daily charging schedule. In electricity generation, the “duck curve” refers to the imbalance between peak electricity demand times and energy production.

Xcel Energy offers OffPeak Vehicle charging rate plans that incentivize the intentional reduction of electricity use during peak energy demand periods, such as during hot summer days. Planning for fleet recharging during off-peak periods can add up to thousands of dollars in savings11 .

Battery capacity Battery technology is changing rapidly, resulting in increased charge capacity and lower operating cost per mile. Chevy and Hyundai offer eight year/100,000 mile warranties on their EV batteries (generally covering defects and workmanship), and Chevy also offers an eight year/100,000 mile warranty on battery capacity. Auto manufacturer warranties and charge capacity have generally reduced consumer concern about battery life and range. As a result, the analysis of total ownership cost does not account for the cost of EV battery replacement, assuming that municipal vehicles will be retired at the warranty expiration.

See Replacement Considerations for a more complete discussion.

4.2.1 Payback Periods To estimate the potential payback periods by vehicle type for conversion from an ICE vehicle to an EV, the premium capital cost was compared to the annual fuel, maintenance and carbon savings12 . It is important to note that the payback periods are a result of the assumptions descripted in this report as well as the usage of the vehicle types. The high payback period seen for sedans is the result of the relative underuse of this vehicle type compared to other vehicle types. If the sedans were driven on average as much as the SUV/Minivans (approximately 8,800 miles a year), the payback period would decrease to 15 years.

If the sedans were driven on average as much as the light pickups (approximately 12,200 miles a year), the payback period would decrease to 12 years. Additionally, as the capital costs of EV continue to decrease and eventually reach parity with ICE vehicles, payback periods will improve. The following table shows initial payback periods.

9 https://www.epri.com/#/pages/product/3002006881/ 10 http://bea.touchstoneenergy.com/resourcelibrary/article/2311/Getting+Charge d+Up+over+Electric+Vehicles 11 https://www.xcelenergy.com/staticfiles/xe-responsive/Business%20Programs%20 &%20Rebates/Equipment%20Rebates/17-03- 205%20Custom%20Efficiency%20Information%20Sheet.pdf 12 Carbon savings are monetized using the Social Cost of Carbon estimates from the EPA.

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 16 Table 9 Payback Period Estimates by Vehicle Type (2017 Capital Costs) Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Heavy Construction Vehicles Light Construction Vehicles All other vehicles Years 25 13 14 17 4 13 6 8 3 Note: Payback periods assume a static carbon emissions factor of 0.896 pounds per kWh, the 2018 estimated factor from Xcel Energy.

As the emissions factors improve, payback periods will shorten.

The City typically considers 8 year payback periods for vehicle purchases. In order to realize an 8 year payback period, the capital cost of electric vehicles needs to decrease or the benefits need to increase. Since it is likely that capital costs of electric vehicles will continue its downward trend, the table below analyzes how much 2017 estimated capital costs for electric vehicles by type would need to decrease to result in an 8 year payback period. As shown below, sedans would only need to decrease in price by approximately $4,900.

Table 10 Required Capital Costs for 8 year Payback Period by Vehicle Type (2017 Capital Costs) Light Duty Vehicles Heavy Duty Vehicles Non-Road Vehicles Sedans SUV / Minivans Light pickups Heavy Pickups Trucks / Cargo Vans Garbage Vehicles Construction Vehicles Maintenance and Service Vehicles All other vehicles 2017 Est.

EV Capital Cost $36,000 $43,400 $52,000 $59,800 $200,000 $420,000 $225,000 $47,900 $11,300 EV Capital Cost Max. for 8 Year Payback $25,500 $35,300 $41,100 $44,800 $233,400 $367,800 $245,400 $49,100 $14,400 Required Cost Reduction $4,900 $11,900 $14,900 $13,200 $73,400 $87,800 $95,400 $17,200 $5,400 Note: Payback periods assume a static carbon emissions factor of 0.896 pounds per kWh, the 2018 estimated factor from Xcel Energy. As the emissions factors improve, payback periods will shorten.

4.2.2 EV Charging Infrastructure When planning for EV charging infrastructure, it is recommended to proactively plan for the number of Electric Vehicle Supply Equipment charging stations (EVSEs) needed by installing more electrical equipment (e.g. transformers and conduits) than is needed for the initial purchase of EVs. It is more cost effective to install excess electrical equipment during the initial installation than having to add electrical wires each time additional stations are required. This electrical equipment installation does not include purchasing all the EVSEs that can fit with that equipment, but instead having the electrical capacity to purchase EVSEs to meet future capacity needs without additional construction.13 As electric vehicles are purchased by the City, EVSEs should also be purchased at an approximately a 1:1 ratio with the number of EVs in the fleet so that all vehicles can be charged adequately overnight.

The installation EVSE stations will be simplified, provided that enough electrical capacity and conduits have been previously installed to support the new EVSE equipment.

13 https://www.documents.dgs.ca.gov/green/evse.pdf

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 17 Figure 3. Level 2 Charging Station14 While there are three levels of EV charging infrastructure currently available, Level 2 charging is currently the most prevalent among them, and requires electrical infrastructure upgrades to extend 240 volt AC service to locations where the EVs would charge. It charges at over twice the rate of level 1, adding 10 to 20 miles of range per hour charging. The increased rate of charging can justify the costs to serve the needs of fleet management in a timely manner.

The U.S. Department of Energy estimates the cost of a level 2 EVSE to be $400 to $1,700 per unit for fleet purposes, but can go up to as much as $6,500 with the most advanced features. Installation and electrical equipment upgrade costs can range from an additional $600 to $12,700 per unit.15 Costs per unit can vary within these ranges depending on the installation and labor costs, warranties for equipment, and operation and maintenance costs for the equipment. Despite a higher upfront cost than Level 1 EVSE infrastructure, Level 2 EVSEs provide good value for infrastructure investment when factoring in cost and time required to charge.

In addition to the EVSE charging stations, it should be noted that fleet management software is highly recommended to provide services including telemetrics, advanced booking and scheduling, real-time tracking of vehicles, keyless entry, and more. This software can be a valuable resource for the City to understand how their fleet of electric vehicles is being utilized over the course of time. 4.2.3 Technician Training Electric vehicles will require different types of vehicle maintenance than standard internal combustion engine vehicles which are currently repaired and maintained by vehicle technicians that work for the City of Minneapolis.

While City vehicle technicians will be required to maintain an understanding of current ICE automotive industry standards, the additional cost of maintenance training on electric vehicles is unknown given the rapid advancements in vehicle and battery technology.

4.2.4 Replacement Considerations Electric vehicles will require replacement at a point in time when the batteries that support the operation of the vehicle can no longer 16 . The longer an electric car operates over time, the shorter its driving range will become due to the depreciation in the life of the vehicle battery from daily charging. This decrease in driving range will likely be unnoticeable in the first few years of EV operations with regular vehicle charging. Many EV battery estimates predict that the typical lithium-ion electric car battery will be good for more than 100,000 miles of driving while still maintaining a decent driving range.

As vehicles approach that figure of overall mileage, the decrease in driving range experienced by City employees will require replacement of either the vehicle or the battery itself. Current estimates of EV battery replacement are high enough that a complete vehicle replacement may make more financial sense 17 . Over time however, as EV battery development progresses the cost of battery replacement decrease to a point where the City may need to determine if a battery replacement is more financially sound than a vehicle replacement at that point in time.

14 http://evtc.fsec.ucf.edu/publications/documents/FSEC-CR-2031-16.pdf 15 http://www.afdc.energy.gov/uploads/publication/evse_cost_report_2015.pdf 16 http://auto.howstuffworks.com/will-electric-cars-require-more-maintenance.h tm 17 http://auto.howstuffworks.com/will-electric-cars-require-more-maintenance.h tm

City of Minneapolis Electric Vehicle Study Prepared for: City of Minneapolis Fleet Services Division AECOM 18 5. Conversion Approaches and Transition Timelines The rate at which the City chooses to transition its fleet towards electric vehicles depends on the driving objective of the conversion, as well as financial and technical constraints. Given the per-vehicle costs and benefits presented in the previous section, six different optimized scenarios with regards to a transition of the City’s current fleet towards electric vehicles were analyzed. These are presented within this section in terms of the objective being achieved by the given scenario and the constraints that scenario is subject to. The optimal number of each type of vehicle to be transitioned by year from 2018 to 2027 was determined for each scenario using a Microsoft Excel-based model. This model uses the Excel Solver function to maximize a specific goal based on identified constraints. Therefore, the resulting procurement plans represent the best way to achieve the stated goal given specific assumptions about technology and costs. For example, the Scenario 1 procurement plan is the best way to maximize CO2 reduction through the fleet conversion, assuming the costs outlined in the cost benefit analysis and that certain vehicle types will not be available as electric until the year 2020 or 2022. More details on the resulting transition/procurement plans and scenarios can be found in Appendix E. A brief definition of these scenarios is provided below:
  • Scenario 1: Aims to maximize the carbon dioxide reduction over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough for procurement until 2022. There are no imposed financial constraints in terms of capital purchase amounts.
  • Scenario 2: Aims to maximize the carbon dioxide reduction over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough for procurement until 2022. It also assumes that the City can only spend $5 million above what it would spend to procure ICE vehicles in a business-as-usual procurement.
  • Scenario 3: Aims to maximize the Net Present Value of the transition over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough until 2022. It also assumes that the City can only spend $5 million above what it would spend to procure ICE vehicles in a business-as-usual procurement.
  • Scenario 4: Aims to maximize the total project benefits (fuel, maintenance and CO2 emissions) of the transition over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough until 2022.
  • Scenario 5: Aims to maximize the total number of EVs purchased over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough until 2022.
  • Scenario 6: Aims to maximize the Net Present Value of the transition over the 10 year timeframe. This scenario assumes that SUVs and Minivans are not commercially mature enough for procurement until 2020. It also assumes that Heavy Duty Vehicles, Heavy Construction Vehicles, and Light Construction Vehicles are not commercially mature enough until 2022. It also assumes a more cautious transition to electric vehicles: It assumes no EVs will be purchased in the first two years of this timeline. This would allow for the City to begin saving money that could be used to purchase electric vehicles in year 2020 and beyond. Coincidentally, Scenario 6 results in the same optimal transition plan as Scenario 3. These scenarios look ahead to each upcoming year for the next ten years from 2018 to 2027. It is important to note that the number of vehicles proposed in each year for electric vehicle conversion is based upon the following:
  • Estimated year in which the City planned to replace the current vehicle. This was observed in the timelines so that the recommended quantity of electric vehicle conversions does not exceed the previously planned purchases of replacement vehicles.

The projected automotive industry standard at the time of the City’s planned vehicle replacement year. This included research into the availability of electric vehicles in upcoming years for each of the vehicle types,

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