Data-Driven Solutions for Decarbonising Fleet Operations: A Conversation with Michael Ayres from Flexible Power Systems.
[PODCAST TRANSCRIPT]
Georgia Lomas:
You’re listening to the Journey to Zero podcast hosted by Alltruck Zero. If you want to stay ahead of the game and find out more about the very latest green truck technology, or you’re looking for hints and tips on how to decarbonise your own fleet, then this is the place for you. In this podcast, we’ll be sitting down with the thought leaders who are guiding the way on the journey we’re all on as we work to deep carbonise the transport industry. Today we’re welcoming Michael Ayers. From flexible power systems to the podcast. Welcome, Michael.
Michael Ayres:
Hi, everyone. I’m Michael Ayers from Flexible Power Systems, the managing director there that I typically look after our sort of client relationships and also deal with some of the optimisation work.
Georgia Lomas:
Michael, could you give us an introduction to FPS and your role at the business?
Michael Ayres:
Sure. So that Flexible Power Systems is founded on the proposition that the very large quantities of data that commercial vehicle operations generate can generate really large value when you’re planning an electric vehicle transition, and also when you then go on to operate those vehicles within your fleet on a day to day basis. As we all know that commercial vehicles very rarely move anywhere without a computer system telling them to do so. And so there’s ways that we can leverage that fact to sort of make better choices as we go on that journey.
Georgia Lomas:
Okay, great. So what does your role entail at FPS?
Michael Ayres:
So I’m the managing director at FPS, so obviously have overall oversight for the business, but also I tend to get involved in our client relationships in terms of managing them at a sort of strategic level. The other thing that I do is I get involved in some of the definition of our optimisation problems that we work on for our customers, both within their sort of planning their electric vehicle fleet transition, but also in terms of deciding how that those vehicles should be used on a daily basis.
Georgia Lomas:
Fantastic. Thank you. So how does software and data play a part in the UK’s journey to net Zero Transport?
Michael Ayres:
Well, I personally think it’s critical. I don’t think that there are very many organisations that would expect to run a commercial vehicle fleet or a logistics operation without relying on software systems today. And I don’t think that we should expect that for sort of electric fleets. If anything, that because that the vehicles and infrastructure is perhaps less flexible than the diesel solutions on which we’ve come to rely, that the need to ensure that we sort of appropriately manage those assets is perhaps sort of more important than it’s ever been. I’m sure we’ll end up talking about this a bit more later, but a lot of people have noticed that the zero emission solution is quite a bit more expensive than the diesel incumbent technology. And so it becomes absolutely critical that we sort of utilize those assets as much as we possibly can. And within that, the sort of software piece is absolutely key because if we can’t drive the return on investment on these low carbon assets, then people aren’t going to buy them once you get beyond the initial kind of CSR type players who are doing it at the moment.
Georgia Lomas:
Great. So you mentioned the return on investment. So how can data and software be combined to improve the return on investment for electric fleets?
Michael Ayres:
Sure, there’s a number of different ways in which that we do that for our customers. Firstly, you want to look at it at the planning stage where by simulating your fleet using the data that you can get from the vehicle operation through things like telematics and also perhaps your sort of operations planning department. As well as building metering systems and things like that. You combine all of that data to build simulations that enable you to look at the impact of different decisions you’d make with regard to vehicles and infrastructure. And so that enables you to make more efficient capital decisions than you would if you were just using a backup of fag packet to do it, or perhaps if you were sort of just going to buy some vehicles and infrastructure and see what happened. It’s clearly very expensive to do that what you get out of a process like that. The principal benefit really is right sizing. People tend to be very cautious, rightly, because of things like range constraints or worrying about how quickly they need to turn around vehicles.
Michael Ayres:
And so we very often see customers sort of over specifying vehicles in terms of perhaps number of battery packs they might be selecting, or over specifying infrastructure and grid connections because they’re thinking about future proofing. We should go for very large DC rapid chargers or something like that, and that can waste very large sums of money and give you a kind of white elephant that doesn’t generate any sort of return on the investment. It also can scare off the business from sort of completing the rest of the transition. The other thing you get from these kind of simulations is that if you do them at sufficient scale, like across the network, is that you can begin to develop an understanding of what you need either in terms of technology or operational change to unlock different parts of the journey. What I mean by that is that lots and lots of operators we saw it in LCV to start with. We’re seeing it sort of in larger vehicle formats at the moment, get their first EVs and drive them around London because there’s congestion charge, high visibility, and vehicles are doing very low mileages, so, you know, they won’t run out of charge. But we also know that most of the UK isn’t like London in terms of the sort of duty cycles that vehicles do. And so that it’s absolutely critical when we’re sort of buying these at the moment, very expensive sort of first trial vehicles, that we sort of put them into environments where they’re telling us what we need to know to unlock the transition to do the more difficult sites and then the really difficult stuff that might be in the sort of Highlands and Islands of Scotland that is really hard to touch with kind of current technology.
Michael Ayres:
And so understanding what that transition journey needs to look like is something else you get out of doing your front end simulation so that every time you spend money on a pilot, you’re generating business benefit that sort of helps you out on that journey. And we’ve seen customers take on large transition programs sort of tens of millions of pounds out of a transition by trying to do this sort of optimal pathway. The other area that you can use is that when you’ve got some EVs and infrastructure that you’ve got these expensive assets, clearly you don’t want them to fail in service. And so there’s a kind of a temptation to sort of give them light duties, give them the short routes, try and sort of maybe operate them one shift a day or something like that. We try to encourage customers to sort of try and push the EV sort of almost as far as they’ll go because that the more miles that you can get on your electric vehicle, the better the payback. Now clearly that you don’t want a failure in service and so that the way to avoid a failure in service is to be able to sort of plan and monitor what you’re doing with that vehicle and that there’s bits of the tool set that are there already so that you can connect to your vehicles through telematics. I’d imagine most of listeners will be familiar with that. Charge points are also highly connected devices, so it’s possible to sort of collect data from them about their availability and their condition, whether they’re working, what they’re doing at the moment in terms of whether they’re busy.
Michael Ayres:
And so that goes into your mix as well. We also know a lot about the outlook about what we want to do with our vehicles during the day is that most people are working to a plan of sort of jobs or deliveries that they need to make. And so having sight of that plan and thinking through what is required in terms of energy requirements to meet that plan enables you to then sort of operate these vehicles much closer to the limit and get more miles on them. And what FBS software does is it effectively automates that process. So our algorithms connect to all these different systems, that we ingest all this data, build a forecast of sort of what will happen across the rest of the day, and then that we match vehicles with tasks on the network and that we also give each vehicle an individual tailored charging profile and that both those allocations and the charging profiles evolve during the day as that maybe operational changes happen. Maybe that you get vehicles coming back late, you hit traffic, weather conditions are different, driving style is different from what the sort of energy forecast said. And so you end up with this quite dynamic system which is a way of dealing with sort of operating much closer to the limit, which is in many ways more cost effective than sort of massively over specifying everything and underutilising the assets.
Georgia Lomas:
So what is FPS doing now to help businesses prepare for the transition to net zero?
Michael Ayres:
We actually have three flavours of things that we do for customers. I’ve talked quite a lot about software, I’ll mention some of the hardware stuff that we do as well. The journey kind of starts for many people with a net zero commitment that comes from their board. And so the sorts of things that fleet managers and property teams and energy managers begin thinking about at that point is what sort of vehicles do I need, what kind of infrastructure do I need, which parts of the fleet should I transition now, what should be done later? And so there’s a planning part of our offer which is around helping fleets to make good decisions in terms of that planning process in the HEV segment, which is sort of maybe sort of more of interest to some of the listeners that we’re seeing lots of fleets approach us asking about sort of either our boards ordered some bev trucks. We don’t know where we’re going to put them in the operation. Can you answer that question, whether they’ll work? We’re also seeing people who are sort of looking for sort of information about whether that their connection capacity is sufficient at sort of depots and distribution centers. Because whilst they may not be planning to transition their whole fleet to 100% bev next year, actually it’s something they think could happen in a 1015 year time horizon which actually begins to conflict with some of the lease lengths that people have on commercial property. So that’s why people are concerned about that.
Michael Ayres:
We also work with customers once they’ve got a whole bunch of EVs, we have a real time management platform, FPS Operate. What it does is it connects to a wide range of data sources in a customer’s business. So your sort of EV telemetry, your charge points, your fulfillment systems building metering and it aggregates that data into one place. And what you can do as soon as you’ve achieved that is you can set up conditional alerts. So rather than being deluged with data as a fleet operator, you’re just simply asked to deal with exceptions. They’re kind of flagged to you so that you can take action on them rather than have to look through rows and rows of sort of vehicle statuses trying to figure out what you should do with that information. You can also use that data set to feed algorithms that make decisions for you about which vehicles should be assigned which tasks and when to charge those vehicles. And that that’s a useful thing to do because it’s key to kind of managing a very large number of electric vehicles.
Michael Ayres:
You don’t want to do that manually, but it also helps you to avoid creating new job roles like I’m the person who deals with EV, charge scheduling or administering the EV back office and things like that, that can be important to sort of avoiding the cost of a transition sort of escalating further. One of the things that listeners may have heard from sort of the Bet trials that were sort of being run by Senex and DAF was that the vehicles were highly reliable, but actually that the charging infrastructure was less reliable, let’s say. So one of the things you can do with these types of platforms is you can obviously connect to everything so you can see when it breaks. And then if you see that you’ve got a failure, that the first thing to do is you start trying to fix it with a machine based intervention because that can start in seconds and so that we often fix our faults before our customers notice them. Then the next intervention is a remote intervention because I’m pretty sure that we can sort of get someone from a sort of bureau to sort of log into a charger and restart it or something like that, faster than we can get anyone to site. And then the sort of third thing is if you can’t clear a fault that way, you get someone else to site. And that’s how you push the reliability of the charging infrastructure up to a level where that people can feel confident in it. Because when you have it sort of sitting as a separate static back office somewhere over here unmonitored, that’s when you get these faults where people rock up to a charger and find that thing’s not been working for two weeks and that you’re going to have to wait three days for someone to come and repair it.
Michael Ayres:
Because that sort of stuff is really critical when you go down the path of sort of battery, electric vehicles, because it’s not any more just a vehicle failure that takes you off the road. Actually, if your infrastructure goes down, that that can take you off the road too. The other leg to what we do is around hardware that we found with some customers that what OEMs can offer them at this stage in the development of the technology doesn’t fit their needs. So we have the ability to sort of develop specialist power electronic devices that enable customers to sort of get EVs to fit in their fleet. So some examples were that colleagues from Waitrose wanted to trial wireless charging on vans. They wanted high power wireless charging, which at that time wasn’t available in the UK. And so that we imported some high power wireless charging pads designed for buses in the United States and integrated them into an LCV platform for waitrose and squared at Crystallantis, who are the OEM? So the vehicle modifications are sometimes required. The other area that we’ve worked is around charging infrastructure that there’s an increasing array of sort of AC and DC chargers you can get for charging traction batteries.
Michael Ayres:
But a lot of our customers have become more interested in transport refrigeration unit hookups over the last year or so since the increase in red diesel price. Well, the elimination of red diesel so that that’s led to a lot of kind of hookup projects in customers. Lots and lots of distribution centers have insufficient power supply capacity to even support Tru hookups. And so that for Sainsbury’s, we built them what we call a Tru smart plug, which is a little bit like a sort of EV charger and a sort of 32 amp socket that you see in sort of many distribution centers. So it has a kind of load control capability that enables you to get the benefits of plugging in the fleet without having to pay your local distribution network operator tens or even hundreds of thousands of pounds. So we sort of span the journey, I guess, from how are we going to sort of tackle this decarbonisation challenge to sort of now that we have to manage these new assets in a sort of much more engaged and active way than you need to with diesel.
Georgia Lomas:
So if we’re talking about HGV fleets, what current alternative fuel options would you recommend businesses to consider and why?
Michael Ayres:
That’s a good question. I think that HGVs are undoubtedly the most challenging of the sectors that we operate in and that’s just simply because of the mass and the utilisation rate that we see. There are a number of contenders at the moment that I think that there’s lots of fleets which are doing things with biofuel. So that could be sort of biomethane or HVO and that that can be a good decision perhaps for the short term and it can be something that you can do to decarbonise maybe your fleet, but it won’t be the pathway through which we decarbonise the fleet in the UK. And the reason for that is that there’s insufficient feedstock to make enough biofuels of any flavor for us to meet the needs of the HTV fleet. And it’s not a sort of small deficit, it’s sort of less than half the energy we need even if we were to use all of it. And actually that biomass is spoken for because it’s going to need to be used for various sort of heating processes in industry as well. So we can’t rely on biomethane or sort of HPA in the long term, but it is a short term option that people are doing.
Michael Ayres:
I think that the other place that we see sort of a lot of activity at the moment is around battery electric vehicles I think that the technology is still evolving. I think that everyone’s watching very closely to see what happens with the sort of new generation of trucks, particularly what happens with sort of range and things like that when we start to sort of get payloads up. But we know that there’s challenges with it. I think that battery electric vehicles will be a significant part of the solution. And that that’s really because that investments are being made in transmission and distribution infrastructure to support cars and LCVs and so that HGVs are likely to piggyback on that and that it’s likely to be the lowest operating cost of any of the alternative fuels because of the higher efficiency drivetrain in niche applications. There could be a case for hydrogen. I know that there’s a number of different sort of businesses which are exploring that, that we think where the very sort of significant range is required or the potentially fast refueling benefits, that there could be a case for it. But I think that the thing we emphasize to customers is that it is and will remain a premium option so that the vehicles will cost more than an equivalent bev truck.
Michael Ayres:
And it’s also the case that the fuel will cost more and that that’s not something that sort of building more electrolysers can change because it’s to do with the sort of fundamental efficiency of how much energy you can. Get out when you’ve made some hydrogen and put it into your fuel cell and turn it into electricity to drive a motor, to drive your wheels versus just putting electricity into a battery pack and so that the fuel costs will be significantly higher. So that we end up seeing sort of in the fleets that we work with that appreciate everyone’s operation is different, is that we sort of see pictures whereby that people can do maybe sort of surprise. We were surprised when we started looking at this 30% to 40% of what they do today in terms of vehicle replacement with sort of current bev technology. If it performs as expected, there’s then a sort of when we get the sort of 500 kilometer range trucks which are supposed to be emerging in the sort of 2024 2025 time horizon, that that then tends to unlock us up to sort of like maybe 80% and then beyond that, that it’s then sort of is it hydrogen in those niche applications? Is it continuing perhaps in some form with biofuels? Or is it that perhaps the efforts to build out the sort of very high power, sort of HDV oriented charging infrastructure at sort of hubs may be sort of like what’s done to achieve that or perhaps even electric road systems. I know that you had sort of David Saban on talking about that. I suspect previously that could be an answer if the country wants to take a strategic approach to that.
Georgia Lomas:
So when you’re talking to businesses about transitioning their HGV fleets. What are the reasons that people are reluctant to move currently?
Michael Ayres:
Well, I think that the biggest and most obvious is cost. That I don’t think that anyone who’s listening to this podcast will be surprised that the cost of a sort of bev HGV is sort of infeasible at the moment. I think for most operators, I think that once you sort of layer the potential infrastructure spend on top of that, then that the economic challenge is very significant at the moment. I think that there’s a view that in the industry that that’s going to change and that that’s partly because of what we’ve seen happen with battery pack prices in recent years and partly a function of sort of increasing volume production. And then I guess the third thing to consider is that as E regulations get more stringent that the cost of a baseline diesel vehicle is going to increase as we go through sort of the future Euro standards. And so we’re expecting to see TCO convergence in say, a heavy usage application maybe around about 2026, 2027. Now if we put cost to one side there’s then sort of other challenges that need to be overcome. I think that people are concerned about payload and that that really is a big issue for some operators who sort of max out on mass, that there isn’t a good solution at the moment for people in terms of we’ve got this more expensive vehicle and guesswork can carry less.
Michael Ayres:
That that’s not really a sort of very compelling proposition. I think the government is trying to work on that, but it will take collaboration with the OEMs to get a sort of workable solution. And we know it’s not as simple as just saying just add an extra ton on, is it? Because you’ve got things like turning circles and the configurations of the tractor unit, so the payload is going to need to be tackled for some operators. But a lot of fleets don’t actually max out en masse, that they tend to cube out before that they max out. So it’s not necessarily everyone is prevented from doing something on that basis. I think that the range piece is improving that you can see that the sort of technology roadmaps are sort of getting us closer to where we need to go. Particularly for many UK operators that many of our vehicles go home at night rather than sort of being know, sort of crossing Europe or something like that. Hauling oranges from Valencia to Norway.
Michael Ayres:
And so that I think range will be slightly less of a barrier in the UK over the coming years. I think the infrastructure is really challenging. I think that lots of distribution centers will struggle to get the charging infrastructure in that they need and that’s a function of local power constraints. And so I think what we’ll see is people developing kind of hybrid solutions whereby that we have some charging infrastructure in the depot. Maybe at logistics parks we might see a bit of shared infrastructure in order to kind of pull resources on a grid connection. And then I think that the charging hubs which some of the EV ChargePoint operators are already pursuing, at least conceptually and sort of looking at sites for and things like that. I think that’s also part of the solution. I expect infrastructure to kind of remain a hot topic for at least the next decade in terms of people looking at that and trying to optimise that.
Michael Ayres:
I guess the piece that when you’ve overcome all of those challenges that people don’t always think about is the kind of operational and it systems integration piece because there’s kind of a temptation when you’re doing small scale pilots and that you’re focused on is there sufficient range in the vehicles? Can we keep the chargers working to sort of narrowly focus on a sort of relatively small scale solution that’s got sort of high levels of manual intervention? But that’s not how lots of operators run their truck fleets, is it? So it’s thinking about how things like your charging schedule, your vehicle, the jobs you give to that vehicle, how you can automate them so that the EVs can fit with the sort of prevailing business workflow and considering sort of ways in which perhaps it may need to change to get the most out of the vehicles.
Georgia Lomas:
You mentioned in your talk at the Microlise Conference this year that the UK is capable of creating enough electricity to support the HGV fleet. But what other challenges do we face?
Michael Ayres:
Well, I think that it’s absolutely the case that there’s enough generation capacity to produce enough energy, electrical energy, to support the HGV fleet. I think that the challenge is getting that energy to the right place at the right time and so it’s as prosaic as sort of having enough wires and transformers to do that. But that’s a challenge which is not unique to HGVs. That’s a challenge that we’re seeing in LCV. It’s a challenge that we’re seeing actually in heat pumps for sort of domestic users and in passenger cars. So it’s one that we’ll have to tackle sort of whichever fuel choice we look at for the HGV fleet that beyond the power piece. I think that the challenges are to do with making the economics work and understanding the operational impacts and how to manage them so that you can sort of fit the BEVs into the business, if that makes sense. Because as we all know that many of these operations are low margin and so the idea of having a bunch of spare vehicles and chargers and drivers sitting around is just sort of not realistic, is it? And so it’s how we can get the utilisation as high as possible to do that.
Michael Ayres:
And I think that doing that is going to require collaboration, not just within businesses. So I’m talking about sort of collaboration between transport managers, property teams, energy buyers and operations people, as well as the ESG people who maybe are pushing the sort of low carbon vehicles in the first place, but actually probably a degree of cooperation with customers and potentially other fleet operators who may be competitors in order to get this done in the most efficient way.
Georgia Lomas:
In your opinion, are HGV OEMs producing suitable products for the needs of the market currently?
Michael Ayres:
Not yet is the summary option. I think that one of the things that everyone will say BIC was too expensive and insufficiently capable in terms of range and payload. Those things are both true. We’re sort of trying to replace 100% of use cases. We’ve talked a little bit about how the outlook is for the sort of the economics to improve in terms of sort of pack price and emachine evolution over the next sort of five years I think will sort of help us out a little bit in terms of the capex story and also technology advancement will help us. What I would say though is that many of the operations that we look at are quite mixed. And so that you find a range of duty cycles ranging from sort of someone who does 15 miles into the center of London and back every single day up to people who sort of go out sort of tramping around the country covering sort of like 1000 miles or something like that. So that one of the things that we encourage our customers to do is actually to look at the data about what their vehicles are actually doing in some detail, rather than relying on a sort of spreadsheet or your sort of intuition about sort of what mileage you do, because that you might find that actually it’s feasible to replace more vehicles than you expected.
Michael Ayres:
We did a project for a customer who was shifting goods in between sort of a number of different sort of distribution centers. We were sort of convinced that the sort of vehicles would have sort of very high daily mileages and that we were actually surprised to find that actually that they could shift out maybe sort of 30 or 40% of the fleet now it would be technically feasible economically. It would be a nightmare obviously, in terms of the capex required. But it was interesting that actually, even now that you’ve got a portion of the fleet you can do and that’s important because actually that these EV transitions are not going to take place in a single year. That I think that sort of lots of the operators that we deal with maybe keep their vehicles for sort of three some keep them for sort of seven years trailers, maybe a sort of decade, something like that. And so actually that these transitions are going to be affected over a number of years. And so actually that you want to sort of start off doing the things that you can. Do now that will teach you what you need to know to do the next sort of level of difficulty up, if that makes sense.
Georgia Lomas:
Yes.
Michael Ayres:
And so that examining sort of what your fleet actually does is a pathway to sort of understanding what you can do with the current OEM products. It set because there’s a lot to be learned, isn’t there, with the current crop of vehicles? That I think that understanding in particular, sort of how your drivers are going to respond to them has been something which we found customers have got a lot of value out of understanding sort of all the things you need to put around an EV in order to make it a success. Those sorts of things are really valuable to fleets which are sort of potentially thinking about spending tens or even hundreds of millions on the transition over the next decade, if you know what I mean.
Georgia Lomas:
Yeah. The Prime Minister recently delayed several key green policies. How do you think this will impact the commercial vehicle industry?
Michael Ayres:
Well, I think the first thing it’s clearly not helpful. I think one of the things that we hear from stakeholders across the industry all the time is that just give us some certainty about what it is you want us to do. And the fact that goalposts can be moved in any direction actually doesn’t really help us in terms of planning. However, when you sort of look at the detail of the proposals, that actually not that much has changed. The optics are very unhelpful. I don’t argue about that. But actually when you look at the sort of manufacturing quotas that there’s been small changes to the next couple of years, but the overall direction of travel is pretty clear. When you look at the LCV and the sort of percentages that you’ve got to get up to by 2030, I think it’s 70 or 80% has to be sort of the zero emission by 2030 of the output so that the ice vehicle is going to be the minority.
Michael Ayres:
I think that HGV. There’s undoubtedly sort of insufficient clarity at the moment. We’ve had those target dates put out there, we’ve had a consultation and then we’ve not really had anything, have we, in terms of sort of saying, and this is how it’s going to work, or that we’ve taken these concerns into account. And so I’d say that sort of the issue is mostly around sort of insufficient communication. I think even being seen to be inconsistent is deeply unhelpful, because everyone trying to put a business case together to take the FD and the plan of action that they want to take forward and finding that sort of like, oh, but it could change. And if it’s a bit difficult, then we can just sort of ring up Rishi and he’ll sort of move the goalpost for us. That’s not helpful for anyone, is it? And then that there is I think there are also actually micro challenges as well that we’re seeing. So that some of the stuff around the 4.25 ton derogation and not just cleaning up the mess there because there’s clearly sort of conflicts and complexity which is making it really difficult for fleets to operate and actually that you could just fix that stuff.
Michael Ayres:
And so that sort of devoting a bit of the time to fixing that, I think would sort of do more in terms of accelerating us in the short term rather than sort of recasting the production targets yet again.
Georgia Lomas:
So do you think that the UK will achieve the 2050 net zero commitments?
Michael Ayres:
Well, I guess the first thing to say is that they’re legally binding, but they haven’t been moved yet. I think the other thing to say, though, on the sort of negative side is that in some respects that we’re behind in terms of where that we need to be. That a lot of the reductions versus 1990, which are often sort of used as sort of an indication of the sort of success of our sort of decarbonisation strategy are based firstly on the sort of switch to natural gas during the 1990s and then actually the very rapid decarbonisation that’s taking place in the electricity sector. And when you actually look beyond that, that carbon intensity is changing at a kind of glacial pace in the rest of the economy. So you can 100% in combination with the fact that targets seem to be movable, at least in perception, see why that people are skeptical about meeting the 2050 net zero target. I am not entirely pessimistic about it. And the reason for that is that the level of pace of technological change that we’re seeing, that when I look at the sort of LCV segment where the sort of FPS started, that we were having this conversation, sort of three or four years ago. I think that the only sort of van products you could have bought would have been a Renault Kangu Nissani MV 200 and an EV 80 from LDV.
Michael Ayres:
And anyone who’s had some of those would know that they were making severe compromises in terms of range that were sort of measured sometimes in sort of 50 or 60 miles and sort of price tags that were sort of double ice incumbents. Now where we’ve got to now in the LCV segment in terms of sort of some of the offers that are there not in every class that done that the progress has been sort of very substantial and that there’s still to come the sort of EV specific platforms from the OEMs that will help us make progress. So in some respects that the HGV segment which I know is much more difficult. I see that as being maybe at that sort of earlier stage where we’ve got these sort of first offers into the marketplace. They don’t meet operators needs in their entirety at the moment. They’re sort of very expensive. People are wondering how that they can work with them. But I think that we’ll see a sort of pace of change that will be driving adoption, I think, within the next five years.
Michael Ayres:
And I think that the combination of sort of commitment from OEMs to sort of advance technology on this path in combination with the fact that some of these sort of corporate mega fleets have made big commitments to sort of 2030 fossil fuel phase outs or 2035 net zero. I think that that will sort of drag a chunk of the market along behind it. And so I think that that could potentially be the pathway through which that we get to net zero through sorts of corporate leadership. The way things are at the moment. I think that what I’d like to see government doing, because it’s not realistic for us to sort of say, oh, we want a colossal subsidy for every bev truck that we have because we don’t have the money to do that is actually just sorting stuff out, like the 4.25 ton derogation thing, that you can sort that out. That’s not wildly expensive. It’s just sort of making rules consistent with each other. And so actually if government can set clear targets and move roadblocks like that then actually I think that there is a good prospect of making net zero by 2050.
Georgia Lomas:
Good news.
Michael Ayres:
But it won’t be easy.
Georgia Lomas:
No. What advice would you give businesses looking to transition to an electric fleet?
Michael Ayres:
I think that if the plan is to transition your entire fleet to electric tomorrow that that’s a very bold strategy and it may be too early, but that’s not to say that you shouldn’t do anything today. Yes and I think that what we always advise customers to do is to make sure you understand your operation in detail and the fit of EVs and infrastructure that you’ll need with it or lack of fit because that’s as important to understand. And what comes out of a process like that is you understand what’s got a business case is easy to do. So you should have done it last year, what is super difficult and that you need to wait for sort of dramatic technology change. So you should push that back to the end of your process to give the process of R and D sort of maximum time to work in your favour. And then also the individual steps in between to tell you sort of like what you need to learn, what you need to trial in order to unlock the next stage of your journey. Going up that kind of difficulty ladder. So we recommend that I think the other thing that we recommend is that if your budget allows you to do it, is to get some experience with the technology, because there are all kinds of things that data scientists like us can tell you about your fleet and how the EVs will work for you and actually, that we can’t know things.
Michael Ayres:
Know John works a different shift pattern to everyone else and so that he can only take the truck out on a Thursday and that he has a totally different driving style to everyone else, or whatever it is, or know the turnaround times change at this time of year. So that getting some of that sort of operational learning about how often do people forget to plug vehicles in and that type of stuff, how do the drivers feel about driving EVs is a really important part of getting information that helps you then make better decisions as you start to scale this. If that you’re buying trial vehicles, particularly in the sort of larger vehicle format segment, you want to think carefully about how to control the costs of your pilot while still maintaining its value. So that sort of renting or leasing vehicles could be a sort of good way of doing that. Infrastructure is a sort of harder one as it’s more difficult to rent to lease infrastructure and get the things so that you will inevitably be spending a certain amount of capital. So it’s then about how do you get the most value out of that investment and the key to doing that is making sure you learn what you need to learn from it. And so I’d encourage people to sort of go through that process of looking at the data before you start so you know what it is that you need to learn from the trial to derisk the next stages of your journey because that’s how you make the business case for the investments at this time, isn’t it? That you won’t on a sort of just simple operating model, say there’s a fantastic business case for deploying a bev truck this year, will you? The reason that you do it is because it tells you what you need to know about deploying bev trucks into your operation over the next ten years and reduces the likelihood of you making mistakes when you specify your infrastructure and your subsequent vehicles. So it’s important to do that.
Michael Ayres:
And then if you are scaling sort of in the LCV segment, I think that the planning becomes kind of even more important as that reversing the mistake of a sort of single or ten vehicle pilot is one thing. But if you’ve gone out and done sort of 20 depots and 500 charges and vehicles and they’re not right, then that becomes something which is harder to live with, isn’t it? Yeah it’s really sort of trying to utilize the data that is available to you as much as you possibly can to make good decisions as you go through that process because everyone is doing something new, aren’t they? That the majority of fleet managers have got in some cases decades of experience of managing Ice technology and I don’t think anyone has decades of experience of managing EVs and infrastructure and replacement across a sort of complex logistics operation and so it’s sort of proceeding with caution and using the tools that are available. But it can be worth it, right, because when it works and you get the cost saving and the carbon emissions, and if you do your sort of communications to the sort of drivers correctly so that they’re on board too, then you can have really large successes with these projects.
Georgia Lomas:
Fantastic. So what exciting plans are on the horizon for FPS?
Michael Ayres:
There’s always exciting plans at FPS, I think. So what we have going on at the moment is that we’ve really started our journey in the LCV segment, that we’re increasingly seeing expansion into HGVs happening at the moment, firstly through sort of planning studies, looking at sort of connection upgrades. But now, actually the operators are beginning to trial them and so that we’re seeing the potential to sort of understand more about sort of how HGVs perform in real life. And critically, what the sort of operational and systems integration barriers are going to be of getting them a sort of fully functioning part of the fleet. Our transport refrigeration unit offers are beginning to scale with different customers around the UK, so that sort of enabling people to burn less diesel and then distribution centers is a sort of exciting thing for us to be doing that. We’re also beginning to take our first steps outside of the UK and so we’re beginning to be approached by US customers and EU customers who’ve seen the things that we’ve done with UK fleets and think that they’ve faced the same kind of problems. And so solving those problems is really exciting for us because we know it’s absolutely critical that we decarbonise the commercial vehicle sector, but obviously without breaking it. And we think that by taking this sort of data enabled approach, that’s how you do that.
Michael Ayres:
And so it’s all about sort of getting ultimately to net zero whilst maintaining everyone’s quality of life.
Georgia Lomas:
So if anyone wants to get in contact with you, Michael, or learn more about FPS, how do they do so?
Michael Ayres:
Sure. Well, you can either connect directly with me on LinkedIn, you’ll find me if you look for Michael Ayres at Flexible Power Systems, or you can go to our website, which is WWw.Flexpowersystems.com.
Georgia Lomas:
Fantastic. Thank you so much for your time today, Michael. That was super. Really, really appreciate your time.
Michael Ayres:
Thanks, Georgia.