Are There Consequences to the Sustainability and Electrification Movement? A Realistic Chat on Sustainability with Dave Meisel | Utilimarc Fleet FYIs

Gretchen Reese (00:06):

Hey there. Welcome to Fleet FYIs, the weekly podcast by Utilimarc that reveals how you can make the most of your data for smarter fleet management. My name is Gretchen, and every week you'll hear from me and some of the industries finest in candid conversations that will shed some light on not only two decades worth of data insights, but some of the industry's hottest talking points and key metric analysis with the aim to help you better understand your fleet from every angle.

Gretchen Reese (00:33):

But before we begin, if this is the first time you've heard our show, thanks for stopping by. I'm so glad you decided to come along for the ride with us, but I've got a quick favor to ask you. Once you've finished today's episode, if you could take a few minutes to leave us a review on your favorite podcasting platform, we would really appreciate it.

Gretchen Reese (00:51):

Give us a rating, five stars I hope, or tell us what you liked, or leave us a comment or a question about what you've heard in today's episode. But if we haven't yet covered a topic that you're interested in hearing more about, let us know. We would be happy to go over it in detail in a later episode. If that sounds good to you, let's get back to the show.

Gretchen Reese (01:17):

Hey there, and welcome back to another episode of the Fleet FYIs Podcast. Today we're kicking off a new series for this show, one that addresses a new angle on sustainability, EVs, logistics, consequences, things you might not have thought about, you name it - with none other than Dave Meisel, the Executive Vice President of Operations for Quanta Services.

Gretchen Reese (01:38):

I wanted to chat a bit about sustainability, not just for fleets, but for consumers in the automotive industry as well. It's a movement that's been growing ever more present in the U.S., as well as around the world.

Gretchen Reese (01:51):

You know, this topic came to mind when I read an article detailing the U.K. Prime minister's recent announcement, and at this point now it's probably been about a month since he made the announcement to the greater part of the U.K., but it was all surrounding green technology. And it detailed a plan to stop the production and sale of purely fuel-based vehicles from 2030 with hybrids only allowed to be in production and purchased through 2035.

Gretchen Reese (02:20):

Now the goal here is being a completely electric vehicle society by 2040, which isn't too far off, and it'll be really interesting to see if they can actually pull it off. And because this movement is so multifaceted, I mean, there's some people that are on the side of the fence where they want to be more sustainable, but they either don't have the capital or the interest to invest in EVs,

Gretchen Reese (02:43):

so you might be looking to make the most of the data that you can from your current fleet operations and try and be more sustainable in that sense. Or you might be on the other side of the fence where you're super interested in EVs, super gung ho about it. And all you want to do is start investing in new technology.

Gretchen Reese (03:03):

It's an interesting movement to try and capture the spirit of, because there's so many opinions surrounding it. So I knew that Dave would be the perfect person to speak on this topic. Currently, he's been in the utility fleet business for over 25 years, with another 15 in large transportation, so about 40 years in total, which is incredible. And he manages around 68,000 vehicle assets worldwide. Wowza, I mean, that's a lot.

Gretchen Reese (03:28):

All in all sustainability is only first on the list. So if you want to figure out what the rest of this series has to deal with, hint, it does surround sustainability just a little bit. You'll have to tune into next week's episode and the week following to learn more about what other aspects of this movement that we'll cover together.

Gretchen Reese (03:45):

So I don't know about you, but I'm excited to dig in and kick off this series, and I'm super pumped for you guys to hear it. Let's get started.

Gretchen Reese (04:00):

Hi, Dave, welcome to the Fleet FYIs Podcast. I'm so glad you were able to join me today. I wanted to kick off the show first by speaking about the fleet electrification and the sustainability movement as a whole, because as you're most certainly aware, it's a massive topic of discussion these days, and opinions are all over the place. Could you give me a little bit of insight as to how this electrification movement affects your fleet, or even you on a day-to-day basis?

Dave Meisel (04:27):

Sure. I think those are two separate issues, personally. Electrification for most of us in the fleet business is about propulsion systems and how we're going to drive our vehicles and equipment going forward, and sustainability has so many other components to it.

Dave Meisel (04:46):

When we look at electrification, we work in the electric and the natural gas space, pipelines and power lines, and things like that. I'm all for electrification to lower our operating costs, to lower our greenhouse gas emissions. Those are the really great things about it. But there's a side that we have an unknown yet, which is a little scary for somebody in my role.

Dave Meisel (05:13):

I worry about when we're responding to storms and there's no electricity, how do you send an electric vehicle to an area where there's no electricity? That really sounds more like a recipe for disaster without some other mechanism to charge.

Dave Meisel (05:30):

And then I look at things like, we still don't know the duty cycles, we still don't have manufacturers who are producing these in work vehicles. We're starting to see them in light duty, but I do think it's further away than some people think or hope before we can see these in volume in all of the different types of applications that we have.

Dave Meisel (05:52):

As far as sustainability goes, that is a very broad series of topics that we work on. We work on everything from our carbon footprint in the fleet, which, obviously, it changes. Some of the things that we normally buy diesel for, maybe we're switching to natural gas, or electric, or even gasoline in some situations.

Dave Meisel (06:16):

But that also includes other things like waste, our carbon footprint for our buildings, recycling, and those types of things. So lots of big topics there and a lot of work going on for us.

Gretchen Reese (06:30):

Okay. And that's an interesting point that you brought up about the electrification, because I don't think I've ever really thought about how do you send an electric vehicle to a storm site where there's no electricity? I mean, that's a very, very valid point to have.

Dave Meisel (06:44):

Yeah. That's a real problem.

Gretchen Reese (06:46):

I mean, what if you get stuck? That could be a very big concern. So when we're talking about sustainability now, and the momentum, I think for sustainability, is huge. Now that's not just within fleet industries, that's obviously in most aspects of life at this point.

Gretchen Reese (07:04):

How was it, do you think, that this movement has gained so much momentum? Do you think it's customer and consumer driven, or do you think it's more on the shoulders of perhaps manufacturers that are trying to get ahead of the demand before it's there?

Dave Meisel (07:19):

Well, I will tell you, I think that it's coming from a lot of different angles, and this is Dave's personal opinion, I really don't think it's the manufacturers. The manufacturers will build what sells, and only what sells. So I don't think they try to drive a particular strategy. They try to understand their customers and what their customers want.

Dave Meisel (07:43):

Now, from my perspective, I look at this and say, clearly the younger generation has a different view of sustainability and transportation then maybe somebody in my generation might have. And the younger generation is growing and the older generation is shrinking. And so I think you're just seeing that younger generation and their views and values playing a bigger and bigger role as we move forward. And maybe somebody who's been around a long time like me, playing a smaller and smaller role.

Dave Meisel (08:19):

So I think that's a big portion of it. And I think that comes from a lot of different directions. I mean, I hear what our investors say, our investors would like to see more sustainability, and many companies are now producing sustainability components to their annual reports.

Dave Meisel (08:40):

25 years ago nobody did that, and that's much more oriented to what investors want. So I do think it's being driven by the consumer side of the business, not the manufacturer side of the business. And it's just being driven in multiple ways at this stage of the game.

Gretchen Reese (09:00):

That's fair. And there's definitely a lot of benefits to, I think, sustainability. I mean, obviously, there's a very strong argument for it. But alongside the benefits, I think there also comes consequences that perhaps either many people aren't aware of, or they just haven't thought about yet.

Gretchen Reese (09:17):

If you had to give it a think, what would you say might be some of the most impactful consequences maybe on fleets, or you could even go as big as cities, or even nations, due to this sustainability electrification movement that's just gained a lot of traction over the last few years?

Dave Meisel (09:35):

Yeah, I will tell you that I think the biggest thing that concerns somebody like me right now is fear of the unknown. It's hard to argue some of the benefits associated with electric transportation. Well, there are some things we know for sure. What we know for sure is the emissions profile is better, at least at the vehicle perspective.

Dave Meisel (10:01):

What we don't know for sure is when you use the wells-to-wheel approach of calculating greenhouse gases, that changes. For example, if I'm using an electric vehicle and putting in at a utility that is a hundred percent coal generation, there's a net difference between the greenhouse gas emissions from the coal producing plant being offset by the electric transportation.

Dave Meisel (10:28):

Conversely, if I'm in an area that is solar powered electricity and electric transportation, I'd say that's kind of the best scenario you can get into it. That unknown is tough to calculate, and it's tough to understand, but it's true.

Dave Meisel (10:45):

The second thing, we do know that when you look at that electric propulsion system that there's only arguably 20 or 30 parts in that entire system versus 2,000, or 3,000 in a typical internal combustion. We don't have enough information at this stage of the game to know how each one of these systems is going to act in our particular application.

Dave Meisel (11:12):

We've got a lot of information now on automobiles, but that's pretty much it. We don't have any information on off-road equipment for the most part, or any significant information. We don't have very little information in utility space, using it as a bucket truck, or a digger.

Dave Meisel (11:32):

And so when I say fear of the unknown, I don't necessarily mean that's a bad thing. I mean, it's an unknown thing. We certainly see the benefits of electrification, and autonomous vehicles and equipment, but we still have a lot to learn before we can do a business case that you have a hundred percent confidence in. Right now it all looks good from the perspective that we have, but I think we have a lot more to learn.

Gretchen Reese (12:01):

Absolutely. And I was doing a little bit of thinking about infrastructure, and perhaps how fuel taxes might be able to be levied to aid in constructing more infrastructure for different cities, and maybe even towns. Would electrification play into that at all? Would it still be the same type of tax formation to allow for the building of infrastructure, even if people are using less fuel?

Dave Meisel (12:24):

Well, I mean, they're going to have to do something, for sure. Now I'm not a tax person, and I don't know exactly the choices that are out there, but one thing we know for sure in today's world, most of that is funded on the per gallon tax for on-road taxes, right? That's how most of it is funded.

Dave Meisel (12:44):

And there is no question that electricity doesn't have that tax structure on it. So as you transition from less and less gasoline diesel fuel, and more and more electricity and other things, they're going to have to do something with the tax structure to recoup those lost dollars.

Dave Meisel (13:02):

Now whether they do it through a tax at the utility level, or whether they do it through increased fees for vehicles, there's clearly going to have to be something that occurs to ensure that those dollars are available for that investment in the road infrastructure.

Dave Meisel (13:21):

The other half of that infrastructure is the charging infrastructure, and that looks really easy. We'll just build charging stations. That's fine, and that's true, but all of that kind of rolls up into how the utility operates knows the individual circuits. And as you increase the draw on those circuits, the need to upgrade transformers, and substations, and power lines all goes up because there's not an unlimited amount of chargers that you can add to any particular circuit.

Dave Meisel (13:51):

And there's just a lot of work that's going to need to be done. That's very local work, it's at the circuit level, it's not at a power plant level. It's a neighborhood level. And nobody really knows how many plug-in vehicles are going to go into a neighborhood until they go into the neighborhood. And then at some point in time, it will start popping the fuses on those transformers, and then we'll know we have a problem.

Dave Meisel (14:16):

Then you have to upgrade that transformer, upgrade that substation, and that's a little longer view work, longer timeline work. And this is the part when I say it's kind of fear of the unknown. There's just a lot of moving parts in this space, and while I completely agree with the philosophy of improving our sustainability, the infrastructure has to move at the same pace.

Dave Meisel (14:41):

And that's the part that a lot of people aren't talking about, they're all talking about, "Gee, these are really cool cars," whether it's a Tesla, or anything else, "And we want more of those." Got it. I agree. But we have to have the conversation about infrastructure and what that means, and make sure that those two progress kind of at the same pace so that we don't have vehicles with no infrastructure, and infrastructure with no vehicles.

Gretchen Reese (15:06):

That's very true. You brought up a point that made me think of how much of a fit some people that I've known over the past few months, they've been putting up a fit over the fact that 5G telephone poles have been being put up in their boulevards. And they're not a fan of that. So then what happens if you need to add in more electrical lines, and more electrical poles in that regard?

Dave Meisel (15:30):

Exactly. Right? None of this really works very well without investment in infrastructure, and all that infrastructure has to go somewhere, and some of it will certainly be new, and some of it will go on the existing footprint, but all of that is kind of TBD based on adoption curves.

Dave Meisel (15:49):

So, like I say, it's hard to argue with what we know from a science perspective that says, "This is a good idea." There's just a lot more to it, I think, and the casual user, or the casual driver of an electric vehicle doesn't necessarily concern themselves with the idea of grid utilization, or capacity.

Dave Meisel (16:16):

And quite honestly shouldn't. That's other people's job. I get that. But to me, both of those have to pretty squarely align going forward. In the near term, we can add a certain amount of electric vehicles without a lot of interruption to the grid, with a lot of interruption of circuits.

Dave Meisel (16:36):

But there's a place when there's no longer any capacity and that will cause issues. And I don't think we're there yet, but with the rate of adoption, we could get there sooner than we think.

Gretchen Reese (16:49):

Right. And just because of all these complications, and perhaps some of the consequences, and the ins and outs of all of this electrification movement that we've spoken of, do you think that electric vehicles will be widely adopted if there's no official mandate? Or do you think it's just going to be an as the mindset shifts then it'll come type piece?

Dave Meisel (17:10):

I think you're going to see widespread adoption for a couple of reasons. I think first and foremost, you're going to find out as they truly get into mass production, and I mean bigger than what we see today, I think people will find out that they are far more cost effective than what we're accustomed to.

Dave Meisel (17:32):

I'm old enough to remember when you bought a new car, you got a 12 month or 12,000 mile warranty. And there was a reason it was 12/12 because it ran out after 12,000 miles. That doesn't occur in today's equipment. Nobody would even consider a 12,000 mile warranty.

Dave Meisel (17:50):

But I do think when you look at vehicle space over time people buy things based on their budgets, and nobody ever worried about how much you pay for a vehicle, they worry about how big your monthly payment is, for the most part.

Dave Meisel (18:05):

And I think when you look at the cost of electricity, when you look at the cost of batteries, and what they are today versus just seven or eight years ago, I think ultimately what you're going to find is that the vehicle will be the same price or cheaper than a current equivalent model. And I think it's going to have a useful life that's going to be significantly longer. Just because you're going to go from 2,000 or 3,000 parts to 20 or 30 parts.

Dave Meisel (18:32):

And I do think that fuel is going to be... I think it's going to be significantly cheaper, and so operating costs are going to be lower. I think payments will end up being lower, even if the vehicle is not cheaper. It might be a ten-year vehicle versus a seven-year vehicle.

Dave Meisel (18:49):

And I think that price ultimately is going to drive this. It will be consumer acceptance as well, but when we get the range and the batteries well, when we get charging infrastructure's done well, then I think the economics will take over, and that will end up driving it.

Gretchen Reese (19:06):

Absolutely. I totally agree. So is there anything else? Because obviously, we can't cover everything with sustainability and the electrification movement right now in this moment. Is there anything else that I haven't touched on that you'd like to add?

Dave Meisel (19:20):

I will tell you, electrification is a funny thing. I told somebody this yesterday, that we haven't changed the propulsion system on a vehicle in over a hundred years, and the last time we did it was when we went from a horse to gasoline. And now we're completely changing the propulsion system for the first time in anybody who's alive, in their lifetime.

Dave Meisel (19:48):

That isn't going to be simple, easy, cheap, and I don't think anybody really knows what the future is going to look like. I think it's got tremendous potential for our industry and our planet, but we have a tremendous amount to learn yet. When you instead of having a million EVs, you have 50 million EVs on the planet.

Dave Meisel (20:15):

So I'm excited in many respects. I think it's going to change everything that we know about transportation in many different ways. But I'm guardedly optimistic because I've been in this business for a long time and every time there's been a technology change, there's always wins and there's always loses.

Dave Meisel (20:35):

And I don't think we focused on the balance between those two yet, or what it's going to take to really drive this as a win for the longterm. But it's going to be an exciting time for sure, and I think you're going to see tons and tons of really cool pieces of equipment coming out over the next several years. And I think it's all moving in the right direction for the right reasons and I'm excited about it.

Gretchen Reese (20:57):

Yeah, me too. I definitely think it's going to be interesting to watch the shift, I think.

Dave Meisel (21:03):

Yeah. I agree. And like I said, we don't know what we don't know, and that's both scary and really cool. Because there's going to be a lot of new things, new technologies that this will drive that we can't even think of them right this second. But they're coming.

Gretchen Reese (21:25):

So I'm curious to know, is sustainability something that's on your radar, or is it something that you'd only consider if there were mandates in place that almost, I guess you could say, forced your hand?

Gretchen Reese (21:36):

I think that Dave had a really interesting point that he'd brought up, many points really, but specifically the differences in generational opinions on sustainability in terms of how aggressive certain fleets are, or they aren't. And that manufacturers will adapt to these opinions and trends because they want to make what will sell. And they want to be ahead of the curve.

Gretchen Reese (21:56):

You know, sustainability may just be something that's consumer driven, and it comes with many associated benefits, which is great, but on the flip side, there's consequences that might be something that many people don't actually think about, or at least not right away.

Gretchen Reese (22:12):

And perhaps it's turning itself into a talking point that needs further exploration before fleets jump into electrification with two feet. Which I guess it really isn't a bad thing because information and studies are always important before a major investment, especially a major investment into a new technology.

Gretchen Reese (22:30):

But I think the key here is truly relying on your data and doing a deep dive before you make any decisions to update your fleet technology. Because if you're still a little bit unsure about the electrification movement, there are certainly things that you can do just by looking at your data now to become more sustainable for the future.

Gretchen Reese (22:48):

Data is absolutely king, and I don't see that changing anytime soon. And on that note, electrification is certainly a movement that's on its way. And of course, like I said previously, digging into your data is a great way to decide if this technology is right for you. Because instead of it just being on its way, it's already here and it's not slowing down.

Gretchen Reese (23:11):

But on that note, I just want to remind you to make sure that you tune in next week to catch Dave's thoughts on what's coming next for the fleet industry, both in 2021 and beyond. I promise you, you won't want to miss it because it's jam packed full of amazing insights and actionable items that perhaps you can turn into your fleet strategy right now.

Gretchen Reese (23:34):

Hey there. I think this is the time that I should cue the virtual high five because you've just finished listening to another episode of the Fleet FYIs Podcast. If you're already wanting more content head over to ultilimarc.com, which is Utilimarc with a C, U-T-I-L-I-M-A-R-C.com for the show notes and extra insights coming straight from our analysts to you. That's all for me this week, so until next time, I'll catch you later.