Logistics companies face mounting pressure to reduce operating costs and carbon emissions. Electric vehicles (EVs) present a potential pathway to lower fuel expenditure, simplify maintenance, and align with sustainability commitments. Fleet electrification in logistics requires rethinking procurement, infrastructure, route planning, and operations. This blog examines how logistics firms are adopting EVs, quantifies cost efficiencies, highlights challenges, presents real-world deployments, and outlines considerations for broader transitions.
According to Extrapolate, the global electric vehicles market size was recorded at USD 691.61 billion in 2024, and it is projected to hit USD 1726.06 billion by 2031, growing at a CAGR of 14% over the forecast period.
How Electric Vehicles Reduce Operating Costs and Improve Fleet Economics
Total cost of ownership (TCO) forms the crucible in which fleet electrification decisions compete. EVs reduce or eliminate fuel costs, avoid many routine maintenance tasks tied to internal combustion engines (ICE), and benefit from lower energy costs per mile under favorable rates. The U.S. Department of Transportation provides tools like the AFLEET calculator to estimate the economic and environmental costs of alternative fuel vehicles, including EVs. The tool models ownership, fueling, emissions, and infrastructure costs. (Source: www.transportation.gov)
A study published by the National Renewable Energy Laboratory indicated that light-medium electric vehicles will reach parity in total cost of driving (TCD) relative to ICE vehicles by 2026 (Source: www.nrel.gov). That crossover moves fleet operators closer to cost neutrality, accelerating the business case for electrification.
EVs exhibit higher energy efficiency in urban and stop-start driving patterns. The U.S. Alternative Fuels Data Center shows that all-electric vehicles are about 4.4 times more efficient than gasoline ICE vehicles in combined driving cycles, with greater benefits in city traffic. That efficiency advantage supports lower per-mile costs in logistics settings characterized by frequent stops and delivery routes.
Maintenance cost reductions further improve ROI. EV drivetrains feature fewer moving parts, no oil changes, no fuel filters, and simpler thermal systems. The reduction in consumable parts and lower mechanical wear helps shrink long-term operating cost burdens compared to ICE vehicles.
Infrastructure costs (charging stations, electrical upgrades, and grid demand fees) constitute a significant portion of the transition cost. Charging infrastructure planning must account for load management, peak demand charges, and electrical capacity expansion. The DOT and logistics agencies continue evaluating optimal designs for depot charging to minimize grid stress.
Challenges and Operational Constraints
Battery cost, range limitations, vehicle weight, and charging time remain central constraints for logistics fleets. Heavy battery systems add mass that can reduce payload capacity. In long-haul or high-mileage use cases, current EV range and charging frequency constraints may degrade productivity.
Charging duration and downtime must integrate with route scheduling and fleet utilization. Inefficient scheduling or mismatched charging windows can erode operational margins. A logistics operator must balance overnight depot charging, opportunistic charging during idle periods, and fast charging during the operational window.
Electric grid capacity and demand charges pose financial risk. High peak demand fees can erode energy cost advantages unless operators manage load through scheduling, battery buffering, or demand response. Grid constraints may necessitate infrastructure upgrades, which add capital cost.
Battery degradation over time reduces range. Fleet planners must account for residual value and replacement cycles. Warranty coverage, battery management systems, and predictive monitoring play critical roles in mitigating risk.
Vehicle cost premium remains notable. EV commercial vehicles often carry a higher upfront cost relative to ICE equivalents. Incentives and scale efficiencies help, but payback periods remain sensitive to energy prices, duty cycles, and maintenance savings.
Supply constraints and delays in EV commercial vehicle manufacturing also hamper deployment. Some logistics operators delay conventional fleet retirements to manage risk. For instance, UPS and FedEx experienced delays in their transition to electric vans due to battery shortages, limited EV supply, and startup instability.
How Leading Logistics Companies Are Implementing EV Fleets
FedEx has actively pursued fleet electrification in multiple geographies. In January 2025, FedEx added 10 EVs in New Zealand (LDV eDeliver 9) with an operational range of 200 km. The company also installed charging infrastructure at facilities in Auckland to support route coverage over a full day.
In July 2025, FedEx expanded its electric van fleet in Korea by deploying 13 Hyundai ST1 electric cargo vans with a 317 km range. The expansion targeted both commercial and residential delivery zones in Seoul and the surrounding provinces.
FedEx also ordered 15 Workhorse W56 electric step vans in 2024 to support its zero-emission goals. The W56 models reportedly meet delivery duty cycle requirements for route deployment.
In Northern California, NorCal Logistics (a FedEx Ground contractor) and Motiv Electric Trucks added fully electric Class 6 vans to their routes. Those vans will run under a FedEx Ground contract, financed via NuGen Capital’s eMobility arm.
On the heavy-duty end, Orange EV manufactures 100 % electric Class 8 yard trucks for terminal and port operations. The company claims high reliability (97%+ uptime) and significant cost savings over diesel over a ten-year horizon.
Such real deployments demonstrate that electrification can scale in last-mile and yard operations first, where routes are predictable, range demands are moderate, and depot charging control is possible.
Pathways to Implementation
Fleet operators should begin with route segmentation. Last-mile and urban delivery routes with moderate daily mileage and return to base clustering are ideal candidates. EVs replace those segments first to maximize operational match. Pilot projects help validate assumptions on energy consumption, range, charging patterns, and maintenance. Operators capture empirical data to refine financial models, vehicle selection, and infrastructure sizing.
Charging infrastructure must be designed in sync with electrical capacity, demand management, and energy scheduling. Smart charging, load shifting, and aggregation strategies help flatten peaks and reduce demand charges. Battery lifecycle planning and telematics become essential. Monitoring battery health, usage, and degradation trends enables operators to schedule replacements or shifts before service impact occurs.
Incentives, subsidies, and regulatory frameworks accelerate transition. Federal or state incentives, tax credits, grants, and emission regulation compliance can reduce effective cost. In the U.S., the Inflation Reduction Act and related programs boost the business case for EV fleets. Partnerships with OEMs, charging vendors, and financiers help address capital constraints. Leasing battery systems, installing managed charging, or partnering in shared infrastructure spreads risk and lowers barriers. Iterative scale-up is prudent. Start small, ramp deployment as confidence grows, refine operational integration, and expand scope over time.
Future Outlook and Trajectory
Battery cost declines and improvements in energy density will continue shifting TCO favorably. The studies reviewed in 2022 (by Wang et al.) assess battery and system cost trajectories to 2040 in the U.S. context. In medium-duty routes, electrified vehicles are expected to dominate earlier. The NREL study projects parity in the total cost of driving for medium-duty EVs by 2023–2024.
Dense depot charging networks, grid integration, vehicle-to-grid (V2G) support, and energy management systems will further improve cost efficiency. Fleets may aggregate multiple vehicles to manage charging loads and energy arbitrage.
Advances in battery chemistries, fast charging, and modular swap systems may open up longer-haul routes. Hybrid architectures combining short-range battery EV and longer-range fuels or fuel cells may bridge interim gaps.
Scaling manufacturing capacity, securing component supply (particularly battery materials), and enhancing reliability remain crucial to sustaining momentum. OEMs that can deliver dependable commercial EVs at scale will precipitate wider adoption. Policy and regulation will matter. Emissions mandates, zero-emission zones in cities, and fleet decarbonization targets will nudge investment. In many jurisdictions, progressive regulation is creating a stronger lever for electrification adoption.
Conclusion
Fleet electrification in logistics is progressing beyond novelty to economic competition. EVs’ lower energy cost, simplified maintenance, and efficiency advantages give logistics operators a compelling reason to adopt, especially in urban and yard operations. Challenges related to battery cost, infrastructure, grid interaction, and vehicle supply remain, but real deployments by FedEx, Orange EV, NorCal Logistics, and others show viable pathways. Strategic pilots, intelligent infrastructure design, and phasing based on route characteristics help mitigate risk. As battery costs decline and regulatory support strengthens, electric logistics fleets will form a backbone of cost-efficient, sustainable supply chains.
