SEBASTOPOL, Calif. — Steve Dutton can't get his hands on an electric pickup fast enough.
The fifth-generation northern California farmer and his family grow wine grapes and apples on a 1,400-acre ranch in this Sonoma County farming community. As part of a just-announced pilot program, Ford Motor Co. will equip Dutton Ranch and two other farms in the county with electric trucks, E-Transit cargo vans, charging stations and software services. Dutton hopes to have an F-150 Lightning Pro soon — and that's when he'll really start to see the impact of moving to an electric, digitally enhanced vehicle fleet.
"The benefit is going to be when we can buy a Lightning and replace this truck," he said of one of the 70 or so fossil fuel-powered vans and trucks that move workers, equipment and goods across dozens of work sites on the farm each day.
While retail customers in the United States generally remain wary of electric vehicles' costs, battery range and charging availability, a growing number of fleet owners like Dutton are ready to make the transition. They're driven by estimates of lower costs, more data, the impacts of climate change on their businesses, tightening environmental regulations and now the launch of a bevy of electric work trucks and vans.
Ford and some of its fiercest competitors are placing big bets on commercial and government fleet customers becoming the leaders in the electric and digital transition transforming the automotive industry in the most fundamental shift since Henry Ford created the moving assembly line.
General Motors Co. has launched an electric delivery van business. Stellantis NV has lined up Amazon.com Inc. as the first buyer for an electric version of its cargo van. EV startups like Rivian Automotive Inc. have leveraged contracts with major fleet owners to win over Wall Street. Several are launching EVs in the lucrative pickup truck segment. And Ford executives say their commercial business is spearheading their growth strategy for the 118-year-old automaker.
"I want to be explicit: Ford Pro is leading Ford's transformation to always-on. Ford Pro is one of the biggest bets we have to lead the connected, electric mobility future," said Ford CEO Jim Farley, speaking from Dutton Ranch earlier this week. "We're not going to cede the future to anyone in this category."
Lower costs, emissions
The Inglenook chateau sits nestled back from St. Helena Highway in northern California's Napa Valley wine country. The storied winery, which dates back to 1879 and now is owned by legendary film director Francis Ford Coppola, overlooks the vineyards that span 235 of the estate's 1,700 acres.
Inglenook, according to winemaker Chris Phelps, is "always looking for incremental ways to improve not just what we do, but how we do it." Now, they plan to do that by introducing Ford's electric commercial vehicles and software services into their operation.
The winery's relationship with Ford started with an email exchange between Coppola and Alexandra Ford English, Executive Chairman Bill Ford's daughter and a member of the automaker's board of directors. Coppola wrote to her, he recounted during an event at the winery earlier this week, to share his Detroit connection: his father was a flautist for the Detroit Symphony Orchestra, and his middle name is a nod to Henry Ford Hospital, where he was born in 1939.
"I thought she'd get a kick, and I also slipped in a little note that, by the way, I own the winery Inglenook and we're very proud ... we only allow electric cars on the property, and so I was excited that Ford had announced the F-150 Lightning," Coppola said.
The winery has been certified organic since 1994, and for over a decade has used a small fleet of electric vehicles and a few gas-powered pickups. Now that electric-powered trucks are hitting the market, Inglenook leaders are eager to add them to the fleet.
"There's applications all over the place for these vehicles," Phelps said. One example: Inglenook is building a 22,000-square-foot winery cave equipped with 120 fermentation tanks. Gas-powered vehicles can't enter the site because of carbon monoxide risks. But electric trucks and vans could be used to haul materials and goods back and forth from the cave.
There also are potential benefits for the winery's harvests, which yield some 400 to 500 tons of grapes that are processed on the property each year.
"Grapes are very sensitive to the environment that surrounds them," Phelps said. "Going electric, we can do away with those emissions and we can take care of our fruit to make super high premium wines."
How pollution and climate change affect the quality of their products is a key consideration for commercial customers, especially in agriculture, who are looking to phase out fossil fuel-burning vehicles, experts, auto executives and farmers themselves say.
"Climate change has really affected their lives, the people that grow here," Farley told The Detroit News. "I think they'll be really important advocates for this transition for electric."
In fact, the pilot program in Sonoma County — which is home to more than 1,800 wine grape growers and 60,000 acres of vineyards — was initiated by the Sonoma County Winegrowers group that is led by sustainability advocate Karissa Kruse. Since 2014, the organization has worked toward making its members' operations 100% sustainable, and Kruse said she sees the Ford pilot as the next step in that effort.
Managing cost is another major consideration for fleet operators. Right now, electric vehicles have higher upfront prices than their gas-powered counterparts, but they also have the potential to save owners money over time because they're generally cheaper to power and have fewer maintenance needs.
Duff Bevill of Bevill Vineyard Management in Sonoma County's Healdsburg, one of the pilot program's participants, isn't put off by the higher sticker price of an electric truck or van. Like many fleet operators, he already spends well above sticker price to customize his vehicles and is focused on the total cost over the vehicle's lifetime: "As we get more confident in these vehicles, that will be the direction that I expect to go."
And Dutton Ranch, for example, spends about $5,000 per month to fuel its vehicle fleet. As it electrifies its fleet, the farm will be able to slash fuel costs and use solar energy to power its fleet.
"Talk about being sustainable," Steve Dutton said. "Doesn't get much better than that."
Competing strategies
Likewise, automakers see some key advantages in introducing EVs to commercial customers.
Fleet owners understand the cost savings. They don't want more battery range than they need. They're trying to meet tightening environmental regulations and the expectations of investors increasing their focus on environmental, social, and governance factors. And some of them are looking to grab a slice of the pie as the federal government looks to electrify its massive fleet.
"It makes complete sense to go with commercial and government fleet business first," said Michelle Krebs, executive analyst at Cox Automotive.
Commercial trucks and vans tend to have lower fuel economy and higher emissions, she noted, so the environmental impact of phasing out gas- and diesel-powered fleets is significant. Plus, she said, it's more impactful to the environment and EV adoption overall to start with owners who are buying a large number of vehicles. And automakers contend that higher sales volumes will help them reduce battery costs, bringing the price tag for EVs down and eventually making them more accessible to retail customers.
Automakers are targeting fleet customers to varying degrees. Commercial vehicles tend to be a stronger business in the U.S. for the domestic automakers, with Ford leading with about 40% of the market.
The Dearborn automaker in May announced the launch of Ford Pro, a standalone commercial vehicle business that executives see as a key part of a growth strategy that looks to generate new, recurring revenue streams from digital services and other products.
Ford Pro is targeting revenue of $45 billion by 2025, up from $27 billion in 2019, and this week reported that it has 125,000 fleet customers in the U.S. Underscoring the growth potential it sees, the company projects that 70% of the full-size bus and van industry and one-third of the full-size pickup segment will go electric in the U.S. by 2030. Ford Pro also announced it has gotten 10,000 orders for the E-Transit, which Farley described as a "breakthrough" because Ford derives so much of its profits from commercial customers in Europe and the U.S.
"We believe we're in a totally unique position to dominate the light-duty commercial vehicle business and service," Farley said. But Ford is not the only player in the game.
Stellantis is preparing to introduce the electric Ram ProMaster van in the U.S. next year, and it has an electric Ram pickup coming in 2024.
GM last year revealed BrightDrop, a subsidiary focused on building electric delivery vehicles and targeting $5 billion in revenue by mid-decade. BrightDrop recently announced that Walmart had reserved 5,000 vans and FedEx Corp. had added 2,000 to its initial order of 500. And GM recently revealed the electric version of its Chevrolet Silverado, which is slated to launch next year.
Rivian, meanwhile, has a contract to build 100,000 electric delivery vans for Amazon. And underscoring the demand in the commercial market, Oak Park-based startup Bollinger Motors recently said it was canceling consumer orders for its B2 pickup and B1 SUV in favor of focusing on products for the commercial truck business.
But while some of its competitors home in on contracts from big-box retailers and e-commerce customers, Ford executives have emphasized that their focus goes beyond package delivery, which makes up just a small part of the market overall. Their strategy, they say, is to play to Ford's strength in helping small- and medium-sized fleets with the complexities of running those operations.
"The most profitable customer is someone who has no fleet manager, has 10 vans, half of them are Ford, half of them are someone else's and they don't have time to finance, to find different telematics solution by OEM," Farley told The News. "That's the heart of the market."
Digital vehicles
But while electrification is a key piece of Ford's growth strategy, Farley has said the move to convert vehicles into software-equipped data generators is the most significant change taking place at Ford and in the industry.
"I'm really excited about the electrification of the products, but I'm actually more excited about this data, software, physical services integrated business," he said. "That to me is the future of our industry, and that's going to start at Ford with Pro."
At Dutton Ranch, for example, the owners acknowledged it will take years to convert to EVs, given that their current fleet has vehicles dating back to the 1990s. And in general, fleets turn over only 10% to 15% of their vehicles per year, according to Ford.
Still, the winegrowers could see immediate benefits from the telematics data that will help establish a baseline for how they're operating now — for example, by allowing them to track the time and costs associated with idling a gas-powered vehicle.
And it's with digital services that Ford sees commercial customers as leaders. The automaker is seeing strong demand among retail and commercial customers alike for its EVs, underscored by recent commitments to boost production of the F-150 Lightning and Mustang Mach-E.
"There's two aspects of how the industry is changing," Farley said. "Yes, they're going electric. But they're also digital vehicles. I think this part the commercial business is ahead on."
