Continuing economic uncertainty that first emerged earlier in the pandemic is causing fleets to pump the brakes on adopting new vehicle technologies, according to Michigan market research firm Escalent. The trend is reflected in the company’s most recent Fleet Technology Index report, which examined commercial fleets’ willingness to adopt eight emerging and transformative vehicle technologies. 

The study compiled 2021 data from more than 1,000 fleet employees who make decisions about their business’ vehicle tech purchases. Each provided information about their company’s willingness to adopt eight technologies in the next six months: data analytics, telematics, battery-electric vehicles, autonomous vehicles, artificial intelligence, drones, mobility service, and blockchain.

“We analytically derive the fleet technology index scoring for each of these technologies with an algorithm that produces the metric … of market readiness for adoption of these various technologies,” said Lucas Lowden, Escalent program lead for Fleet Advisory Hub, automotive and mobility. “This is a metric that is reflective of the general market readiness for adoption more so than a measure to gauge how much or how little these technologies are adopted in the broader market.”

Escalent analysts say a minority of fleets are large-sized with robust budgets, and they are most willing to consider tech adoptions during uncertain times. The majority of fleets are small- to medium-sized and are most affected by the need to balance new technology investments with maintaining daily operations. 

Fleets understand the new technologies’ benefits with boosting energy efficiency and productivity while potentially lowering long-term costs. But typically that is overruled by short-term risks, analysts say.

“It’s not that they’re not interested. It’s just that in challenging times like these, they have to put their best foot forward to manage the business day-to-day and ensure business viability,” Lowden said. “With increasing cost pressures, it becomes challenging for these smaller businesses to keep the momentum going.”

Investment trends

Fleet owners and operators expected to slow their tech adoption for all eight technologies. While all categories experienced dips from their 2020 numbers, battery-electric vehicles and artificial intelligence took the biggest hits.

Major factors influencing tech adoption decisions first emerged early in the pandemic with business closures and supply chain disruptions. Concerns over the shortage of microchips and other products play a role. So does inflation for goods, fuel, and transportation. 

For example, product availability and costs are affecting decisions to replace aging vehicles with new versions, including electric vehicles.

“They’re either having a harder time trying to replace it with what they want to replace it with, or they’re second-guessing and holding onto their vehicles a little bit longer,”  said Jason Mantel, Escalent managing director of automotive and mobility. “Folks that participated were telling us: “I’d love to replace the vehicle but I’m not jumping on it as quickly as usual. … Costs are creeping up a little bit and I’m just not sure what’s happening, so I’m being careful with my next step.’” 

Speed bump, not stop sign

Despite the downward numbers following 2020’s spike, market readiness last year still remained higher than the pre-pandemic data from 2019. Therefore, Escalent contends overall growth in market readiness still is occurring.

“This isn’t a full reset of technology adoption,” Lowden said.

In addition, delays in adopting new technologies do not appear to be long-term. Fleets anticipated waiting months, not years, to make these investments.

“I don’t think anything has stalled out,” Mantel said. “This is just a sign of a short-term level of uncertainty, not a long-term trend.”