July 2, 2024

Electrify Your Fleet: Upfront Costs vs. Long-term Savings

5 Min. Read

Fleet electrification is on the rise, driven by clear benefits such as significant cost savings through reduced fuel and maintenance expenses, improved air quality by cutting down on harmful emissions to meet ESG goals, and enhanced customer satisfaction due to quieter, more reliable, and environmentally friendly vehicles.

For organizations considering the switch to electrified fleet vehicles, it’s important to weigh the upfront costs against the long-term savings to make an informed decision that maximizes the return on investment for their new EV fleet.

In this article, we’ll explore what fleet managers should know about upfront costs vs. long-term savings in their decision to electrify their fleet.

The Upfront Cost of Fleet Electrification

While electric vehicles (EVs) are more cost-effective than gas-powered vehicles in the long term, there is an upfront cost that requires an initial investment in two main areas: vehicle acquisition and charging infrastructure.

Vehicle Acquisition

The cost of purchasing or leasing fleet EVs varies based on the make and model, but the good news is that EV prices are steadily dropping and are now only 5.5% higher than the average ICE vehicle, with many models being priced under $40,000. Manufacturers are also continuing to develop new EVs, meaning fleet managers have greater flexibility in ensuring fleet vehicles meet all the needs of their business.

To save on vehicle acquisition, you might consider purchasing used EVs or reaching out to automakers directly to explore any discounts they might be able to offer for scaled or commercial purchases.

Charging Infrastructure

Developing a charging strategy and investing in a charging infrastructure is a critical part of planning your fleet electrification.

Options include creating a central charging hub, adopting at-home charging for your drivers, relying on third-party charging facilities, or using a combination of these methods. Not sure which EV charging station solution is the best fit for your fleet? Here’s more on how to evaluate which EV charging station solution fits your electric vehicle fleet needs.

Equipment can cost as little as $400+ for at-home Level 2 EV chargers, with commercial chargers tending to cost more and often requiring additional investments in infrastructure as well. You’ll also need to factor in labor costs for the installation and potential electrical upgrades which typically range from $800-$2,000+ for a Level 2 EV charger. Level 3 EV charging stations, also known as DC Fast Chargers will be significantly more expensive and are limited to commercial and industrial locations, making them a more ideal investment for fleet depots and shared charging hubs.

Electrical upgrades can range from panel replacements or load management devices at drivers’ homes to more significant electrification projects and upgrades in commercial buildings. If your charging strategy involves a central hub, you might need a new load center and updated wiring, as well as a load-shedding or battery storage solution.

While electrical upgrades increase the upfront cost of going electric, investing in a reliable infrastructure paves the way for expanding charging capabilities in the future or investing in other electrification technologies.

Additional Costs and Incentives

Fleet electrification will likely result in additional costs, such as training for drivers or investing in route planning software that supports charging requirements and battery ranges.

Federal, state, and local incentives can help offset the upfront cost of electrification and total cost of ownership for electric fleets. For example, businesses located in non-urban areas and low-income communities can claim the Alternative Fuel Vehicle Refueling Property Credit to save on their charging infrastructure.

You can also look into electric vehicles eligible for the Commercial Clean Vehicle Credit of up to $7,500 per EV weighing less than 14,000 pounds and up to $40,000 per EV weighing more than 14,000 pounds.

Exploring Electric Fleet TCO and Long-term Savings

In general, EVs have a lower total cost of ownership (TCO) than ICE vehicles, creating a strong argument to electrify your fleet beyond the obvious environmental benefits of adopting a fleet of electric vehicles and meeting any corporate ESG goals. Electrifying your fleet is good for business and your bottom line.

Fuel and Maintenance Savings

A major immediate benefit of electrifying your fleet is savings from reduced fuel spending. The average electric commercial rate is $0.12 per kWh, which translates to an average cost of $0.03 to $0.05 per mile, given that most EVs have a conversion range of 3 to 4 miles per kWh. You can save even more if your utility provider offers preferred charging rates or by investing in solar-powered EV charging.

Maintenance is another area where electric fleets can create significant savings, as EV batteries and motors require little maintenance, there are fewer fluids to check, and regenerative braking reduces wear and tear on the brakes. Overall, you can expect to spend as little as $0.03 per mile on maintenance.

Other Long-Term Savings

You can offset the cost of going electric by taking advantage of multiple sources of value:

• EVs allow for more effective fleet management and route optimization thanks to their advanced telematics features.
• You can explore new business opportunities by connecting with customers and partners who share your environmental values.
• Electrification can also be a differentiator that helps you attract and retain talent, a significant benefit for drivers in the context of labor shortages.
• EV adoption supports improved air quality at the local level, contributing to better health and a thriving community.
• In the near future, more EV models will feature bidirectional charging, a technology that allows your business to sell any unused load back to the grid.
• For California fleets, going electric is an opportunity to earn and sell carbon credits.

EV Fleet Charging With Qmerit

EV fleets have a significantly lower TCO, with savings on fuel costs, maintenance, more effective fleet management, and more. However, there is an upfront cost to plan for. Successful fleet electrification projects leverage strategic planning and incentives to minimize this cost and enhance ROI.

With lower TCOs and manageable upfront costs, it’s clear that the future of fleet management is electric. Now is the perfect time to consider electrification and start exploring EV models, charging options, and incentives.

Qmerit simplifies fleet electrification by helping fleets overcome the complexities of installation. We provide a simple and seamless installation experience with top-quality service you can trust, helping fleets budget and control costs while tracking every step of the process.

With the largest and most trusted network of certified EV charger installers across the U.S. and Canada, all Qmerit electricians are fully licensed, background-checked, insured, and vetted, so you can rest easy in knowing your investment and your drivers are protected.

We understand that electrifying your fleet is a big project. We’ll work with you to ensure your drivers have the same safe, high-quality EV charger installation experience that’s helped us earn our reputation as the most recommended EV charger installation network in North America. See how Qmerit’s expert team is ready to make your fleet electrification easy, with guaranteed satisfaction and support through our Fleet Electrification Services.

Learn more about how Qmerit can help electrify your fleet and enhance access to charging with Charge@Home™ for Fleets for your drivers.