January 31, 2025

Understanding The Costs Of EV Fleet Transition & Fleet Electrification

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6 Min. Read

As fleet managers explore the transition to electric vehicles (EVs), much of the focus is often placed on the upfront costs of buying EVs and installing EV charging infrastructure and the operational savings that EVs can bring, such as lower fueling and maintenance costs.

While that is a critical component of your fleet’s expenses and is a major benefit of EVs over gas-powered vehicles, it’s not the only perk of an electric fleet.

In addition to offering savings in the short- and long-term expenses of owning and operating your fleet vehicles, EVs can present unique opportunity cost savings as well.

An opportunity cost is the potential value lost when choosing one alternative over another. For fleet managers, this might include costs associated with charging downtime or reduced payload capacity.

In this article, we will explore how to identify, address, and overcome these hidden expenses, empowering you to make informed decisions about fleet electrification.

Breaking Down EV Fleet Costs

When evaluating the costs of transitioning to an EV fleet, it’s helpful to categorize them into three main areas: upfront costs, ongoing expenses, and opportunity costs.

Each of these different categories plays a critical role in determining the true total cost of ownership (TCO) and the potential return on investment (ROI).

Upfront Costs

The initial investment for EVs is typically higher than that of traditional internal combustion engine (ICE) vehicles powered by gasoline. These costs include the purchase price of EVs, which is often higher due to advanced battery technology, along with the expenses associated with specialized charging infrastructure, either in a central depot, at fleet driver’s homes, or installed in both locations.

To ensure drivers have reliable EV chargers available when they need them, fleet managers may need to invest in Level 2 EV chargers, DC fast chargers (DCFC), or a new electrical setup, depending on fleet size and usage patterns.

Despite these higher upfront costs, advancements in battery technology and growing competition in the EV market are driving prices down. By 2030, EV battery prices are expected to be lower than those of gasoline-powered engines. You can also take advantage of federal and state incentives to further offset these expenses, making the transition more accessible.

Ongoing Expenses

Once the fleet is operational, several ongoing expenses come into play including:

  • Charging costs: Electricity expenses are generally lower than fueling costs for ICE vehicles but will be a recurring expense based on routes, driving, and other factors.
  • EV maintenance and repairs: With fewer moving parts, EVs are often less expensive than internal combustion engines (ICE) are generally require less maintenance.
  • Charger maintenance and repairs: EV chargers will also need routine and seasonal maintenance due to wear and tear in addition to preventing downtime.
  • Software and management: Fleets utilizing third-party companies for telematics or for monitoring vehicles and EV chargers will realize an ongoing expense for these services.
  • Insurance premiums: This can vary based on vehicle type and usage as well as driving records.
  • Depreciation and interest: The components of vehicle financing should be carefully considered.

Ongoing expenses are an area where EV fleets can excel, often recouping initial investments over time. By carefully managing fleet operations and taking advantage of time-of-use (TOU) electricity rates, fleet managers can optimize charging schedules to reduce costs further.

Opportunity Costs

Opportunity costs are less tangible and harder to track but are still important to consider. Opportunity costs for EV fleets can include:

  • Charging downtime: EVs require time to recharge, which can impact fleet availability. For example, a vehicle sitting idle during a busy period to charge represents lost productivity.
  • Reduced payload capacity: Many EVs have lower cargo capacities due to the weight of batteries, limiting their utility for certain applications.
  • Faster depreciation: EVs may depreciate more quickly in certain markets due to evolving technology and perceived obsolescence.
  • Missed savings on bulk vehicle purchases: Higher upfront costs mean fewer vehicles can be purchased within a given budget, potentially limiting fleet size.

Efficiently managing these factors is critical to minimizing their impact on your budget. For instance, adopting a smart charging schedule can ensure vehicles are ready when needed while taking advantage of lower electricity rates during off-peak hours.

How to Mitigate Opportunity Costs

As with any opportunity costs, while these challenges may be a frustrating part of fleet electrification, they can still be mitigated with strategic planning and informed decisions.

EV Fleet Charging Strategy to Avoid Downtime

A well-designed fleet charging strategy can significantly reduce downtime and operational disruptions. Consider implementing:

  • Nighttime charging: Charging vehicles overnight when demand is low, and electricity rates are cheaper can save money and ensure full batteries at the start of the day.
  • Rotating schedules: Staggering charging times across the fleet can prevent bottlenecks and maximize charger utilization.
  • Home charging: For small and mid-sized fleets, enabling drivers to charge at home reduces commute-related delays and extends daily range.

Investing in reliable charging infrastructure, including smart chargers that optimize energy use, can further streamline operations.

Beyond charging overnight, fleet drivers can maximize the time their vehicles are charging by scheduling their charging sessions around breaks, during restocking periods, and when they are otherwise occupied and not planning to be in the vehicle for an extended period of time.

Choosing the Right EVs

The capabilities of EVs have improved significantly, with newer models addressing some of the traditional limitations of earlier designs. Many modern EVs are lighter and more efficient, reducing constraints on payload capacity and range. Selecting the right vehicles for specific fleet needs ensures that electrification doesn’t compromise operational efficiency.

Take Advantage of Federal and Local Incentives

Government incentives can play a significant role in offsetting the costs of fleet electrification. For example, the Clean Vehicle Tax Credit offers up to $7,500 for qualified commercial vehicles under 14,000 pounds and up to $40,000 for heavier vehicles. Many states also provide additional incentives for infrastructure investments and fleet electrification.

By staying informed about available programs, fleet managers can maximize savings and reduce the financial burden of electrification.

Balancing Savings

Fleet electrification offers long-term savings that can outweigh the initial investment and opportunity costs of driving electric. Fueling an EV is typically far cheaper than filling a gas tank, and maintenance costs are significantly reduced due to fewer mechanical components. Additionally, pairing these savings with government incentives and optimized charging strategies can create a compelling financial case for electrification.

Calculator Tool

Tools like the National Renewable Energy Laboratory’s T3CO (Total Cost of Ownership Tool) can help fleet managers evaluate the economic viability of electrification. These tools consider factors such as vehicle purchase price, operating costs, and incentives to provide a clear picture of potential savings.

For those looking to streamline the electrification process further, Qmerit’s Fleet Expressway offers an end-to-end solution, from charger installation to ongoing support, enabling businesses to maximize the benefits of their EV investments.

As the largest and most trusted electrification network in North America, our network of certified electricians has installed over 450,000 EV charging stations in homes and businesses across the U.S. and Canada.

We’ve earned our reputation as the most experienced and high-quality electrification service and EV charger installation network and can help make your transition easy with our experience and commitment to your business.

Find out how an electric vehicle fleet can help build your business for the future. With a simple and seamless installation experience and top-quality service you can trust, Qmerit makes driving electric easy no matter where your drivers need to charge.

Contact Qmerit today to learn how we can support your fleet electrification project and help you enjoy the benefits of a seamless EV experience without the typical complexities of EV charger installation.

Author: Ken Sapp

Ken Sapp

Senior Vice President, Business Development and eMobility