Affordable emission-free electric vehicles (EVs) are no longer a sci-fi prospect. Fleet managers across the nation are experimenting with different ways to introduce EVs into their businesses. As our charging infrastructure improves, so does the financial feasibility of going electric. While there are still uncertainties when it comes to calculating EV ROI in 2021, we understand much more about the prospect now than ever before.
Fleet managers have been keen to reduce operating costs since the first use of commercial vehicles. EVs offer a chance to accomplish this while also reducing emissions.
One of the biggest savings with EVs over internal combustion vehicles is the reduced need for maintenance. EVs have fewer moving parts than traditional vehicles do. The lack of the traditional engine, transmission, differential and cooling system drastically lowers ownership costs for fleets. Indeed, electric motors only need very infrequent lubrication of rotating components.
Nonetheless, when making the decision to switch to EVs, there are several considerations to take into account when estimating the EV ROI for your new fleet. After listing them, we will explore each in more detail:
Some buyers may be put off by the higher purchase price of many EVs compared to their gas-powered competitors. However, nearly 25% of EVs actually have an upfront purchase cost lower than the average for all vehicles. This figure increases to almost 50% if you include plug-in hybrids. Therefore, the purchase cost is fairly easy to quantify in relation to standard vehicles.
Perhaps more important, though, is moving to an electric vehicle from a gasoline-powered one can save considerable money over the car’s lifetime. Lower fueling costs combined with lower maintenance and repair costs can offset the purchase price and lead to long-term savings when compared to a similar-sized gas-powered car with comparable features.
In fact, Consumer Reports research supports that electric vehicles require less maintenance and cost less to repair than those with internal combustion engines. Their study shows EV purchasers can expect to save an average of $4,600 in repair and maintenance costs over the EV’s lifespan.
Additionally, the U.S. government, which operates one of the largest EV fleets, noted that eliminating the traditional engine, transmission and differential drastically lowers servicing costs for fleets.
Additionally, EV battery costs are dropping. They went down 13% in 2020. Consequently, this is further driving down the cost of EVs through less of a need for battery replacement.
Keeping internal combustion distributed fleets fueled comes out of the company’s budget. Relieving fleet management departments of the requirement to pay for fossil fuels can significantly improve the overall EV ROI.
While the company would still reimburse employees for electricity consumed for charging a work vehicle, it would still be far less than the equivalent gasoline or diesel cost. An EV distributed fleet can be recharged at work or at an employee’s home during off-peak times when electricity costs are extremely low. This also reduces the need for expensive infrastructure in one location, as would be the case for charging vehicles on site.
EV charging will increase monthly electricity bills, but the “fueling costs” are still likely to be way less. How much your bills go up will depend on the applicable utility rate plan. Most utilities now offer Time-Of-Use (TOU) EV rate plans. For example, Southern California Edison offers a couple of TOU plans that offer lower rates during the night and morning. On their TOU-D-PRIME, they claim that charging an EV at home during off-peak times costs the equivalent of paying less than $2 per gallon for gasoline. However, it should be noted that some TOU plans charge peak rates until 8 or 9 p.m., so most drivers cannot plugin right after they come home from work.
Check on the plans available in areas where your employees live. The options differ greatly. Additionally, some utilities have limits to how many people can be on a particular plan. For example, in Illinois, ComEd’s pilot residential Time-of-Day Pricing rate is limited to 1,900 participants.
Many all-electric and plug-in hybrid vehicle owners have received federal tax credits up to $7,500. The credit currently phases out once a manufacturer produces over 200,000 vehicles. That means that GM and Tesla vehicles are no longer eligible for this credit. However, other EVs do qualify, such as Nissan, Toyota and BMW. (The credit does not apply to leases – the vehicle must be purchased outright.) Additionally, Congress is considering legislation to boost the credits to $12,500 and change the limits.
The Federal Renewable Fuel Standard and California’s Low Carbon Fuel Standard are some other incentive programs that boost ROI. Some use a credit-based system to incentivize low-carbon intensity fuel use for transportation. These “transportation credit” programs allow for the generation of credits, which can be sold to obligated buyers, mainly large electric power plants, industrial plants and fuel distributors (e.g., natural gas and petroleum) that are responsible for the majority of greenhouse gas emissions. This emissions trading effort, particularly in California, was developed to create more options for firms to reduce their emissions. Moving to EVs will help yours and may result in credits to be sold, further offsetting fleet management costs.
Additionally, many states and cities offer rebates and tax breaks. In California, there are state (and some city) clean vehicle rebates. Stacking incentives from federal, state and other entities can further increase your EV ROI.
EVs used to depreciate more than standard cars. However, as demand for them increases, so has their residual value. In fact, Tesla models hold onto significant value, over 80%, after a full year of use. This is, in part, due to brand recognition and demand. Still, other makes and models that score in the 60-79% range make for excellent investments that can be resold rather than claimed as depreciating assets.
Overall, EV ROI is poised to be much better than standard vehicles. A fleet manager who embraces this emerging technology will not only save the environment but also save on the costs and downtime of managing a fleet as well. Less maintenance and downtime increase the productivity that can be derived from each vehicle and, for fleet managers, time managing the fleet. There are other time savings available in areas that give clean-air vehicles single-driver access to state carpool lanes. Reducing driving time will also increase staff productivity.
Planning for your fleet transformation can be a complex undertaking. This is a rapidly changing area, with new vehicles being introduced and Congress debating EV infrastructure and tax credits. Some states are even attempting to compensate for the loss of gas taxes by introducing EV fees.
Overall, implementing a distributed fleet that can be charged at employees’ homes can take a lot of effort to coordinate. Rather than sort through the myriad regulations, permits and contractor selections, Qmerit can do these things for you.
Acting as an @home charging agent, we can remove any unknowns related to installation and make the process easy to complete, thanks to our network of reliable local electrical contractors. In fact, Qmerit has managed over 150,000 EV charger installations around the nation and has been in operation for two decades. If you want help determining your EV ROI and are interested in switching to a distributed electric fleet, contact us today.