September 27, 2023

Evaluating Total Cost of Ownership for Electric Fleets

7 Min. Read

As electric vehicle (EV) adoption continues, fleet managers must increasingly consider transitioning from traditional gas or diesel-powered vehicles to electric ones. Understanding the total cost of ownership (TCO) of your electric fleet is essential to making informed decisions and optimizing your fleet performance.

This article covers EV acquisition costs, including incentives, vehicle selection, and EVs’ fuel and maintenance savings. It also discusses bidirectional charging benefits and the importance of infrastructure and energy management for electric fleets.

Understanding EV Acquisition Costs: Balancing Upfront Costs, Incentives, and Vehicle Selection

As more manufacturers embrace the EV market and innovations reduce the cost of producing EV batteries, prices for new and used EVs become more affordable, and an increasing number of EV models continue to hit the market.

Upfront Costs

Prices range from $26,500 to over $250,000 for new EVs – ranging from economic mid-line options to high-efficiency luxury models. The market is more diverse than ever, and there is an EV for every buyer’s budget and driving needs. Mid-line, economic, and efficient models start at $26,500 and are best for budget-conscious consumers. There are several electric SUVs in the $30,000 to $40,000 price range, while the fast-growing electric pickup truck segment includes vehicles in the $50,000 to $60,000 price range, so finding delivery vans for about $50,000 is possible.

Given that the average price for a new gas-powered car in 2023 is $50,000, EV models with comparable or even more affordable MSRPs than gas-powered vehicles are available, especially with many incentives and rebates further helping to reduce the cost of electric vehicles.

Federal and State Incentives

The initial costs become much more reasonable once you factor in federal and state incentives for EV adoption. It is essential to realize that personal and business incentives are different, and vehicles must meet different requirements to qualify for applicable and corresponding credits.

The highest federal incentive businesses can receive for purchasing an EV is $7,500 per vehicle. This incentive applies to individuals and businesses, although each will have their requirements. Due to sales caps, 13 models currently qualify for the full credit.

Forty-six states currently offer excellent incentives for purchasing electric vehicles, providing even more benefits to the federal programs. While Wyoming, North Dakota, Montana, and Kentucky do not currently have specific incentives, most states are entirely on board. Iowa stands out as the absolute best state for purchasing an EV, offering fantastic incentives that make it an ideal choice for eco-conscious individuals and businesses.

For instance, if you purchase a 2023 EV in Iowa, you can receive up to $12,000 back; this applies to up to 10 category 7 or 8 electric vehicles annually.

For fleet managers considering purchasing used EVs, a federal state credit is available that covers 30% of the purchase value up to $4,000.

Vehicle Selection

With over 500 EV models globally, there is an EV for everyone. Beyond considering the upfront cost and TCO, it’s important to compare vehicle sizes and select an EV model that reflects the needs of your fleet.

Vehicle range is another critical consideration, with newer models showing a noticeable improvement. The average range for new EV models is now around 291 miles.

Driving Efficiency: Fuel and Maintenance Savings with EVs

Fuel and maintenance savings further reduce the cost of operating a fleet and can make up for an EVs’ higher initial purchase price, creating a continued return on your investment over the vehicle’s lifetime.

Reduced Fuel Costs

Manufacturers actively improve gas mileage with enhanced filters and smart fuel system features. However, the cost of driving 15,000 miles with a midsize gas-powered car remains between $500 and $4,400 yearly, depending on the model, environment, and driving style. This range increases to $600 to $4,700 for an SUV.

Driving 15,000 miles a year with an EV typically costs just under $600. This example from USA Today provides a better idea:

“For example, at 10 cents per kWh, an electric vehicle with an efficiency of 3 miles per kWh would have an energy cost of about 3.3 cents per mile. In comparison, a gas-powered vehicle that gets 22 miles per gallon at a fuel cost of $3.50 per gallon would have an energy cost of 15.9 cents per mile.”

Currently, driving 200 miles with the most popular car in the market, the 2023 Honda CR-V, costs around $25, given that gas costs $3.58 per gallon and that this popular car has a gas mileage rating of 28 to 34 mpg. When compared to the costs to fuel an electric vehicle, the costs of driving an EV the same distance are significantly lower – especially with at-home charging overnight.

Lower Maintenance Costs

Over ten years, you can also save significant money on maintenance costs as EVs have fewer moving parts at risk of failing, and oil changes aren’t necessary.

According to an analysis performed by Charged Magazine’s Jill Ciminillo, owners can save more than $2,800 every ten years, and with EV efficiency improving or by implementing additional electrification technologies, company fleets will realize even more significant savings.

Predictable Expenses

The cost of gasoline can fluctuate widely and remains challenging to predict. Electricity prices tend to increase slowly and predictably, and it’s possible to offset these costs by investing in solar arrays and other renewable energy sources or by partnering with the local utility for time-of-use (TOU) rates.

The Benefits of Bidirectional Charging

Bidirectional charging represents the future. You can charge your EV battery and can also elect to push stored energy from your EV back to the energy grid to help balance the temporary demand for an energy spike.

Additionally, bidirectional charging offers a sustainable solution to keep expenses lower. Here are a few examples of how bidirectional charging can benefit your fleet, and in turn, your business:

• Bidirectional charging can make you more resilient in a power outage when combined with a battery system.
• You can turn unused electricity into energy credits by uploading power to the grid during peak hours.
• It offers a significant energy management upgrade without requiring heavy investment.

Navigating the Charging Landscape: Infrastructure and Energy Management for Electric Fleets

Before you switch your fleet to EVs, you must realize the impact of your charging infrastructure and energy management techniques.

Charging Station Installation

Installing the appropriate level of charging stations will be critical to the success of your EV fleet.

Level 1 chargers are not ideal for fleets due to their slow and inefficient charging, resulting in a lowered maximum range, averaging only 60 miles after 12 hours of charging. With a Level 2 charger, you can achieve up to 64 miles on a two-hour charge (depending on the charger, the EV, and other technical factors).

A Level 3 charger can charge your vehicle to full strength within 30 minutes (also dependent on the charger, the EV, and other technical factors). The problem, however, is that it can cost up to 200 times more than a Level 2 charger. Due to this, most people and businesses select a Level 2 charger, as they are best suited for daily use, offer the convenience of overnight charging, and are cost-effective for many EV drivers.

Level 3 chargers, also known as DCFC or Direct Current Fast Chargers, are unavailable for at-home charging due to the high voltage needed to power these chargers. These fast chargers are not ideal for daily charging, as frequent use can increase the risk of battery degradation.

While these charging levels offer different benefits and have additional installation and infrastructure requirements, having a combination of charging station levels may be worthwhile.

Energy Management

You can also reduce your energy consumption by implementing proven energy management techniques. If you have a microgrid or nanogrid, storing energy with a battery storage system is a great way to help mitigate peak demand charges and enable you to optimize your electricity costs. Otherwise, a smart charger or smart panel can help with energy management.

At-Home Charging

If you want to bring your entire company on board with EVs, offering @Home EV charging is the way to go. Although this may cost you more upfront, it is well worth the investment and is the best way to ensure you use your fleet effectively. @Home EV charging also improves driver satisfaction, so it’s a win-win for your drivers and your bottom line.

Tailored Charging Solutions for Commercial Fleets: Unlocking the Total Cost of Ownership

As a fleet manager, understanding the total cost of ownership for electric fleets is essential to make informed decisions and optimize fleet performance, and Qmerit can help. As the most-trusted turnkey solutions provider for EV charging station installations and other electrification services, Qmerit’s network of certified electrical contractors provides service and support across North America.

Contact Qmerit today to learn more about our comprehensive EV charging solutions tailored for commercial fleets.