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September 7, 2021

Handling EV Driver Reimbursements With At-Home EV Fleets

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5 MIN. READ

Over the past decades, we have gotten used to gas station cards, mileage allowances and similar solutions for driver reimbursement. Now, however, fleet electrification has companies grappling with a similar problem – How do we handle EV driver reimbursements? Moreover, how can we best accomplish this transition with current technology?

Old solutions, per mile or per fill-up, do not fit with electrification. Let’s look at emerging EV and charging solutions that offer a variety of answers to the reimbursement question.

Calculating energy spending

One basic advantage to an EV is the low cost of operation. The electricity to run an EV costs a fraction of what gas costs to go the same distance. But, determining the cost to charge the vehicle can be a lot more complex than keeping track of gas purchases, particularly for an at-home EV fleet. To fairly handle EV driver reimbursements (and get an accurate picture of your fleet operation), you need to separate the energy spend from EV charging versus other uses of electricity.

This involves effectively using EV telematics. One basic use of telematics for most newer vehicles is the navigation system. The GPS capabilities help track the vehicle’s location and can alert the driver to upcoming gas stations or, in an EV, charging stations. But EV telematics does a lot more to help you calculate energy spending per vehicle – and identify outliers.

For better management of your EVs and optimal use, telematics technology is essential. It provides communication of travel distances, time, electricity use, and engine performance and service needs. Furthermore, the technology lets drivers manage range, optimize utility rates to reduce charging costs and achieve better route optimization.

Offering EV driver reimbursements

Before implementing a new fleet, particularly one that will be largely charged at employee residences, you need to have policies in place for reimbursing drivers for their actual business mileage. Calculations based on the cost of fuel or miles driven no longer apply.

Your fleet needs to reap the benefit of the lower EV operating costs with mileage reimbursement rates that reflect the true electricity costs. That isn’t easy with a vast range of costs between peak energy use times, off-peak charges, use of fast public chargers and more. Here are a few ideas:

Proprietary plug-in charging stations(owned by the company)

Depending on how they use EVs and the range expectations, many companies opt to implement proprietary chargers at their worksite and/or homes. Dedicated meters and hardware can eliminate the need for reimbursement, with totals tracked on actual usage.

Flat-rate reimbursement

Depending on the variability and complexity of the energy rates your employees actually pay, you may want to consider a consistent flat-rate reimbursement policy. This does simplify reimbursement and, if based on off-peak rates, would incentivize employees to charge the EVs using lower-cost options.

However, a flat-rate mileage reimbursement policy is difficult to implement in firms over large geographic areas dealing with a variety of electric rates and driving conditions. It is likely to be unfair to some employees or to your company. To avoid inequities, some find it easier to reimburse employees for miles driven rather than offering a flat monthly allowance.

Actual energy rate

Another option for fleets transitioning to EVs is a driver-by-driver approach, taking the time to calculate exact mileage rates for EV driver reimbursements, unique to each individual. You would need to work out how much energy each vehicle consumes per mile, home charging costs derived from the local utility and charger installed, and costs at public chargers.

Auto manufacturer tools

Some EV manufacturers, such as Ford, offer features that help tabulate energy usage. They can generate reports to ensure drivers receive reimbursement only for the electricity consumed while charging work vehicles at home.

Energy cards (similar to gas credit cards)

The electrification of fleets is forcing gas stations and other businesses to electrify their offerings. While free public chargers exist, fleet drivers are likely to seek rapid, high-powered chargers that get them back on the road quicker. Several vendors are now offering energy cards (a.k.a. fuel cards) to use at charger installations so employees do not have to pay and file charging expenses. The drivers may use home chargers too, but the cards help ensure costs are tied fairly to usage.

Oil companies are also joining in, ensuring that current gas customers become charge customers. For example, Shell is now one of Europe’s largest EV charger suppliers. It operates over 40,000 private electric charge points in four European countries. With Shell cards currently used for gas, future EV drivers can purchase electricity.

Other considerations

While formulating a plan for your EV driver reimbursements, keep in mind three other areas that can impact your policies:

  • Green incentives and rebates at the federal, state and city levels impact your fuel and operating costs. There are federal tax credits for purchasing many EVs. (They currently phase out once a manufacturer produces more than 200,000 cars. However, Congress is considering changes to the credits and the limits.) In addition, credit-based systems exist to encourage low-carbon intensity fuel use. These “transportation credit” programs allow for the generation of credits that can be auctioned to obligated buyers, such as electric power plants, industrials and fuel suppliers that create the majority of greenhouse gas emissions. Moving to EVs may result in selling credits, further offsetting actual operating costs.
  • Home-based charging equipment usually means Level 1 cords that use standard household outlets and are very slow at charging vehicles and are impractical for anyone driving more than 25 miles per day. The better option is Level 2 charging that uses a higher voltage, much like your clothes dryer. While Level 2 charging equipment costs more to buy, they offer time savings, which can mean paying less for the electricity on time-of-day utility rate plans, and waking up in the morning with a full battery.
  • Proprietary systems and proven processes from fleet electrification experts, such as Qmerit, can help ensure your transformation is successful. We have simplified the shift from fossil fuels to EVs for countless companies. Our turnkey solutions and vast experience can help you manage expenses and establish an EV fleet that satisfies drivers, fleet management and your bottom line.

To date, Qmerit has managed over 10,000 EV charger installations in the U.S. If you need help determining EV driver reimbursements to take the next step in fleet electrification, contact us today.

Ken Sapp Qmerit- SVP, Business Development