Why 2017 Is a Good Year For Fleets to Purchase Electric Vehicles

January 24, 2017

All things considered, electric vehicles had their best year yet in 2016. Plug-ins set sales records in North America and around the world; charging stations came into service at an astonishing rate; and the Chevrolet Bolt EV, the first affordable long-range model, debuted on the U.S. market.

Meanwhile, the first generation of EVs saw improvements nearly across the board. Updated editions of the Tesla Model S, Chevy Volt, BMW i3, and Nissan Leaf went into wide circulation. Fleet owners who wanted to lower operating costs by going electric had more options at their disposal than ever before.

The coming year should be even better for organizations, governments, and utilities hoping to incorporate low- or zero-emissions vehicles (ZEVs) into fleets.

In this article, we take a look at four developments to watch for in 2017.

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1) Improving Value Proposition for EVs

The value proposition for electric cars reached a new peak with the release of the Chevy Bolt EV. Capable of an EPA-estimated 238 miles at $37,495, the Bolt achieves more than double the range of a Nissan Leaf for just a few thousand dollars more than the Leaf’s base price with quick-charging capability ($34,200).

When fleet managers take advantage of incentives, the price of a Bolt will drop below $30,000 in many areas of the United States. Canadian incentives also offer as much as $14,000 in potential savings.

But this model is not the only one offering fleet operators superior value in 2017. Other electric cars to consider include:

• Ford Focus Electric. Now offering approximately 115 miles at a base price of $29,120, the 2017 Focus Electric becomes the best value on the lower end of EVs. Fast-charging capability that had been lacking in the previous model comes standard with the new edition. The Focus Electric will fall below $20,000 in the areas with the best incentives.
• Hyundai Ioniq Electric. The first pure electric car from Hyundai enters the U.S. market in 2017. Ioniq Electric, which arrives in the first quarter of the year, will offer 124 miles of range on a full charge and a best-ever 136 MPGe combined. While Hyundai has yet to announce a price, this EV could become the best value in the lower end of the segment.
• Tesla Model 3. Though it is by no means a sure thing for 2017, Tesla Model 3 would become the best value proposition on the market with 215+ miles at $35,000. Because of the high number of reservations, California fleet owners with a spot in line have the best shot at a 2017 delivery.

2) Status of EV Incentives

Incentives for purchase or lease of plug-in vehicles do not last forever, as consumers in the once-booming Georgia market learned firsthand. Fleet managers should keep an eye on news about state electric car incentives or refer to PlugInAmerica.org for updates.

The U.S. federal tax credit ($7,500) remains in force for the time being, but automakers have a cap of 200,000 rebates per OEM before they begin to phase out. InsideEVs estimated where the segment’s top sellers stand as of January 2017, and there are three numbers worth noting:

• General Motors. GM could very well be the first automaker to max out its number of federal tax credits in spring 2018.
• Tesla. Once the Model 3 appears, Tesla will have used the majority of its credits. InsideEVs projects the clock will begin in the second quarter of 2018 – around the same time deliveries are expected to begin in earnest.
• Nissan. As the top seller of pure electric cars through November 2016, Nissan owners claimed about half the automaker’s allotted credits before 2017 began. The rest will start phasing out beginning in 2019, projections say.

Besides purchase incentives, business owners can get help with the cost of installing charging systems (often called electric vehicle supply equipment, or EVSE) in some states. You may also pay no sales tax and avoid emissions testing when buying a ZEV, depending on the state.

3) Electric Vehicle Pilot Programs

In addition to EVSE incentives, pilot programs through utilities may give fleet owners a break on charging costs. Careful grid management is essential as urban centers grow in size and more electric vehicles enter the picture. By giving business owners a break on charging costs during off-peak hours, utilities make it easier to go electric.

Indianapolis Power & Light is one major utility to offer incentives to plug-in adopters. Time-of-use (TOU) options are available along with flat rates ($2.50) when drivers are charging somewhere in the middle of town.

As municipalities grapple with booming populations and concerns about air quality, we are likely to see more pilot programs come into play. Check with your local government agencies before estimating the cost of acquiring an EV for your fleet. Likewise, run through our previous post about getting the most from pilot programs.

4) Effects of a New U.S. President

Despite what the incoming U.S. President may claim, making changes to American government policy takes time. For example, CAFE standards in place for 2025 recently passed their final review. In order to reverse this policy – one which requires the help of ZEVs in the coming decade – the new administration would have to mount a massive political campaign and fight back lawsuits to uphold the law.

The process would take years, and by then the majority in Congress is likely to shift back to the U.S. party that prioritizes clean air legislation and considers climate change a grave threat. Automakers who have taken years to develop new electric models are also past the point of no return, financially speaking. They need to show a return on that investment.

Maybe the worst that could happen for plug-ins in the foreseeable future is the federal EV incentive ending as scheduled. Fleet owners should keep an eye on this part of the equation and note the OEM counts listed above to avoid missing out on this valuable credit.

Looking ahead, the outlook is bright for fleet owners planning to add electrified vehicles to the fold in 2017.