5 Ways the Tesla Model 3 Is (and Isn’t) the Perfect EV for Fleets

 In EV Industry

Less than six weeks after the unveiling of the Tesla Model 3, one could argue it’s already the most successful pre-production automobile in history. Tesla has reportedly recorded in the neighborhood of 400,000 reservations for its first attempt at an affordable mass-market vehicle, despite still being in the design phase and holding many of its plans for the final design close to the vest.

If nothing else, the Model 3’s outrageous pre-sale numbers indicate that there is strong demand for the right consumer EV.

What about fleets though? Will there be a single game-changing plug-in that captures the fleet market in the way that the Crown Victoria or Toyota Prius did in their respective eras? If so, is the Tesla Model 3 it?

We also put together a short PDF cheatsheet that covers the main points from this article. You can download that PDF here.

1.) Range

Tesla Model 3 range

Much of the Tesla Model 3’s appeal in the consumer market likely stems from its exceptional promised range of “at least 215 miles.” That amount of single-charge electric mobility has thus far been unobtainable outside of Tesla’s Model S and Model X large luxury vehicles—both of which carry a starting price tag at least twice as high as the Model 3.

Why it might work for fleets:

The average New York City taxicab travels about 180 miles per shift—well beyond the capabilities of existing affordable EVs like the Nissan LEAF, BMW i3 or Ford Fusion Energi. For taxis and other motor pools that frequently benefit from longer single-charge operability, the Model 3 might be the first EV that truly checks all the usability boxes while remaining cost-effective.

What’s more, those fleets that require the largest daily duty cycles from passenger sedans are the ones that stand to save the most money from going electric. The annual fuel savings resulting from replacing a gas vehicle that travels just 15 miles per day with an EV will be just 10 percent of replacing one that drives more than 150 miles.

Distribution of maximum daily driving distances according to FleetCarma data.

Distribution of maximum daily driving distances according to FleetCarma data.

Why it might not work:

While some fleets truly can’t do without longer range capabilities, to others, 215 miles is barely preferable to 50 miles. From our fleet data, we’ve found that the average daily distance traveled by baseline fleet vehicles is about 40 miles per day – with 56% of vehicles traveling less than 40 miles a day. It’s not overly common to see vehicles average a daily driving distance beyond the range of popular existing EVs like the Nissan LEAF or the BMW i3.

For fleets whose cars regularly take on a punishing daily work load without much opportunity to charge, the Model 3 could pay huge fuel-saving dividends. For those that don’t, breaking the 200-mile range barrier won’t mean much at all.

2.) Price

Tesla Model 3 price

The Tesla Model 3 is slated to start at around $35,000. It’s unclear just how “stripped down” the base model will be at that price point. Many fleets though will likely find the array of high-tech bells and whistles Tesla is expected to offer as cost-plus options extraneous.

Why it might work for fleets:

The Model 3 effectively doubles the range-per-dollar quotient of existing EVs. The only electric sedan on the market currently offering 200+ miles of range, the Tesla Model S, starts at $70,000. The 2016 Nissan LEAF SL has a 107-mile range and starts almost $2,000 higher than the Model 3. The Chevy Bolt is expected to have a range near 200 miles, but it will start about $2,500 more than the Model 3 before federal tax credits. Right now, the Model 3 looks to be the industry leader on a cost-per-mile basis.

New York City recently committed to the Nissan NV200 passenger van as its “Taxi of Tomorrow.” The NV200 gets 24 mpg in city fuel economy and costs slightly less than $21,000. But also represents roughly $5,000 more per year in fuel costs than a Model 3—and that’s not counting the lower annual maintenance costs associated with fully electric vehicles.

Why it might not:

At $35,000, the Model 3 is still far more costly than first-generation EVs with 70 to 90 miles of battery storage. Those cars generally start in the low-$20,000 range, making them far less expensive and, for the majority of motor pools that don’t need a high-performance, 215-mile EV, a better value proposition than the Model 3.

Importantly, all carmakers are limited to 200,000 full $7,500 federal U.S. tax credits. Currently, Tesla is the only nameplate in danger of hitting 200,000 EV sales anytime soon, and buyers who don’t already have a deposit down on one of the first 400,000 Model 3s are unlikely to benefit from the incentive.

3.) Passenger Comfort and Cargo Room

Tesla Model 3 frunk

The 2017 Chevy Bolt and the next-generation Nissan LEAF will likely both hit the market within a year of the Model 3 and both are expected to offer comparable ranges. But one of Tesla’s main advantages is its unique battery-motor configuration, which places all of its power storage and moving parts beneath the floor of the car. This allows Tesla engineers to move the front seats closer to the nose of the vehicle, giving it a roomier cabin while still leaving room for an extra front storage compartment under the hood. (Tesla calls it a “frunk.”)

Why it might work for fleets:

We don’t yet have numbers for the Model 3’s cargo area, but it’s unlikely that a compact sedan will match the car’s roominess or storage anytime soon—much less a compact plug-in sedan. For fleets that prioritize passenger comfort or cargo capacity (taxis, executive company cars or rental fleets for instance,) this is one area where the Model 3 can go toe-to-toe with any car on the market.

Why it might not:

Fleets looking keep their purchase or lease costs low may prefer gas-powered crossover SUVs or small vans. Many of them can best the Model 3 in roominess and storage for thousands less in starting cost.

4.) Technology

Tesla Model 3 screen

Tesla has commonly been characterized as Silicon Valley’s answer to the auto company. With the Model 3, Tesla appears to have taken an even more radical approach to the technology-driven automobile than it did in previous models. The front seat of the pre-production “3” is totally devoid of gauges, controls or styling flourishes, save for a large single touchscreen mounted to the center console.

Tesla is also competing to be the first carmaker to produce truly autonomous vehicles. According to some reports, the Model 3 will be outfitted with all of the sensors and other technological requirements necessary to allow it to be that car. While it’s unlikely that the 2018 Model 3 will be capable of driverless transportation, future software updates might be.

Why it might work for fleets:

Collecting data and interfacing with other vehicles in the fleet couldn’t be easier with Tesla’s advanced CPU. Later on down the line, your fleet could also save dramatically on labor costs if Tesla, insurers and government regulators are able to finalize the logistics of autonomous transportation.

Why it might not work:

Don’t bank on the autonomous transportation thing. Few experts believe that the many impediments standing in its way can be resolved within the next five years. There also aren’t many advantages to writing your own software for Tesla’s Ubuntu-based operating system over using smartphone apps and fleet monitoring software.

5.) Prestige

Tesla vehicles

Though price and range may be what made the Model 3 feasible for the 400,000-odd consumers who have put down a deposit, what really attracted most is likely the same factor that drives people to camp out overnight for the latest smartphones. The level of excitement around the Tesla brand and loyalty of existing Tesla owners is, at the moment, unmatched in the industry. VIPs want to be seen in a Tesla, performance lovers want to drive one, and millions of curious newbies just want the experience of being in one.

Why it might work for fleets:

Offering the opportunity to spend time in a Tesla can be a powerful attractor for customers and employees alike. If the Model 3 presale numbers tell us nothing else, it’s that the car has a certain cool factor—one that just might be capable of rubbing off on your brand. If you’re a taxi or car service advertising rides to the airport in a Tesla, the curiosity factor has the potential to bring in first-time customers. If your business keeps a motor pool of company vehicles, the chance to drive one of the most sought-after cars in the world might help you land the sought-after employees on your radar.

Why it might not work:

Most fleet vehicle considerations are more about function than form. For every purchase or lease decision swayed by sex appeal, there are many more that all but ignore it.

Does the Model 3 Make Sense for Your Fleet?

There’s still a lot we don’t know about the Tesla Model 3, so making firm plans based around its release is probably not advisable at this point. But for fleets with demanding duty cycles and others looking to draw eyes to their brand, the Model 3 could represent a unique opportunity to take the plunge and integrate electric vehicles into the motor pool.

The key considerations are mileage, marketing and timing. FleetCarma’s electric vehicle telematics can tell you whether or not deploying the Model 3 makes sense from a fuel cost standpoint. How much you’re willing to spend for increased visibility—and how long you’re willing to wait for it—is up to you.

Download the 5 Ways the Tesla Model 3 Is (and Isn’t) the Perfect EV for Fleets Cheatsheet

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