Why electric vehicles are better for your fleet
Fleet managers aim to reduce vehicle ownership costs by purchasing vehicles with high resale value and good fuel economy. While Electric vehicle (EV) adoption in fleet applications have been low due to cost and uncertainty, EV technology has developed significantly in the past few years. EVs can be a great choice for fleet managers that are looking to save on costs while greening their fleet.
According to Wheels Inc., a fleet management service provider in Chicago, 45% of fleet operation cost is linked to depreciation, followed by fuel and maintenance costs which account for another 41%. With depreciation, fuel, and maintenance being 86% of vehicle ownership costs, it becomes very important to analyze and measure potential savings when replacing old vehicles.
For this article, we researched two electric vehicles with comparable gasoline models: the Volkswagen e-Golf with the Volkswagen Golf, and the Hyundai Ioniq Electric with the Hyundai Elantra GT. We assumed that these vehicles would travel 20,000 kilometers a year, with gas prices averaging $1.20 per liter.
While the exact price of each vehicle varies a little, it was found that the depreciation of internal combustion engine (ICE) vehicles was significantly more, by an average of 23% per year. The Golf was estimated to depreciate 26% more than the e-Golf per year, and the Elantra GT was estimated to depreciate 20% more compared to the Ioniq Electric. Fleet managers are estimated to save between $570 to $750 per year, per vehicle, on depreciation costs by choosing the EV option. That is a significant amount of money that fleet managers can save by making the switch to EVs.
Fuel and maintenance costs
Fuel and maintenance is the second largest expense for fleet managers. It is estimated that the Golf will cost $2,000 in gasoline per year, while the e-Golf will only cost $565 in electricity. Additionally, the maintenance costs are estimated at $560 for the e-Golf, whereas the Golf would cost approximately $700 a year. That is close to $1,700 of savings in fuel and maintenance per year by choosing an EV.
This is because electricity is significantly cheaper than gasoline on a per kilometer basis. It is also important to remember that EVs do not require regular maintenance items such as oil changes and transmission fluid changes – greater vehicle utilization because of less downtime. The brakes also last significantly longer due to regenerative braking, and since there is no engine, tune-ups are not needed.
The story was very similar in the Ioniq Electric’s case. Like the e-Golf, the Ioniq Electric will be much cheaper to operate, with $1,700 in savings per year compared to the Elantra GT.
After research, it was found that EVs can save fleet managers on depreciation, fuel, and maintenance costs. On top of the savings, EVs can help you reduce greenhouse gases (GHG) and assist in achieving climate action targets.
While this analysis iterates that EVs are cheaper to own than ICE vehicles, it doesn’t show the whole story. FleetCarma can help fleet managers build a future-proofed business case that demonstrates the economic viability and operational suitability on fleet electrification.
FleetCarma’s Electric Vehicle Suitability Assessment (EVSA) models the suitable EV replacement options of your ICE fleet by collecting high-quality vehicle side data. The data is modeled through our proprietary diagnostics tool to create an assessment tailored to each fleet. The EVSA report will project the total cost of ownership (TCO) and return on investment (ROI) accurately, giving fleet managers the confidence needed before going ahead with fleet electrification.
An EVSA will also help you overcome the uncertainty of an EV fleet. FleetCarma will ensure the EVs included in the assessment are range capable, as well as recommend charging infrastructure to ensure your fleet is running at optimal condition at all times. With experience in hundreds of assessments, FleetCarma can help with the transition into a more sustainable fleet.