EV fleet incentive programs: why it pays off to do your research
The upfront costs of electric vehicles (EVs) has long been a barrier to EV adoption. Despite OEMs best efforts, EVs remain a higher price than conventional vehicles. One of the biggest challenges in the coming years is to ramp up the production of EVs where the economies of scale can prevail, thus substantially reduce the price of EVs.
Financial incentives in the form of grants or tax credits have become the prominent force in decreasing the upfront cost of EVs, as research tells us, financial incentives are the most effective in encouraging EV adoption. However, it is also true that incentives generally have been poorly promoted and communicated, leading to a lack of consumer awareness.
Nonetheless, being an early adopter and taking advantage of the available financial incentives is arguably the right move, particularly when economic pressures straddle EV fleets. The following sections will explain why.
Why OEMs are dropping gasoline and diesel models
Porsche have pledged their commitment to EVs, following the announcement to stop the production of diesel vehicles, and invest six billion euros in electric mobility by 2022. Arguably, an appropriate measure when major cities around the world are banning the sale of polluting vehicles. For example, Hamburg, Germany is one of the first cities to stop the sale of fossil fuel vehicles earlier this year.
Given the trajectory, backing conventional vehicles would be counterintuitive. EVs are the new product in town, and significant investment will be required to update assembly lines and introduce battery manufacturing. OEMs must shift priorities to take advantage of the EV wave expected to shake up the industry.
New fuel economy standards and the pressure on fleets
The transport sector is one of the highest contributors to greenhouse gas emissions in the United States, which is why new fuel standards have been enacted to help reduce emissions.
As a result, company fleets are under notable pressure to reduce fuel emissions while still focusing on the bottom line. Older fleets are particularly under threat because of the relatively low fuel efficiency they can offer, which leaves fleet managers with a dilemma. Notably, keeping the status quo could result in significant fines. Therefore, fleets have two options, invest in newer gasoline or diesel models, or take the leap and invest in EVs.
However, far too often fleet managers are unaware of the broad range of incentives available for EV fleets at the point of acquisition, therefore unlikely to be making the most informed decision possible for their company.
Consumer knowledge of EV incentives
As noted earlier, financial incentives are the most effective tool to encourage adoption. However, research indicates a general lack of knowledge towards EVs. For example, one US study surveys a sample of California’s population to find that less than 35 percent were aware of EV incentives. Another US study, surveys 21 cities to see that 95% did not know the state and local policies for EVs.
The lack of knowledge around incentives is alarming given the broad range of incentives available. It further highlights, the likelihood that fleets decisions occur without taking eligible incentives into consideration, which may explain the slow uptake of company EV fleets.
Individual consumer EV adoption has been the focus. However, enticing fleets to adopt could have a more significant impact on the environment given the size of some fleets. But also, using fleets to show the general public the viability of EVs may be a powerful tool for more widespread adoption.
And notably, twenty-eight US states have hybrid or EV requirements, meaning that private fleets require to have a specific percentage of hybrid or EV vehicles in the composition of their fleet.
Incentives will play a crucial role in fleet adoption. For example, the federal government introduced the Plug-In Electric Drive Motor Vehicle Credit of up to $7,500 (dependant on battery kWh capacity) is available for personal and business use, the only restriction being when OEMs reach 200,000 sales the incentive will no longer be available.
California is a global leader in incentive programs. For example, the Electric Vehicle Charging Station Financing Program offers small business a rebate of 10-15% or up to a maximum of $500,000 on loans used to finance workplace charging stations. Similarly, the Southern California Edison’s Charge Ready Program covers the cost of all-electric infrastructure, and offer rebates to offset the charging station and installations costs for more than ten charging station installations at the workplace. In New York, the Plug-In Electric Vehicle Charging Rate Discount offers an electric rate reduction ranging from 34-39% for businesses, to qualify the charger must have a power output of at least 100 kilowatts.
There is a general lack of consumer awareness of EVs, both of the benefits and incentives available. Fleets are under considerable pressure to reduce fuel emissions but don’t currently have access to the all the options. If there is one thing to take away from this article, is to do your research on what fleet incentives are available in your locality, you might be surprised on what support is available to assist your adoption to EVs.