Why Fleets Aren’t Getting the ROI on their EVs Quick Enough
Reaping the maximum return from adding electric vehicles to a fleet requires a plan. But as with many new technologies, there’s no one-size-fits-all strategy for guaranteeing a quick boost to your bottom line. As a result, one of the major barriers to integrating electric vehicles into fleets is uncertainty.
A lot of fleets have an operating process that is adverse to new technologies. They want to see it proven across a broader spectrum before they’re going to dive in.
– Dave Head, Former Sonoma County Fleet Manager
In calculating the cost effectiveness of integrating plug-ins into an existing fleet, managers must estimate factors such as future energy prices, how much use each vehicle will get, and how much mileage it will be able to offset from a regular gasoline vehicle. In some cases, it might not even be clear that an affordable, limited range EV will be able to meet the needs of your fleet to begin with.
Most cost savings from EVs will be a function of how many gasoline-fueled miles they’re able to replace and the difference in cost compared to an electricity-powered mile. The higher the mileage for a vehicle, the bigger the savings will be. With plug-in hybrids, fleets maximize electric miles by optimizing charge cycles and driver behavior. For limited-range EVs, the task is putting the cars through as much use as possible without running out of range.
Factors that go into the cost effectiveness of an EV
- Future energy prices
- Vehicle utilization
- Vehicle total cost of ownership
- Range capability
- Charge cycle optimization
By the way, on March 23rd we’ll be hosting a webinar on the topic of maximizing the ROI of fleet electrification. This will cover integrating EVs into your motor pool, determining which EVs should go where, utilizing them to receive the greatest return on your investment, and optimizing fleet charging.
UPDATE: you can now download the recording here.
According to data we published in a report last year, Are Electric Vehicles Right for Your Fleet?, the average distance travelled by baseline fleet vehicles is just 12.4 miles per day. But average distance is far from the complete picture. Fleet managers need to prepare for the longest distances traveled in a single duty cycle.
With fewer than 15 percent of maximum daily distances exceeding 70 miles, an affordable limited-range battery electric vehicle like the Nissan LEAF would be sufficient for the vast majority of driving days. Each fleet is different, but for those who occasionally require vehicles to travel in excess of 80 miles, assigning those trips to gas-powered vehicles or plug-in hybrids is always an option.
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Charge cycles can also be a crucial part of the picture. How often will a plug-in have to charge during service hours? How long will it take to recharge? How might charging time interfere with or limit a vehicle’s daily use?
Performing duty cycle analysis
The key to calculating cost factors, mitigating range limitations and setting good charging procedures is understanding the duty cycle requirements of your fleet. A great place to start is collecting data from cars that are already in operation. Using vehicle monitoring software, fleets can accumulate valuable data in several areas that aren’t particularly relevant to gas vehicles.
While stats like total mileage and fuel expenditure have always been important to fleets, equally important for EVs is how far away from the lot they’re likely to get. Driving 80 miles per day in a internal combustion vehicle could mean driving around the same one-mile radius every day, or it could mean driving to and from a single location 40 or more miles away.
A duty cycle analysis of data from vehicle monitoring software should put fleet managers in a position to make reasonable estimates about mileage, cost savings and even charge cycles. A duty cycle analysis can also be quite useful in choosing which vehicle models to consider.
Based on range needs, a fleet may choose between pure EVs and plug-in hybrids—or perhaps to use both. Different electric vehicle models come with different ranges, which means that in some cases, knowing that your vehicles rarely top 50 miles in a day could save you money and open up more options.
We’ll be hosting a webinar on Wednesday, March 23rd that digs deeper into this subject.
UPDATE: you can now download the recording here or by clicking on the image below.