3 Ways Electric Vehicles Reduce Fleet Operating Costs
The pitch for electric vehicles is by now familiar to fleet operators; assume higher upfront procurement costs, but reap the cost savings that come during operation.
As long as the vehicles aren’t completely underutilized, EVs typically have a lower total cost of ownership than vehicles powered by fossil fuels. A simplified analysis even allows you to chart how many miles it takes for an EV investment to make financial sense compared to a gas equivalent – and that’s only taking fuel savings into consideration.
While range capability, charging costs, driver training, and systems to measure and monitor performance all need to be factored into the equation, there are a number of tangible ways EVs deliver on the advertised savings. Here are 3 ways electric vehicles can reduce fleet operating costs.
While the cost of fueling a fleet of vehicles varies by region, the economics for EVs make sense across the board. A good example comes from the state of California, where the highest number of plug-in cars are registered in North America.
California’s average price of regular gasoline was $2.85 per gallon in July 2016 – the highest price anywhere in the continental United States. Meanwhile, its $0.126 per kilowatt hour recorded in April 2016 was lower than New England, New York, and New Jersey.
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Assuming a gasoline car in your fleet achieves 30 miles per gallon, the cost breaks down to $0.095 per mile in California. In a year of driving (15,000 miles) fuel costs would be $1,425. The average cost per mile running on electricity comes in at $0.034, or $574 for the year based on the same driving distance (15,000 miles). An EV would save about $850.
This dramatic savings comes without any special system of charging. If your fleet participates in a smart charging program from a local utility, the cost of charging can go down further, opening the door to more savings.
Data is available for fleet owners in any region to crunch the numbers and see exactly how little an EV would cost to run. Looking at the Seattle government fleet that has EVs in the mix, city officials estimated $6,000 in fuel savings from a Nissan LEAF vs. a Ford Focus over 10 years.
Reduced Maintenance and Repairs
There are fewer moving parts in an electric car, making maintenance less expensive for fleet operators in the long run. Studies suggest total maintenance may be one third the cost when compared to a gasoline car of similar size and use pattern.
Fleet operators can look at four areas of maintenance for savings potential:
- Oil changes
- Brake systems
- Spark plugs and wiring
- Engine and transmission repairs
Oil changes are the most common bit of maintenance necessary with internal combustion engine (ICE) cars. If you follow the rule of every 3,000 miles, the costs add up when annual distances break 15,000 miles. Even if you change a vehicle’s oil every 5,000 miles, the costs mount over the course of five years.
Brake system maintenance can be costly in any car, but the regenerative braking found in electric cars makes these repairs far fewer (about half) than what they are in gas cars. Remember that soft braking using regen systems improves economy as well.
Spark plugs and associated wiring are not found in electric vehicles, so this element of maintenance starts at zero for any EVs in operation. In ICE models, owners have to replace these parts at least once every 100,00 miles.
Engine and transmission repairs are the costliest when operating ICE vehicles, especially when not covered by a service contract. When the diagnosis is bad, fleet operators may be forced to give up on a vehicle.
The cost of insurance has many variables involved, but EVs have several factors on their side. Insurers are certain to take note of the fewer maintenance requirements (i.e. a longer brake-life decreases the odds of an accident due to faulty brakes). Advanced safety technology that often comes standard in electric cars also assists drivers in reducing the chance of a collision.
According to Cover Hound, which ran the numbers in a study on EVs compared to gasoline counterparts, insurers also consider plug-in drivers more responsible – lowering their rates. Cover Hound data noted that a Chevy Volt was several hundred dollars less to insure annually than another GM car, while the same went for a Nissan LEAF compared to an Altima.
Fleet operators who opt for advanced telematics systems also see reductions in insurance costs because theft and other risks become minimized by the technology.
Upfront Cost Comparison: Nissan LEAF vs. Nissan Sentra
While electric models are typically more expensive than gas cars of comparable size and technology, the price difference decreased in recent years due to dropping battery costs and the increase of available incentives.
To show just how close they have become, let’s take a look at the purchase price of a Nissan LEAF S vs. Nissan Sentra S.
Nissan Sentra ($17,760)
The base MSRP of a Nissan Sentra S comes in at $17,760 with an automatic transmission (before the delivery charge), which is affordable for any fleet operator with a limited purchase budget. However, limitations include:
- Uncertain future fuel costs
- No HOV lane access without multiple occupants
- No discounts from utilities
- Standard parking challenges
Nissan LEAF ($29,010)
The Nissan LEAF’s purchase price is $11,250 more than Sentra, so right off the bat there is a drastic difference in acquisition cost. However, the LEAF qualifies for the $7,500 federal tax credit for fleet owners in the U.S.
This big chunk of change drops the price to $21,510, or $3,750 more than Sentra. Already, the gap is bearable if you consider future fuel cost savings. However, state and municipal plug-in incentives cut into that further.
While California ($2,500) and Pennsylvania ($2,000) offer attractive rebates, Colorado’s EV incentive is worth up to $6,000. In addition, the available single-occupancy and parking privileges give fleet operators other ways to find value by going electric.
In summary, the cost comparison is nearly a wash before operating costs enter the picture. Fleet operators hoping to bring down expenses across the board can turn to EVs to get the job done.