New Fuel Economy Standards: How Will Fleets Respond?
Recently the Obama administration announced that it has finalized the new fuel-economy standards for cars and light trucks sold in the United States. The new standards are a strong commitment by the U.S government and will provide incentives for auto manufacturers to produce more efficient vehicles. The outcome should lead to corporate average fuel economy (CAFE) that is nearly double what we are seeing today to 54.5 miles per gallon (MPG) by 2025.
Auto manufacturers that don’t comply with the standards each year would be forced to pay a hefty fine (more about CAFE fines here). But what does this announcement mean for your fleet operations? It means that your fleet will have access to vehicles that provide fuel economy that has never been seen before and increased access to advanced vehicle technologies such as hybrid and battery electrics. With increased technology options to choose from fleet operators will be faced with new ways of evaluating their vehicles and we quickly can identify two of those impacts.
Possible Budgetary Effects
While higher efficiency vehicles will offer reduced operating costs, they will also likely come with an initial purchase premium. This can cause a problem for fleet budget makers. In my experience, many fleets have separate budgets for procurement and operations. This means that the fuel savings realized with more efficient vehicles are not incorporated into the purchase budget. Currently fleets may be able to procure some high efficiency vehicles because of the incentives offered. However, these incentives often have ‘sunset’ periods and will expire and it will be ever more important to set budgets that account for the vehicles total cost of ownership(TCO). Fuel and procurement budgets will need to be aligned to make the best decision.
Re-evaluation of Hybrids and Electrics
Manufacturers will likely increase the amount of electric vehicles in their fleets to up their corporate average. Electric vehicles such as the Nissan Leaf have a rated fuel economy of around 100MPGe. The boost in corporate average MPG that these vehicles can provide to an auto manufacturer will likely lead to increased availability of these vehicles. As electrics become more available their purchase price should see similar decreases to what we have seen in the hybrid market. The decrease in price and increase of models available should make electric vehicles a more attractive option for fleet operators to consider. However, it is still important to know where to deploy these vehicles to maximize the benefits that they offer.
New vehicle technologies require new ways to evaluate them for fleet applications. Vehicle manufacturers have been using computer-based vehicle models to simulate their prototypes to ensure they will achieve the fuel economy they require. In the past year, innovative fleet operators have been using the same tools to quickly and reliably determine hybrid and EV TCO in their unique applications.
To learn more about vehicle modeling and simulation we recommend reading “5 reasons vehicle modeling has become a must have fleet tool“. It is a free resource that we hope is useful for your needs to spec and procure the best vehicles for your fleet.