How to Understand the ROI of Your Electric Vehicle
With pressure on organizations coming from their customer base and top level executives, it’s no longer a question of if you’re converting to electric vehicles. It’s when.
There are many considerations when it comes to preparing your fleet for electrification. From range to weight, charging to depreciation, the vast variety of metrics can seem overwhelming to a fleet manager just getting started. Many companies are making the switch, but the process of electrification is gradual. Most fleets will increase the makeup of EVs in their fleet to ten percent over the next three years.
Whilst the number may seem small, it remains highly promising of what the future holds.
There are now more consumer plug-in electric vehicles on the market than ever before, and many major manufacturers are making the push to develop more efficient models as demand increases. Even as governments create incentives for making the switch to electric, fleets are beginning to realize that a strong sustainability initiative can not only set them apart from competition, but also help them sustain their fleets for the future.
Organizations are beginning to electrify their fleets
A fleet of electric vehicles can lower CO2 emissions and save money on fuel expenses, but there are many challenges that arise when you begin your transition to an electric fleet.
EVs are far from perfect, but the technology is promising.
As electric vehicles are such a new technology, it can be more difficult to capture a true ROI. Especially when you’re comparing them to a traditional internal combustion fleet.
It’s like the age-old saying, comparing apples to oranges.
EVs use kilowatts per hour instead of miles per gallon. There’s fewer moving parts. Charging infrastructure vs. refueling presents a challenge. There’s no precedent for making a switch like this on such a scale, so we’re left to wonder how other fleets planning their transition and acquisition strategies, as well as which vehicle classes will inevitably make the switch first.
To answer this question, we ran a survey with one of the top utility fleets in the nation, Consumers Energy, on electrification and how fleet managers are implementing this new technology. The results of the survey were promising. Many respondents mentioned that they were planning to make the transition to electric for their Class 1 and Class 2 vehicles at first. This has a lot to do with the industry trend of announcing new production of light-duty electric vehicle offerings of fully hybrid options.
But the question remains – once you’ve turned in a purchase order and your new technology shows up ready to work, what then?
Your electric vehicle strategy will have to include all aspects of the electrification challenge – range, load-capacity, charging infrastructure and even the impact strain your region could have on the batteries of your new fleet assets.
Whilst it’s true that ICE vehicles have poor fuel economy at peak payload, commercial EVs have less than half the range. Why? EV batteries power everything from the movement of the car to the air conditioning, and the charge can run out faster if your drivers are prone to speeding or carry heavy payloads.
How are fleets planning to measure the success of their EV programs?
If you’re wondering which KPIs to focus on to measure the success of your new EV initiative, you’re not alone. The success of electric vehicles in any given fleet is dependent on the many factors, including location and vehicle function.
But there’s more to it than that.
Our survey found that top utility companies across the country all indicated “Reduction of CO2 emissions,” “Fuel savings,” “Reduction of maintenance costs” and “Cost per mile” as key metrics they intend to use to measure the success of their electric vehicle initiatives.
Range is a crucial aspect of measuring success for many fleets – reason being, they want to ensure that their next asset investments can fulfill the same amount of workload as their previous internal combustion vehicles – alongside drastically reducing their carbon footprint. But this presents a challenge that some manufacturers have yet to solve with anything other than anecdotal data.
If your fleet operates in cold weather, your battery charge will suffer. The cold temperatures can change the efficacy of the battery charge and can as well cause a permanent decrease in max capacity charge. The battery itself, whilst manufacturers are working to reduce their weight with different chemical makeups, can still strain the charge and reduce the amount of total payload your vehicle can withstand. Anecdotal OEM data typically depicts a vehicle running without carrying passengers or necessary equipment for any given fleet, as well as not having factored in accessory use (think air conditioning or heat, radio, etc.). Because each of these components utilize a portion of the total battery charge, the MAX range often differs for each vehicle from what the manufacturer will have listed.
However, it remains to be determined whether or not each EV initiative for every fleet planning an implementation will be successful. One of the best (and most productive) ways to ensure that your best estimate is made during implementation is to rely on your fleet’s data. Utilimarc’s business intelligence platform can do all the heavy lifting for you – by identifying problem areas in your fleet and opportunities for growth and waste reduction, allowing you to plan for any new initiative your organization may carry interest in.
Are electric vehicles budget-savvy in the long term?
There is limited data to draw from on the effects of EVs on a fleet over a long term, because it;s still considered relatively uncharted territory. As a generalization, most fleets will still be purchasing primarily internal combustion vehicle assets in the coming years – as there’s simply not enough electric offerings available to suit all functions and needs of certain fleets yet.
However, electric vehicles are still thought to be the future of the fleet industry. And there are plenty of indicators that show that the push to electrification is just beginning.
In the long term, trends indicate a shift to a higher percentage of EVs across the fleet industry, which, in the long-term, will decrease emissions and fuel consumption considerably. Whilst the price of EVs provides a reason to not be as cost effective as the hybrids right now, they make up ground with an ease of maintenance (and lower maintenance costs) as well as government incentives.
Electric vehicle technology is always improving. Models with better range and battery life will be released in the coming years and competition in this area is always ripe with room for innovation. Though, one thing to note, is that it remains crucially important to understand your fleet’s telematics data – as this can be your key to mapping out routes and charging infrastructure in the future.
Will the switch to electric vehicles happen sooner or later?
It still may be years before we see the real benefits of fleets electrifying their assets. As time goes on, the range of EVs is likely to increase and their application will be wider reaching. There is a lot of potential for growth with EVs, and laying the groundwork today will set fleets up for incredible growth and cost effectiveness down the line.
Here are a few things you can do to begin prepping for an electrified fleet:
- Identify which make and model of electric vehicle or plug-in hybrid vehicle will take to charge.
- Similarly, you need to identify how many of your assets you’ll be looking to purchase, as well as the amount of charging infrastructure you’ll need to support them.
- Begin communication now with your local utilities provider – electric vehicles will increase your energy usage considerably, so it’ll be important to ensure that the local electric grid can handle the increase.
- Lastly, as electrification becomes more common – it’s easy to think about what you’ll need immediately. Instead, make sure to future-proof your electric initiative by trenching and wiring to prepare for future changes in infrastructure or an increase in your electrified assets.
One thing to keep in mind, is that on average, purely electric models retain a quarter of their value after five years while the hybrids retain a third. However, EVs boast lower maintenance costs, and also enjoy federal rebates. The Biden administration’s GREEN Act proposes a $7,000 rebate for sales up to 600,000 units. So even with a higher initial investment, you could actually see more return than initially anticipated.
What are some of the considerations necessary to make good on 2030 sustainability commitments?
The world can change a lot in a decade. But you already knew that. Do you think that EVs have the momentum needed to reduce your emissions completely in that time? GM is set to become carbon neutral by 2040, and they’ve committed to eliminate all tail-pipe emissions by 2035. But the question remains, are these goals feasible?
Making good on a commitment like this means taking advantage of every possible way you can reduce your emissions and carbon footprint.
One way to do it is to decarbonize your portfolio by switching to battery electric vehicles, sourcing renewable energy, and potentially taking advantage of alternate fuels, hybridized vehicles and ICE vehicles with high fuel-efficiency if they suit the needs of your fleet.
Digging into your data will be essential in this transition, especially if you’re looking to identify opportunities within your operations structure that could in fact be more sustainable that they currently are. Telematics can be a large help, but the data means nothing if you don’t do anything with it. This is where data management platforms are key – helping you streamline your data, do away with the data silos and provide insights you didn’t even know you were missing. Our platform helps our clients visualize how much fuel they’re using and how they can better reach their goals through best driver practices and waste reduction opportunities.
The bottom line
Electric vehicles aren’t perfect, but the major challenges impeding their progress, like battery range restrictions and lack of charging stations, are almost in the rearview. You’ll eventually be able to forget about miles per gallon and think in terms of kilowatt hours or cost per mile. When that happens, all of the unfamiliar metrics could get in the way of your fleet operations. Fortunately, Utilimarc can reduce the confusion, help you make sense of your data and provide a benchmark you can use to see how you stack up with other companies making the switch.
If you’re interested in learning more about how Utilimarc can help you make the most of your electric vehicle data, schedule a live demo with our analytics team.