Distributors: Is Your EV Fleet Worth the Investment?
You probably heard the news that the Biden administration has raised gas mileage standards and set tougher expectations for tailpipe emissions. Fleets have until 2026 to comply.
Regardless of whether regulations continue to get tougher (and for what it’s worth, we think they will), you’ve surely wondered by now: does it even make financial sense to convert to an EV fleet?
Our answer: almost definitely.
In a massive EV suitability assessment, telematics provider Geotab recently found that it makes financial sense for North America to replace 64% of their conventional fleet vehicles (cars, SUVs, and minivans) with electric ones today.
That’s an impressive finding—but it may still leave you saying, “That’s not even two-thirds of vehicles. It’s hardly unanimous.”
Consider a couple of facts. First of all, this finding completely disregarded incentives and only focused on the actual costs of running and maintaining these vehicles. So, Geotab isn’t counting on having generous rebates available to offset the often-high costs of building an EV fleet.
Second, remember that although EVs are becoming more widely available, the best is likely yet to come. Watch the EV market over the next two years, and you’ll see a flood of dozens—or perhaps hundreds—of new models. More options means more competition, and more incentive for vendors to focus on maximizing quality while reducing sticker price.
When we dig deeper into Geotab’s findings, we can find even more justification for the initial outlay of building an EV fleet.
Three Surprises from the Geotab Study
Geotab’s study unearthed quite a few surprising facts. Here are just three that could have a major impact on your decision to build an EV fleet:
- The notion of having to stop and charge a fleet vehicle in the middle of the day is fast becoming a myth. Geotab analyzed 179,000 fleet cars and SUVs and determined that nearly half could be replaced with electric cars that have a long enough range to not need mid-day charging. In other words, given the driving patterns of today’s fleet cars, roughly half are driving few enough miles per day that they wouldn’t exceed the range of a battery electric vehicle (BEV).
- Your future EV fleet could outlast your current gas-powered fleet. Most savings estimates assume a conservative five-year lifespan for EVs. But many EV manufacturers offer a seven- or eight-year warranty for their batteries—which means you could run your EVs longer and rack up the savings. The savings for a five-year service life were $1,970 per vehicle. For a seven-year service life, that figure rises to $3,130.
- 2021 could be the tipping point for starting your EV fleet. As we noted, the Biden administration is committed to reducing emissions and increasing gas mileage. Your fleet will have to meet new, more stringent standards by 2026. Meanwhile, the climate is still good for garnering government incentives on EVs. And while 64% of gas-powered fleet vehicles could be replaced more cost-effectively by EVs without incentives, adding in rebates makes this an even easier decision.
According to the Geotab study, a mere $2,000 rebate per vehicle makes it cost-effective to replace 87% of gas-powered fleet vehicles with electric. And a $4,000 per vehicle rebate makes 95% of EVs cost-effective.
Again, we can’t count on government incentives sticking around forever. But as we noted, a huge wave of new EV models is about to hit the market. As options increase and prices come down, rebates may become a moot point.
Get Help Planning Your EV Fleet
Of course, there’s more to buying electric vehicles than sticker price and cost of ownership. You’ll have to have the right software in place to manage and optimize the performance of your EV fleet. That’s where Gridline comes in. Our analytics solutions enable you to find the hidden insights in your telematics data so that you can get the most out of all your vehicles. Ask us how.