Auto manufacturers continue to ramp up electric vehicle (EV) production. More and more governments worldwide are offering subsidies, tax exemptions and other incentives for EVs. The upfront cost of EVs is falling as their popularity and numbers rise and battery costs decrease. And several countries, from China to the U.K., are proposing bans on gas and diesel car sales within the next twenty years – some as soon as 2025.
With so many signs pointing to EVs as the preferred mode of mobility in the not-so-distant future, is it time to consider EVs for your fleet?
EVs vs. internal combustion engine (ICE) vehicles
According to the US Department of Energy’s Office of Energy Efficiency and Renewable Energy,“EVs convert about 59%–62% of the electrical energy from the grid to power at the wheels. Conventional gasoline vehicles only convert about 17%–21% of the energy stored in gasoline to power at the wheels.” Clearly, EVs are the hands-down winners when it comes to energy efficiency.
But EVs only make up less than 2% of the U.S. vehicle market right now. That means EV supply is limited and EV sticker prices tend to be higher than their gas-powered counterparts. Since keeping your fleet costs down is a top priority, does it make economic sense to replace your conventional vehicles with more expensive EVs? For the right answer, you need to look at the big picture.
The total cost of ownership for EVs is falling
According to a recent report from Deloitte, by 2022 EVs will be the same cost to own as gas-powered vehicles, even without tax breaks or subsidies. The study further predicts that by 2030, owning an EV instead of a gas or diesel vehicle could actually save you more than $1,300 a year. Another study conducted by AAA in 2018 claims EVs have already achieved a lower average cost of ownership than conventional vehicles.
Why EVs are a more affordable option in the long run
- Charging an EV costs ten times less than gassing up – the cost is further reduced when you charge at non-peak hours.
- An EV is more reliable and cheaper to maintain since it has only 20 or so moving parts whereas an ICE vehicle has an average of 2000+.
- EV powertrains can last 500,000 miles or more – that’s at least twice as long as an ICE powertrain.
- The upfront purchase price for EVs is steadily dropping to that of ICE vehicles largely due to the falling cost of lithium-ion batteries.
Incentives and tax credits make EVs even more attractive
The federal government and a number of state and local governments offer tax credits for the purchase of EVs. Plus, several state and local governments, along with utilities and private organizations, offer EV incentives such as vehicle or infrastructure rebates or vouchers, vehicle registration fee reductions, loans, special low-cost charging rates and high-occupancy vehicle lane exemptions. For a detailed list of tax credits and incentives by area, visit the U.S. Department of Energy’s Alternative Fuels Data Center.
How Does EV Tax Credit Work?
While EV tax credits vary depending on the model of car purchased and a company's individual tax circumstances, some buyers can receive up to $7,500 in EV tax credit, in addition to local and state initiatives. The federal EV tax credit isn't an instant rebate at the time of purchase. Instead, what credit amount you receive at the time of annual tax return filing depends on a number of factors, including:
- The vehicle's battery capacity measured in kilowatt-hours.
- Your specific tax situation.
- Whether or not you have the correct type of factory-produced, electric, road-going vehicle.
EV Charging Stations
In addition to lucrative EV tax credits, some states offer even more money back should you install an EV charging station at your business or home. Local utility services may also offer credits or discounts for using an EV and installing a charging station.
Some EV charging stations are free, some charge by the hour or per session and some require subscription fee.
For a detailed list of tax credits and incentives by area, or for a list of available EV charging station locations near you, visit the U.S. Department of Energy’s Alternative Fuels Data Center.
EVs can boost your image with customers and employees too
EVs showcase the latest vehicle technology and release zero emissions. These factors help you look good to customers and employees who are drawn to forward-thinking, tech-savvy, environmentally responsible companies. At the same time, building a more energy-efficient fleet with EVs helps you meet your company’s goals for reducing waste.
Auto manufacturers continue to rev up EV production
The Obama-era federal regulations requiring OEMs to meet a fleet wide average of about 47 mpg by 2025 is still in effect. The Trump administration’s proposal to freeze fuel economy standards at the 2020 level has not passed into law. Even if it does pass, OEMs still plan to move ahead with their investments in EVs:
- GM plans to make 20 new electric car models by 2023
- Ford will offer 16 new electric vehicles by 2022
- Mercedes-Benz plans to produce electric versions of all its cars by 2022
- Volvo says half of all its sales will be electric by 2025
- Volkswagen, which is phasing out conventional cars, is spending around $50 billion on electric and autonomous cars over the next 5 years
As EV production increases, EV sticker prices decrease and the technology advances (e.g., longer battery range). In particular, major strides have been made in designing and engineering SUV and pickup trucks – the most popular automotive models in the U.S.
Tesla, the current leader in EV sales, offers the Model X SUV and the new, less expensive Model Y SUV crossover. Ford, Audi, Hyundai, Jaguar, Kia, Bollinger, Mercedes-Benz and Volvo all have electric trucks, SUVs or crossovers hitting the market in 2019 and 2020. And startup company, Rivian, with the introduction of its R1T truck and R1S SUV, has won a recent $700M investment led by Amazon. Other companies, including UPS, Federal Express and DHL, are also tapping into the advantages of EVs for their fleets.
Think you’re ready to add EVs to your fleet? Think Mike Albert Fleet Solutions.
Whether you’re part of a private company or a municipality, Mike Albert will help you procure, finance and manage the right EVs for your organization. We provide expert consultation on everything you need to know about EVs and electric vehicle supply equipment (i.e., charging stations) including:
- Features and benefits/pros and cons of various EV models and equipment
- Supply chain challenges of certain EV models
- New EV vehicles on the horizon to consider
We also offer you a variety of financing options. Once you select your EVs, we match you with the financing that best meets your business objectives. Then we stack all the applicable federal, state and local tax credits and incentives into your financing for maximum savings.
For more information on how to electrify your fleet cost-effectively, efficiently and smoothly, contact our EV specialist, Nate Shadoin, at 859.444.7646 or email@example.com.