How to budget for fleet electrification
July 25, 2023
3 minutes
Fleet electrification is a significant investment, with benefits such as fuel and maintenance cost savings. Proper budgeting is an important part of the process, and costs depend on electric vehicle (EV) infrastructure, vehicle selection, the number of vehicles being deployed, and your unique fleet needs.
Element Fleet Management will provide you with cost/benefit expectations, so you can take charge of your fleet electrification journey.
Primary costs associated with fleet electrification programs
Fleet electrification requires upfront costs for acquiring EVs, the installation of charging infrastructure to recharge an EV battery, access to public charging networks, and sometimes for additional data access.
Costs to install home chargers can vary significantly, from as little as $800 to $8,000 or more. The cost will be determined by your project requirements and factors such as the length of wiring needed, whether there is space in the home electric panel, and the location of the installation site relative to the main electrical panel.
Depot or office charging requires planning well in advance to determine how many chargers are needed at the site and how much power is needed for those chargers. Costs are influenced by the number of chargers needed, and specific site needs like digging underground. Other costs associated with electrical upgrades may include inspections and electrical permits. Access to public charging networks can occasionally represent an additional cost for fleets.
While there are several costs associated with fleet electrification, this initial investment will pay off with significant fuel and maintenance cost savings over time. Maintenance costs are lower, as there are fewer moving parts with an EV compared to an internal combustion engine (ICE) vehicle, so less periodic maintenance is required. Fueling costs are considerably less for EVs, as they are cheaper to recharge than ICE vehicles that lack fuel efficiency. EV charging costs are also lower as electricity is cheaper per mile than gasoline.
Considerations for EV charging
Some of the main factors to consider for EV charging are vehicle dwell location, dwell time, and future-proofing.
In most cases, Level 2 chargers are best suited for charging EVs when they are not in use. Most Level 2 chargers can charge an EV battery in 8 to 12 hours, so that it is fully charged when the driver needs the vehicle.
Home and depot charging are the best solutions for charging EVs, as they are the most cost-effective and widely available options. Most EV charging can be done at home or at work where drivers have longer dwell times. With home charging, drivers can also take advantage of off-peak electricity rates.
Fleets will need to consider how to reimburse drivers for their home electricity use. This can be done as a set stipend for each driver or calculated based on charging data. Home charging reimbursement policies should be incorporated into fleet driver policies. Smart chargers allow drivers to monitor charging progress and energy usage in real-time and provide fleet managers with visibility into the use of charging devices to optimize energy consumption.
Public charging is a good fit for drivers on longer trips or overnight trips, but it is typically more expensive per kilowatt-hour (kWh) charged. Drivers should look for Level 2 chargers if they have a secure place to leave their vehicle for 8 to 12 hours while it charges, such as a hotel parking lot, or a Level 3 fast charger if they need to charge in under an hour. Apps such as ChargePoint or PlugShare can help drivers identify charging locations, and filter by available charger type.
Government incentives and rebates to electrify your fleet
In the United States (U.S.), the 2022 Inflation Reduction Act 45W commercial EV incentive covers up to $7,500 for vehicles that weigh below 14,000 pounds or up to $40,000 for vehicles that weigh more than 14,000 pounds. The Internal Revenue Service continues to work on incentive details to claim the credit and will soon make the application form available. Clients should reach out to their fleet representative at Element to see if there is an opportunity to take advantage of this incentive for U.S. fleets.
In Canada, the Incentives for Zero-Emission Vehicles (iZEV) Program provides up to $5,000 for eligible light-duty vehicles. While the Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) provide eligible purchasing or leasing organizations with up to $200,000.
How hybrids can help if there are limitations with budget
Hybrid vehicles might be a lower-cost option than EVs in upfront costs, but their operating costs tend to be only slightly lower than ICE vehicles. In the case of a plug-in hybrid, it is important to charge the vehicle’s battery to optimize gas mileage, otherwise, the vehicle’s overall efficiency and fuel costs will be impacted.
EVs provide operational expense savings, as they are three times cheaper to operate in comparison to an ICE vehicle.
Financing for EV fleet deployments
Purchasing a vehicle requires significant capital investment. When you partner with Element, you get access to competitive leasing rates that allow you to focus on operational expenses without the need to worry about big capital investments.
Arc by Element provides a holistic solution that includes charging options, fit-for-use electric vehicles, cost/benefit expectations, and monitoring to scale your EV deployments.
Check out the top 5 lessons learned from EV pilot programs.
Are you ready to take action?
Get in touch with our experts. We work with you on budget planning for your EV pilot by reviewing total cost of ownership for selected EVs, the cost of your charger project and available incentives.
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