What makes electric cars in fleets so cost effective?
Integrating eMobility in fleets is increasingly gaining currency. After the German government increased subsidies and tax breaks for the purchase of electric vehicles last year, the inducement to acquire EVs has also heightened among fleet managers. Nevertheless, EVs remain more the exception than the rule. Many fleet operators are still of the opinion that electric cars are uneconomical.
In many respects, EVs are the better choice for fleets. Not only are they environmentally sustainable, in the long run they are also the more cost-effective choice. We will explain what makes EVs so penny-wise when used in a fleet.
Argument 1: EVs are low maintenance.
Thanks to their “simple” design, electric cars have longer maintenance intervals than internal combustion engines. For one, they have neither transmissions, clutches, catalytic converters, fuel tanks nor alternators – components in internal combustion engines that quickly wear down and so are maintenance- and repair-intensive. In contrast, EVs require up to 35% less maintenance and possess an overall longer service life. In other words, the longer an electric vehicle is in use, the less maintenance it requires.
Tires and brake pads and such are many of the parts in combustion engine cars that are subject to wear and require regular replacing or changing. Moreover, there is no longer any need for oil changes or inspections. All this truly makes EVs the cost-effective alternative in fleets. Last not least – the mandatory vehicle tax is waived after a service life of 10 years.
Argument 2: EVs are ideal as pool vehicles
Research studies like “Shared E-Fleet” and “EMS” have found EVs to perform very well especially in smaller fleets in urban areas and as part of a sharing concept. This is because the vehicles are used frequently, i.e., high utilization and covering shorter distances on inner-city routes. They quickly pay for themselves. Compared to personal company cars, pool vehicles are also more cost-efficiently utilized and reduce expenditures in the vehicle fleet over the long run.
Argument 3: EVs have a long service life
While battery capacity was rather limited in the early days of eMobility, great advances have since been made. The latest generation of lithium-ion batteries has a significantly longer service life. Take, for instance, an electric Mitsubishi in 2009 had a battery capacity of 16.3 kwh, ten years on many EVs have more than four times that capacity. Batteries built today are bigger and more powerful, needing replacement only after some 1,000 charges.
Higher battery performance also increases the range and service life of EVs. This is because a more powerful battery needs to be charged less frequently so that it ages more slowly and has longer use due to the greater range. Improved battery technology is also impacting the used EV market. While first-generation electric vehicles have a greater residual value loss, newer models tend to retain their value.
Cost efficiency of combustion engines vs. EVs
Internal combustion engines
Low to medium acquisition costs
Maintenance costs rises with longer service life
Medium mileage in the fleet
Low residual value (especially diesel vehicles)
High mileage in the fleet, subsequent use as pool vehicle optional
New models retain residual value
Consistently low maintenance costs
High acquisition costs
Argument 4: EVs promote a sustainable image
Integrating electric cars into a fleet sets an example for sustainable and environmentally-sensible corporate mobility. Companies are gaining ever greater awareness of their responsibility and so are converting their fleets or have already electrified parts of their fleets.
However, due to the very limited charging options, many companies are currently unable to switch completely to eMobility. Total electrification is feasible only for small fleets, preferably located around urban centers that allow vehicles to return to headquarters. The federal government is working to accelerate the electrification of fleets by improving framework conditions, like expanding the charging infrastructure, raising incentives like tax breaks.
The economic viability of EVs also depends largely on annual mileage. When it comes to measuring economic efficiency, fleet managers have a reliable benchmark in the form of total cost of ownership (TCO). Taking into account the energy consumption of the vehicle, fuel price and power supply rate, energy costs are included and evaluated in the TCO process. Other cost factors, like vehicle tax and maintenance and repair costs, are also folded into the overall calculation.
Mileage also plays a major role in the calculation of an EV’s total cost, which, in turn, determines the cost trend for fuel and thus significantly impacts the residual value trend. When these figures are calculated and juxtaposed against the combustion engine, EVs comes out the winner in the long term.