Corporate Fleets: An Unlikely EV Engine

Businesses will have to find religion to take full advantage of EVs, making them more likely followers than leaders

2 min read

Corporate Fleets: An Unlikely EV Engine

Despite the high levels of excitement surrounding electric vehicles, there is reason to worry about this nascent market's capacity to fizzle in a big way. Most of the buzz surrounds electric vehicle introductions from major automakers, such as the Nissan Leaf and the Chevy Volt, for which consumer demand remains to be demonstrated. Today I've got a piece running at MIT's site raising doubts about the likelihood that corporate fleets will soak up EVs if consumers leave these pricey machines languishing on showroom floors. 

The TechReview story, a 'news-you-can-use' piece aimed at managers, concludes that big price reductions and adjustments to fleet management practices will be needed to make a business case for replacing gasoline and diesel fleet vehicles with EVs. In short, lithium battery costs push the purchase price too high for most corporate buyers to recoup their investment through efficiencies -- especially if they continue to replace vehicles every three-to-five years. AT&T predicts a return on electric Ford/Azure Dynamics service trucks they are phasing in, but only because the company bucks standard fleet practice and uses its fleet vehicles for 10-12 years.

Fact is that corporate fleets are technology laggards, just beginning to absorb the hybrid-electric vehicles that consumers got excited about back in the 20th Century. Hybrids are considerably cheaper per mile of operation than EVs and therefore likely to boom in fleets before EVs, according to Oliver Hazimeh, director of the automotive practice for Boston-based consultancy PRTM. "We see more hybrids coming online first and then, providing there are incentives, by 2015 it makes sense to switch over to electrics," predicts Hazimeh.

Yet fleet managers say they are still struggle to make hybrids pencil out. Companies such as Verizon and lawn-care giant ServiceMaster are getting serious about electrifying auxiliary equipment to limit idling by service vehicles, but still hedge when it comes to hybrid-electric drivetrains.  "We’ve been trying to justify hybrid electric vehicles for both lawn truck applications and pest control termite applications for about 4 and a half years and with the premium you pay today we could never cost justify it," complains Jim Steffens, ServiceMaster's director of fleet engineering. "The savings -- especially with fuel below 4-5 dollars a gallon -- could never come close to justifying the cost premium."

And therein lies the real rub for EVs: today's gas prices reflect none of the real costs of putting petroleum in a tank. Not the geopolitical costs of stabilizing oil supplies. Not the health and environmental costs from accelerating fossil fuel burning. Not the prospective ecological costs to Canada's tarsands, the Gulf of Mexico, and other oil production sacrifice zones.

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