Electric Vehicles are a Big Deal – If You Can Afford Them

Assetworks
Nick Bridle

Nick Bridle, Senior Industry Consultant, AssetWorks

According to 360 Media Group, the Fleet 250 report takes an interesting look into the world of electric vehicle (EV) utilisation and procurement in large fleets. Specifically, it views the 250 largest car and light commercial (LCV) fleets. Across the region, these fleets can range from 370 vehicles all the way to 49,100 vehicles.  

An astonishing 88% of the 250 largest fleets indicated that they plan to purchase at least one EV in the next year. Not to be outdone, approximately 71% of the 250 fleets also plan to invest and establish charging stations for their fleets. While the fleet community may not normally be so quick to accept a new technology, their hands are forced by commitments to achieve carbon neutrality.

It’s not surprising that this information also implies a competitive structure for the EV industry. Adding on to this is the fact that vehicles that have higher mileage will end up being more power efficient over the long run. Why? These EVs’ power costs per mile are nearly 25-33% compared to their diesel and petrol counterparts. While the specialty repairs may cost a little extra in the short term, the amount of maintenance and downtime for EVs are expected to be significantly lower.

AssetWorks, a leading supplier of fleet and asset management software for over 35 years, possesses a partnership with ChargePoint to provide EV charging hardware and cloud-based solutions to its customers. ChargePoint is a market leader in EV charging, with an open network, hardware and cloud-based solutions. With ChargePoint, EV fleets don’t have to worry if their vehicles are “fueled” or not. They are ready to drive whenever needed (especially when off-peak charging is moderated properly). The software comes with a cloud solution that proactively ensures you’re never left with vehicles stuck away from your lot. Finally, ChargePoint considered the security issues that may arise, and prepared their systems with features that prevent unauthorised access across all hardware, software and other services.

So, how do you go about procuring and implementing EVs, and tracking their life-cycle costs to present data to your government and taxpayers?

Modern fleet management systems rely on comprehensive data systems with the ability to integrate into other important platforms, like fuel or motor pool management. One such integration is AssetWorks Capital Asset Management (CAM), the platform to monitor fleet life-cycle cost analyses, ERP integrations, procurement, disposal and more. What challenges does it solve?

Replacement timing: There comes a point when it costs more to maintain a vehicle than it does to replace it. While a traditional life-cycle model may recommend something along the lines of 10 years/100,000 miles, CAM can demonstrate that your actual operational and maintenance costs may be sky-high years before you reach that mark.

Organisation efficiency: The goal of your business efficiency practices is to be able to streamline your processes so that a single source of information populates as much as possible. CAM encourages an automated reconciliation process, while also highlighting discrepancies for manual review. As a result, your involvement is only necessary if an error or anomaly appears.

Cost analysis: Simply put, cheaper does not equal better. Do you remember your high school maths or science teachers saying, “correlation does not equal causation?” The same principle applies here. While the cheapest option may be the best in one given scenario, that is a dangerous principle to apply to every circumstance.

Many fleets don’t conduct life-cycle analysis because they don’t have the necessary data to conduct the analysis, and doing the analysis requires time to collect data, transform it, set up the model and run it. The process can be easier if fleet managers take steps to ensure that the needed data is captured and properly organised in their fleet management system.

The first step is to organise your fleet assets in CAM into categories of like assets. Life-cycle analysis is most effective when it is comparing categories of assets that have similar configurations, acquisition costs and operating use cases. Life-cycle categories are used to select and group records from the fleet information system to calculate average monthly operating and capital costs.

Cost of ownership is a key input for life-cycle analysis. Fleets are generally not in the practice of selling operating assets in good condition early in their life, so the actual residual value in those early years is not data their fleet information system would typically have. After being entered, CAM tracks all of the costs and sales estimates of your assets for a total cost displacement statistic.

Maintenance costs make up most of the operating costs of an asset. However, not all maintenance data should be used in a life-cycle cost analysis. Life-cycle analysis considers predictable, unpredictable, and recurring repairs and maintenance that is related to the actual operation of the asset. This includes preventive maintenance, inspections, breakdowns, warranty claims and recalls.

Fuel can be important when comparing life-cycle costs of similar assets with different fuel types. There is an assumption that fuel efficiency declines over time. Our experience is that decline is not significant enough to change replacement cycles. However, there is difference in the cost and efficiency of different fuel types across similar assets (e.g., compressed natural gas versus diesel or diesel versus petrol or petrol versus electricity).

Fuel prices can be very volatile over time depending on market factors. If actual historic fuel cost is used, those costs need to be restated in current year dollars before running the analysis. This also needs to be considered against electric power costs, as off-peak charging may be dramatically lower than traditional petrol costs.

As a result, CAM can be used to track all of the costs of procurement, ownership (including maintenance and fuel/power) and disposal. This allows for peace of mind while implementing an electric fleet – a feat towards carbon neutrality that all fleets should strive for.

 

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