Electric vehicles, or EVs, are the future of the commercial fleet, due in large part to their lower long-term environmental impact. The popularity of EVs among individual consumers has been steadily rising, and with new commitments to higher EV production and deployment, it seems there’s no turning back. Fleet owners and managers are being urged to plan for when — not if — they go electric.
If you’re ready for full or partial fleet electrification, consider whether buying or leasing your EVs will make the most sense for your business.
Buying EVs for Your Fleet: Pros & Cons
When you purchase an EV, there’s a good chance you can take advantage of the following.
Federal and state tax credits
EV owners in the U.S. may be eligible for up to $7,500 off their taxes the year following their purchase. Some state and municipal governments also offer tax incentives to local EV owners. Utility companies may offer discounts and rebates to customers who drive EVs, but the terms vary by state.
Long battery warranties
EV batteries carry warranties that cover eight years or 100,000 miles, per federal requirements. Fortunately, the average lifespan of an EV battery is eight to 12 years, as is the average amount of time a U.S. driver will keep the same car. This is a major selling point since the battery is the most expensive component in an EV.
Sales and promotions
Since EV innovation is currently on a fast track, car dealerships want to move their inventory as quickly as possible. To do this, many dealers will run frequent EV sales and promotions.
No more fuel management
Fuel tracking is a non-issue with EVs. Provided fleet drivers and owners have access to charging stations, EVs have enough “fuel” to get drivers where they need to go within budget and on schedule.
Fewer moving parts
In general, EVs contain fewer components than internal combustion engine (ICE) vehicles, which can translate to a less frequent need for repairs. This is important to note in case ownership extends past the warranty term, since owners may not need to spend as much on repairs post-warranty.
While the benefits of EVs may be enough to attract many fleet owners, there are some caveats to consider when electrifying your fleet.
Lower battery life
Since EVs rely on their batteries as their sole source of power, the batteries tend to have shorter lifespans than those in gas-powered vehicles. The standard long warranty is meant to account for this, and many fleets will cycle their vehicles out well before the batteries degrade.
Uncertain future value
While new EV models may be cutting-edge now, the technology is evolving so quickly that their resale value may decline more than owners expect. It’s difficult to predict exactly how an EV’s value will change over time, but each new generation will presumably be more innovative than the last.
Higher up-front cost
EVs generally carry a higher retail price than ICE vehicles due to their high-tech components and the cost of lithium battery production. However, EVs have proven to have a lower total cost of ownership (TCO) since they don’t require gasoline and have fewer parts that may need repairs or replacement.
Need for skilled technicians
This is only a downside for fleet owners who have not adequately prepared for EV adoption. EVs come with high-tech components that require a specialized skill set in addition to standard automotive repair knowledge, so it’s fleet owners’ responsibility to upskill or reskill existing staff or hire new technicians who can keep their EV fleet running.
Not ready to commit to owning your own EV fleet vehicles? Leasing may be the better option as you weigh the conditions of ownership.
Leasing EVs for Your Fleet: Pros & Cons
When you lease an EV, you experience many of the same benefits of leasing a traditional ICE vehicle, including warranty protection, lower monthly payments, and loyalty deals. However, there are a few unique benefits that come with leasing EVs for your fleet.
Try out new technology
Unless you have unlimited funds at your disposal, when you buy an EV, you’ll likely have it until an issue leads you to replace it. If the OEMs introduce an EV upgrade or a new technology in that time, you won’t be able to take advantage of it without trading your existing vehicle in for a fraction of the retail value and losing money in the process. With a leased vehicle, you can trade it in for one with the latest tech upgrades once your 24-39 month lease is up.
Save money sooner
While EV owners can score a tax credit the year following their purchase, EV lessees may see those savings reflected right away in their monthly payment — provided the leasing company applies them proactively.
Of course, leasing EVs for your fleet comes with its own limitations.
Leasing companies who look out for the customer will transfer any EV tax credits or cost savings accordingly, but they are not obligated to do so. As such, there are some leasing companies who will keep any savings for themselves while the customer pays the full monthly payment and never sees a tax credit.
Each business is different, so sometimes it’s necessary to customize your fleet vehicles to fit your needs. When you lease EVs for your fleet, you won’t be able to upfit or customize them, and your contract may prevent you from canceling the lease prematurely if the vehicles don’t serve your business well.
As the push toward an electric future gains momentum, fleet owners will need to weigh all of this while planning for EV adoption. Fortunately, the majority of fleet owners are in the same boat, so there will be plenty of resources available to navigate this societal shift.