Release date: 11/2/2017
Few could have predicted from NAFA's previous Alternative Fuels Survey in 2014 the sudden discovery of domestic oil reserves, which increased the global supply of gasoline and, subsequently, depressed its price. The key to experimentation and adoption of alternative fuels has been, historically, that they are an alternative to high-cost gas.
However, a comparison between NAFA’s 2014 and 2017 Alternative Fuels Surveys reveals a major shift in opinion on future reliance on alt-fuels types. Speculation concerning which fuel types would wind up at the head of the pack seems similarly contradictory. When asked in 2014 which alternative fuels fleet managers believe will be the most used in their fleet in the next one to five years, 31.5 percent of respondents said compressed natural gas would be their top choice. This year, CNG’s favor has fallen to only 8.2 percent.
In fact, Bloomberg.com reported on CNG's fall from grace on August 14, 2017 (https://www.bloomberg.com/news/articles/2017-08-14/how-elon-musk-and-cheap-oil-doomed-push-for-natural-gas-cars), citing the U.S. oil boom and Tesla's ascendance as key contributors.
Electric vehicles are gaining a firmer footing in the marketplace, exhibiting a "cool factor" that, only three years ago, seemed unimaginable. Tesla is becoming synonymous with luxury and status. The diesel emissions defeat device scandal of 2015 has emboldened France and the United Kingdom to announce bans of diesel vehicle technologies. Fuel cell technology has struggled to spur the imagination of the public.
NAFA Survey Overview - NAFA’s 2017 Alternative Fuels Survey was conducted in June 2017. The survey was sent to 1,879 NAFA regular members. Of this number, 139 respondents with fleet management responsibilities took part. The responses have a margin of error of +/- 8 percent. These represented corporate fleets (27.1 percent), government (48.8 percent, the largest percentage of survey-takers), law enforcement (1.6 percent), university fleets (7.8 percent), and utility (14.7 percent). The results were analyzed by NAFA's Education Development Committee.
Large Fleets Are Most Likely To Have Advanced Knowledge of Alternative Fuels - There is a wide spectrum of fleet sizes represented in the survey and a marked disparity in the rates of alternative fuel adoption.
In the survey, 2.2 percent of respondents have fleets between 11 and 100 vehicles; 19.7 percent have 101 to 250 vehicles; 32.1 percent have 251 to 700 vehicles; 11.7 percent have 701 to 1,000 vehicles; 12.4 percent have 1,001 to 2,000 vehicles, and 21.8 percent have 2,000-plus vehicles in their charge.
The adoption rates and overall knowledge about alternative fuels vary widely across fleet segments and sizes.
According to the data analysis conducted by NAFA’s Education Development Committee, respondents running fleets of 701 to 2,000 vehicles and above said they were either very knowledgeable or an expert on alternate fuels and vehicles. The majority of these are government-run, and none are university-run. A majority of utility fleet professionals said they were very knowledgeable, with the remainder of the respondents stating they had basic knowledge.
Almost all respondents who run fleets between 10 and 250 vehicles said they had either basic, very little, or no knowledge regarding alternative fuels and vehicles. A majority of survey-takers with fleets in the 251 to 700 vehicle range stated their knowledge was “basic” or “very little.”
Corporate fleets of any size tend not to have advanced knowledge of alternative fuels, or their knowledge is basic. Most of the survey-takers in this category said that less than 10 percent of their fleets are composed of alternate fuel vehicles.
Medium fleets (251 to 700) and larger fleets (700 to 2,000) stated that their primary source of information about alternative fuels came from industry/professional organizations like NAFA and from industry/trade publications like FLEETSolutions.
There are still significant barriers to adoption. 26.7 percent of respondents said alternative fuel adoption occurred through a mandate by management, and 25.9 percent said that it was due to achieving emissions reductions. These figures help illustrate why government and utility fleets seem much more involved with such sustainability initiatives over other fleet types.
What is holding back those other segments? “There is resistance from our budget department and management to invest in ‘more expensive’ alternative fuel, vehicles, and infrastructure,” said one respondent.
Another survey-taker said, “I feel like the industry itself is very focused on the east and west coasts and I don't think they consider the Midwest or central plains locations.” This person indicated that the infrastructure still is an obstacle, not only because the fuels might not be available with any regularity, but because of the roads themselves. “(How can) sustainable energy vehicles be used by a corporate fleet in particular which spends a lot of time on gravel roads, out in the middle of nowhere where infrastructure currently does not exist? Driving a hybrid sedan just wouldn't be practical for my drivers (who) are visiting farms and ranches all day long, driving down gravel and through fields,” the respondent noted.
Infrastructure is a problem for university fleet professionals, too. “(Interest) depends on what will be available close to campus. Currently, no alternative fueling is close, (with the) closest ethanol station being 30 minutes one-way to get there,” the survey-taker said.
Total Cost of Ownership May Not Be the Primary Reason Why Fleets Look To Alt Fuels - 48.7 percent of respondents overall did not know the percentage of Total Cost of Ownership savings that would have resulted from replacement of traditional vehicles with alternative fuel vehicles. 30.4 percent said they experienced less than two percent savings. 4.4 percent said they achieved over 10 percent savings.
A respondent indicated that their purpose for such vehicles was not from a dollars-and-cents standpoint: “We don't look at TCO yet. We concentrate on the needs of the driver, but we consider our (carbon) outputs first. It has to be at or under 160g/km for our vehicles.”
For the fleets that are adopting, what are the primary reasons why? 26.7 percent of respondents have cited management mandates as the dominant reason. Sustainability has emerged as a major aspect of corporate and governmental responsibility, and even though the corporate segment participating in this survey is not well-versed in alt-fuel knowledge, they must know what such efforts represent. This is best demonstrated by the utility segment which straddles both corporate and government fleets.
Further bolstering this finding, 26 percent of survey-takers cite Calculated Carbon Footprint/Emissions Reduction as the main reason to add alt-fuel vehicles.
Conclusions - Responses to NAFA’s Alternative Fuels Survey show that the larger the fleet, the more likely it is that the fleet operator will be interested in learning about, and investing in, fuel types outside of traditional fossil fuels.
Corporate fleets, many of which tend to work with fleet management companies, are least incentivized to expand their knowledge of available fuel types. Across the board, fleets are more interested in using fuel types that can work with their current equipment – ethanol and renewable diesel – other than in taking the risk on new equipment.
Still, when fleets do take on new fuel types, it’s most often to fulfill sustainability goals rather than to reduce the total cost of ownership. This is, in part, because plans in such a direction are already underway.
Infrastructure remains a huge barrier to adoption. If there’s a requirement for an organization to build its own fueling solution rather than having something already available and accessible, the organization is probably not going to make that investment.
Politics Not Seen as a Significant Motivator - The Trump administration, including Scott Pruitt, Administrator of the Environmental Protection Agency (EPA), has signaled that the stringent Corporate Average Fuel Economy (CAFE) standards set forth by the previous Obama administration will be revisited and probably revised. President Donald Trump has stated his belief that the overall effect of such policies stifles business and growth, and has stated his continued support of the fossil fuels industry.
However, many businesses, organizations, and local governments have already put into motion plans that are aligned with Obama-era policies. According to our respondents, they are unlikely to backtrack on these goals. Only 16.4 percent of 2017 Alternative Fuels Survey-takers cited “Regulatory Mandate,” as per previous standards, was their prior reason to go with alt-fuels, suggesting that their own internal philosophies of corporate responsibility drove initial decision-making. This signals they are unlikely to divert from these plans within the new political climate.