The Changing Fuels Market: What Alternative Fuel Vehicles Mean for Fleets

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Release date: 5/8/2019

The Changing Fuels Market

What Alternative Fuel Vehicles Mean for Fleets

GASOLINE-POWERED AUTOMOBILES ARE STILL the kings of the road. But, as automotive technology continues to advance, vehicles that run on alternative, more renewable fuels are beginning to challenge those powered by traditional internal combustion. More and more automakers are offering hybrid versions of some of their popular cars and trucks, while others are developing cars that run on alternative fuels like electricity, propane, and hydrogen.

The fuel market is changing, and fleet managers must be aware of the pros and cons of these alternative fuel cars and trucks as it relates to their organizations’ fleets.

"Gasoline/diesel prices have declined dramatically over the last decade thanks to booming domestic oil production," said Mark Smith, Technology Integration Program Manager for the U.S. Department of Energy. "For alternative fuels, prices have held relatively stable over the last 10 years. The U.S. is producing more gasoline and alternative fuels domestically than at any time over the last three decades, resulting in more stable prices, which allows fleets to budget more accurately for fuel expenses."

While prices for gasoline and diesel fuels have dropped, it can still be advantageous for organizations to diversify the types of vehicles in their fleets. Making these changes can be difficult, but there are advantages in addition to cutting fuel costs. NAFA Regular Member Ronald Gitelman, CAFM®, Fleet Administrator for Yale University, mentioned that one key benefit is being able to show your community that your organization is committed to sustainability, especially in environments where it is a significant focus.

"We operate in a fairly heavily congested area with some rankings having the New Haven, Connecticut, area as high as fourth to seventh on worst air quality," he explained. "Yale is trying to do its part to help clean the air." Gitelman also said that fueling costs for alternative fuel vehicles can be lower, depending on the source, and some can also have lower maintenance costs.

Likewise, NAFA Regular Member Richard E. Battersby, CAFM, Assistant Director, Bureau of Maintenance and Internal Services for the City of Oakland, California, said that alternative fuel vehicles help meet his organization’s stated sustainability goals by reducing their carbon footprint and lowering exhaust emissions.

However, there can be drawbacks to adopting this new technology. Battersby said that such vehicles can result in higher capital acquisition costs. He also added that "some fuels may have range limitations, and others are not always available."

If a fleet adds the required infrastructure so they can combat this issue and fuel these vehicles on-site, costs can increase significantly. "To put in a solid level-2 charging station can cost between $5,000 and $10,000 depending upon the type of station used. If you want a DC fast charge, you could be looking at $30,000 to $35,000. That is significant," said Gitelman.

"The cost of the upfit adds to the cost of the vehicle and can reduce ROI, especially if you don’t calculate the social costs as part of the savings," he stated. "Repairs may need to be sent to an upfitter, and this can increase downtime."

There is also the prevalent issue of getting buy-in from drivers who may be used to topping off the tank at the local gas station. Part of getting over that hurdle is getting drivers into the vehicles to try them out. "Fleets that have a motor pool also have an effective way to ingratiate drivers to vehicles with different fuel types," said NAFA Regular Member Sara Burnam, CAFM, Director of Palm Beach County Fleet Management in Palm Beach, Florida. "Pool vehicles have shown to be a particularly good entry point to electric vehicle adoption."

"All vehicle technologies have tradeoffs and alternative-fueled vehicles are no different," added Smith.

"For example, alternative fuel vehicles can have fewer operations and maintenance costs than gasoline and diesel vehicles, although they tend to cost more upfront. Payback periods vary depending on use, so whether an alternative fuel vehicle makes sense depends on individual customer preferences."

Complete article available in current issue of FLEETSolutions magazine:

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