Leader

3.1    Deploy fleet vehicles

Reason for action

Fleet vehicles can drive early growth of PEVs and familiarizes DOT staff with PEVs.

Implementing the action

  • Check the completion of prerequisite actions: 2.7 Identify funding sources for supporting PEV deployment; 2.13 Conduct and publish total cost of ownership calculations for PEVs; and 2.14 Survey and educate agency staff on PEVs.
  • Find the appropriate use for public fleet electric vehicles. Utility vehicles that travel less than 70 miles every day (i.e., vehicles that do not require multiple charges per day or the construction of new DC fast-chargers) may be best suited for replacement with battery electric vehicles. EREVs/PHEVs can run on a backup internal combustion engine when the battery runs out and are thus not limited by range.
  • Check if bulk purchasing discounts exist. Some states have joint/bulk purchasing and procurement programs for state agencies, local governments, and DOTs should check whether PEV bulk purchase discounts are available. Currently no known instances exist of manufacturers giving bulk discounts because of limited production volumes and the high cost of production, but bulk discounts may eventually be possible as manufacturing scales up. Spotlight: Most states, including Illinois, have joint purchasing programs in collaboration with local governments, state agencies, and non-profits.
  • Lower capital costs by exploring lease agreements. The separation of operating and capital budgets within DOT budgets makes it difficult to offset higher capital costs with lower operating costs because operations and capital are kept separate. Special vehicle leasing programs can overcome capital budget constraints and risks associated with battery longevity. Moreover, leasing a vehicle provides a hedge against perceived battery reliability risk. With respect to the type of leases available, a capital lease involves a transfer of ownership at the end of the contract whereas an operating lease does not. Financial officers sometimes prefer off-balance sheet financing to keep debt-to-equity ratios lower. However, new rules to be implemented in 2013 by the U.S. Financial Accounting Standards Board will consider many operating leases as on-balance sheet financing.
  • Find a way to take advantage of existing electric vehicle tax credits. The government as well as non-profits cannot take advantage of the existing electric vehicle tax credit because these entities do not pay taxes. However, the Internal Revenue Service (IRS) says an auto dealership may claim the PEV tax credit as long as it discloses to the tax-exempt entity purchasing the PEV that it will be claiming the credit. With this disclosure, the DOT can negotiate a lower price. However, a dealership must have a high enough tax liability (i.e., sufficient profits) in order to claim the tax credit. Spotlight: Nissan is building a turnkey municipal lease program that leases vehicles over several years or allows a one-payment, off-balance sheet purchase (a pre-paid lease). The tax credit is passed through to the lease because the tax credit is claimed by Nissan Motor Acceptance Corporation (NMAC). Spotlight: Oklahoma City successfully obtained the $7,500 tax credit for its electric vehicles.
  • Educate staff on how to use and drive PEVs after the fleet vehicles are purchased by holding a demonstration day. Staff may be wary of driving a car that uses an unfamiliar technology. For instance, a hybrid electric vehicle was not used by the staff of one DOT because they were unsure of how the vehicle worked. Educating staff can alleviate concerns about unfamiliar technology.
  • Use public fleet vehicles as an opportunity for education and awareness. See Action 3.2 Use public fleet to hold demonstration days and events for the public. For example, the DOT can clearly label the vehicles as electric vehicles so people gain awareness as the vehicles travel around the area. Additionally, the DOT can publicize the emissions abated and oil saved from using an electric vehicle by, for example, publishing that information on the DOT website.Spotlight: The City of Houston highlights its fleet at various community events. The fleet was acquired through the Climate Showcase Communities Program, which “helps local governments and tribal nations pilot innovative, cost-effective, and replicable greenhouse gas reduction programs.” 

Outcomes

The DOT uses its experience with fleet electric vehicles to guide future deployment efforts – for example, by going through the PEV procurement process, the DOT can advise other fleet operators interested in electric vehicles, especially those working for tax-exempt entities. Moreover, it can give DOT staff experience with driving PEVs. The DOT should continue to look for innovative, cost-effective ways of purchasing PEVs while staying up-to-date with the latest PEV and charging technologies.

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