The push to put more electric vehicles (EVs) on the road is real. With an increased focus on climate change and environmental protection, understanding how EVs fit into a fleet of predominantly fuel-based vehicles has become more important than ever.
For fleet-based businesses who rely on drivers and vehicles, understanding the tax benefits to move to clean EVs under the Inflation Reduction Act (IRA) is another element in the strategic planning for the future of EV-based fleets. Incorporating EVs into traditional fleets is a learning experience in knowing how clean vehicles will change their fleet’s composition, operations, and revenue stream without sacrificing productivity, safety and customer service.
Making Moves to Help Fleets and the Environment
The Inflation Reduction Act is helping to move the needle in terms of climate change, evolving how we move from point A to point B to better protect the environment now and for future generations. The impact the passing of this act has on the tech industry is a game changer, especially for fleet-based businesses who rely on technology to make intelligent, real-time decisions that directly affect daily operations – one of those decisions focusing on seamlessly incorporating EVs into their fleet with little to no disruption to the overall business or the bottom line.
Beginning in 2023, commercial vehicles will be eligible for a tax credit equal to 30% of the difference between the cost of an EV and its fuel-powered alternative. While this will have a positive impact on the economy, it does come with limitations. There will now be a $40,000 cap for vehicles weighing more than 14,000 pounds. With medium and heavy-duty vehicles accounting for approximately 24% of US transportation greenhouse gas (GHG) emissions, the ability to positively impact the environment with this transition runs deep1.
Simplifying the Numbers
When it comes to crunching numbers, this credit helps simplify the otherwise complicated math exercise of calculating total cost of ownership (TCO). For fleet owners and operators, this means making sense of not only their fleet’s behavior but also the dollars they invest in their drivers and vehicles. And with more fleets making the decision to transition to clean vehicles from fuel-based vehicles, knowing where dollars are spent and saved is crucial information to continue operating seamlessly.
As of 2021, there were over 16 million EVs on the world’s roadways2. With the increasing interest in EVs and more businesses incorporating clean vehicles into their fleets, both businesses and the environment are beginning to reap the rewards. Operating an EV can reduce fuel costs by 60%3, lower maintenance costs by 40%4 and cut CO2 emissions by 50%5. When these types of cost savings are recognized, the bottom line is impacted in a sustainable way that provides fleet owners and managers with the ability to reinvest in their fleet, increasing productivity and customer service while potentially expanding their service offerings.
Driving the Fleets of the Future
For fleet managers, the benefits of implementing EVs into their fleets have lasting impacts. With the ability to travel nearly 200 miles per charge6 and access to over 7 million charging stations around the world7, operating a clean vehicle also becomes about driver adoption and how well they use the vehicle.
“With EVs, it’s incredibly important to increase vehicle utilization so the vehicle is being used by multiple people and multiple shifts”, says Aarjav Trivedi, Ridecell Founder and CEO. “Being sustainable requires fleet managers to use EVs at a higher volume as well as the data being collected from those vehicles, which is more than a traditional fuel-based vehicle. Fleet automation can help to automate decisions, such as charging locations and times, so the overall operation of these vehicles is much easier across makes and models, leading to smoother adoption”, he says.
Author: Stacey Papp, Director, Content, Ridecell