An EV plan for the future: creating a small business adoption strategy

Welcome to the fifth installment of WEX’s six-part series on navigating the economy and its sometimes perplexing business cycle. In spring 2024, the Federal Reserve reported some surprising developments. In May, 272,000 jobs were added in the U.S., exceeding economists’ expectations. Then the Fed met in June to assess interest rates. The Board of Governors remained conservative, holding rates steady for another period and maintaining its current target range between 5.25% and 5.50%. As small business owners, the twists and turns of the economy can be unsettling. To mitigate associated stressors, consider developing strategies that will keep your business safe no matter the global financial climate. One strategic decision that will ensure savings and stability for your business is turning your ICE fleet of commercial vehicles into a mixed-energy fleet.

Read on to learn how adopting a mixed-energy fleet can generate cost savings for your business and help you improve your bottom line no matter the current state of the economy. 

Forces point toward a mixed-energy future for commercial vehicle fleets

Transitioning from an internal combustion engine (ICE) fleet to a mixed-energy or fully electric fleet of vehicles is no small task. With governments globally encouraging adoption, businesses that have yet to even consider electric vehicles are starting to look at how they might adopt EVs as a part of their commercial vehicle fleets.

Building a mixed fleet – an integration of both EVs and traditionally fueled vehicles – provides a pragmatic approach for businesses navigating the initial stages of fleet electrification. With a mixed-energy fleet, businesses can strike a balance between innovation, operational reliability, and efficiency.

Business owners should carefully consider each vehicle within the fleet. For each vehicle, consider:

• Vehicle components (e.g. age, size, mileage)
• Vehicle use case (are you doing long haul deliveries, or short runs?)
• Vehicle charging strategy (would you charge a replacement EV en route, at the driver’s home, at work/depot, or a combination)

As the vehicle charging infrastructure grows, proceed thoughtfully and consider each step and the implications of your decisions.

When should you consider a transition to an electric or mixed-energy fleet?

Electric vehicle (EV) is more than just a buzzword. Globally, governments are increasingly pressuring businesses and citizens to adopt EVs; many countries (the U.S. included) currently plan to ban the sale of traditional ICE vehicles by 2035.

For example, California’s Advanced Clean Cars II (ACC II) plan outlines a restriction on gas-powered vehicles — and other states are following suit. The following 11 states have implemented similar goals to California’s to achieve more eco-friendly fleets in the near future:

• Colorado
• Delaware
• Maryland
• Massachusetts
• New Jersey
• New Mexico
• New York
• Oregon
• Vermont
• Virginia
• Washington

While these plans won’t necessarily impact a business’s existing ICE vehicle use, it is safe to assume that more strict policies are in the pipeline as we start to move toward a more eco-conscious future.

Beyond the impending restrictions on sales, transitioning your small business’s fleet to a mixed or fully EV roster can help save your business money. 

Electric vehicles (EVs) cost less to maintain than internal combustion engine (ICE) vehicles

While the sticker price for EVs remains higher on average than ICE vehicles, your business can realize savings through lower EV fuel and maintenance costs. In fact, McKinsey estimates that by 2030 fleet EVs could have a total cost of ownership that is 15-25% less than that of equivalent ICE vehicles. The average cost of electricity required to drive 15,000 miles per year is $546, while the average cost of fuel required to drive the same distance in an ICE vehicle is $1,255 (or 130%) more. 

EVs do not require as much maintenance as ICE vehicles since they don’t need oil changes or air filter replacements. If maintained according to the automakers’ recommendations, EVs may cost $330 less annually (on average) than a gas-powered vehicle to maintain. And don’t forget, that sticker price can be lowered significantly when you take advantage of rebates, tax credits, and other incentives. Read on to learn more about how government and advocacy groups can help you adopt EVs into your commercial vehicle fleet.

Government and advocacy group EV adoption incentives can help you save on commercial vehicle costs

In recent years, governments and organizations have begun to offer incentives for businesses and individuals who choose to adopt EVs. Governments understand that purchasing new vehicles is no small expense, and by providing monetary and tax incentives, industry experts hope to help more small businesses transition to mixed-energy or electric fleets. 

One example of this is the tax credit offered starting at the beginning of 2023 for businesses and tax-exempt organizations to purchase new EVs and fuel cell electric vehicles (FCEVs). As the U.S. Department of Energy states, the tax credit amount is equal to the lesser of the following amounts:

• 15% of the vehicle purchase price for plug-in hybrid electric vehicles
• 30% of the vehicle purchase price for EVs and FCEVs
• The incremental cost of the vehicle compared to an equivalent internal combustion engine vehicle

Another EV tax credit is the Clean Vehicle Tax Credit which emerged with Biden’s 2022 Inflation Reduction Act. Taxpayers who purchase an eligible vehicle may qualify for a tax credit of up to $7,500 with this incentive. 

How to transition to a mixed-energy fleet by adopting EVs

While there are plenty more than six steps involved in transitioning your fleet, there are a handful of steps that are particularly important to get right. Making the move from ICE to EV takes some work. So, when it comes to your small business, it’s nice to have all the help and support you need to ensure a smooth transformation.

1. Evaluate how your current vehicles are being used (assess your needs)

Before you purchase your first EV, it’s important to assess your specific needs. Start by quantifying relevant metrics, such as your daily mileage, routes, and load capacity requirements. Doing so will help you determine the types and sizes of EVs you will need.

2. Research tax credits and incentives

Small businesses may be working with little capital. Thankfully, as we discussed above, there are a variety of tax credits and incentives available to help offset the costs of purchasing a new EV. We’d also recommend exploring local tax credit and incentive availability. For example, in the State of Maine, Efficiency Maine offers state-wide incentives in the form of rebates particular to commercial fleet EV purchase.

Some offerings come with certain eligibility requirements and/or restrictions, so do your due diligence to find programs that work for your business and EV needs. 

3. Understand your current charging infrastructure

EV charging stations are one of the most significant considerations for businesses when looking to transition some of their commercial ICE vehicles to EVs. Do you have chargers available to you? Would home charging be an option for your employees? Will you have to build a charging station on your premises and fund installment in driver residences?

If you need to build, ensure your workplace can support EV charging stations, and consider the installation cost and available incentives for adding new stations. For a list of available incentives by state, visit the Alternative Fuels Data Center site. ChargePoint also has a great tool to determine how ready you are to adopt a charging station.

4. Start small when considering converting to EV

Especially for small businesses, replacing your current fleet of commercial vehicles in its entirety with EVs, all at once, is unwarranted and unnecessary. Instead, start small by adopting one or two electric vehicles and mixing them in with your existing ICE vehicles (that’s called a mixed-energy fleet). From there, gather data and optimize your strategy to ensure a smooth rollout. When the time is right to fully convert to EVs, you’ll have the insight to transition smoothly.

5. Leverage the EV Fleet Converter tool to determine how many and which vehicles to convert to EV

Historically, it’s up to you, maybe a manager or two, and a few data analysts to build out a report that outlines the feasibility, costs, and benefits of electrifying your fleet of commercial vehicles. Now, it’s easier than ever to gain that insight through tools like the WEX EV Fleet Converter tool.

WEX’s U.S.-based customers have free access to EV Fleet Converter, which helps business owners and their managers determine which vehicles and routes may make sense to transition to EVs. In cases where it makes sense, like a sales rep driving a sedan and returning home to charge each night, there can be substantial savings for the business. As payments and charging infrastructure continue to evolve, you can analyze the use case and fueling strategy for each vehicle, and other components of the fleet – such as the age or model of vehicles – to provide a recommendation as to which vehicles to electrify and when, helping your small business understand the feasibility, costs, and benefits of electrifying a fleet. All you need to do is input information about your organization and current commercial vehicles in use, and the tool will do the rest.

6. Train your drivers

EVs operate a little differently from traditional ICE vehicles, which means training is important to ensure a successful EV adoption. When training drivers, start by covering EV basics such as:

• Charging best practices
• Range management
• Maintenance differentiations

Properly trained drivers will know how to best care for and handle their EV, thereby extending the service life of your vehicles and saving even more money in the long term.

The benefits of one resource for all your fueling needs

When you are considering adding EVs to your fleet of commercial vehicles the complexity of tracking costs might feel overwhelming. The good news is there are fuel card providers who have combined all your fueling data into one credit line, one invoice, and one set of reports for all your charging and fuel purchases. With a trusted fuel card provider offering options for mixed-energy fleets, you’re also provided insights into charging costs across different stations and times, allowing you to strategically pick stations for cost and time efficiency.

Companies like WEX have the tools in place already to make EV conversion easier for you. “We continue to hear from fleet managers and other business leaders that they need an alternative to handling multiple apps, credit lines, invoices, data sets, and interfaces in order to charge EVs. WEX’s continued mixed fleet innovation signifies a true commercial mixed fleet experience – offering integrated systems and reporting, access to quality chargers, fraud controls, and Level III transaction insights,” shares Jay Collins, SVP and GM of EV and Mobility at WEX. “Our hope is WEX’s consolidated solutions for mixed fleets will help small business owners feel more confident about managing billing, payments, discounts, a unified commercial fleet credit line, and reporting as they incorporate EVs alongside internal combustion engine (ICE) vehicles.”

Beyond electric: additional viable energy sources 

Beyond electricity, there are many renewable energy resources available including:

• Geothermal energy
• Solar energy
• Hydroelectric power
• Wind power
• Biomass energy

As we transform the ways that we work to build efficiencies and better position our businesses for sustainability, the options for renewable energy are vast and worthy of consideration.

Transition to mixed-energy and EV fleets more smoothly with a trusted fleet card partner

Simplify your energy transition with the WEX suite of EV solutions, designed to help get your mixed-energy fleet of commercial vehicles up and running with little fuss. 

WEX EV En Route

Through WEX’s DriverDash app and RFID card, WEX EV En Route leverages WEX’s proprietary closed-loop payments network to increase the security of each transaction and to transmit charging behavior, driver identification information, and vehicle mileage to the fleet manager. WEX’s DriverDash app and RFID are accepted across the U.S. at ChargePoint-branded EV chargers and at ChargePoint’s roaming partner brands: EVConnect, EVGo, and FLO, with additional accepting merchants expected in the coming months.

WEX EV At-Home

Along with EV En Route, WEX offers other innovative solutions to meet your EV business needs including EV At-Home. WEX EV At-Home is the cutting-edge solution for drivers who charge their business vehicles at home, automating driver reimbursement and reporting. Charging at home, overnight is also the most cost effective solution, according to AAA.

Find available stations with our WEX Connect mobile app; initiate secure, touchless charges with a WEX RFID, approve at-home charging sessions, and save time and money with direct driver reimbursement.

In September, we explored strategies for trucking companies to handle economic volatility, and in November, we delved into cost-saving measures for small businesses. In January we unveiled five straightforward tactics to maximize your benefits and bolster personal savings. In April we explored corporate payments technology and how to use it to your advantage when you want to streamline payments processes for your business. Today we talked about how to build efficiencies with a mixed-energy fleet. 

To learn more about EV solutions and mixed fleets, visit:

• EV FAQs
• How to best incorporate EVs into your fleet
• EV at-home charging
• EV en route charging

Apply for a fleet card today!

Resources:
U.S. News & World Report
U.S. Department of Energy
CA.gov
Efficiency Maine
CNBC
U.S. Energy Information Administration
Forbes
McKinsey

Editorial note: This article was originally published on November 15, 2023, and has been updated for this publication.