fbpx

UPDATE ON CORONAVIRUS (COVID-19) MEASURES: We value our business relationships and want to assure you that we are here to help you through the COVID-19 challenges. Please read our CEO’s message on steps United Leasing & Finance is taking to address the impact of the virus on our customers.

THE TRANSPORTATION INDUSTRY

Top 5 Factors to Consider Before Purchasing an EV

A guide to what you should think about before making the switch

When buying a new vehicle, there are a lot of different factors to consider. But when deciding to make the switch from a gas-powered vehicle to an EV (electric vehicle), there is even more to think about. Whether environmental concerns are leading you to look at different options or the cost savings potential are drawing you in, here are factors you should keep in mind when considering whether EVs are right for you or your business.

Range

According to a Geotab study of more than 400,000 light-duty fleet trucks in the U.S. and Canada, half of all the light-duty trucks were never driven more than 280 miles in a single day over the course of a year. Across all EVs, most have a range around 300 miles before they need recharging, and the Geotab study found that 76% of the vehicles never drove more in a single day than the range on many electric pickup trucks coming to the market soon.

When thinking about the range you might need in an EV, it’s important to look at your actual driving habits, not the driving habits you aspire to have. Is most of your driving in the city or on a highway? Will this vehicle be used often for long trips? How many miles do you drive on an average day? Other variables that can affect range are climate and towing. Extremes in temperature on both ends of the spectrum — cold winter days and scorching summer heats — can negatively impact EV range and battery life. If you’re needing to use EVs for towing, prepare for your battery range to significantly decrease as you add more weight. Just as towing lessens a gas car’s fuel economy, it also will diminish an EV’s battery life. In an interview with Autotrader, a spokesperson for Rivian stated that a trailer loaded to the full 11,000-pound capacity reduces their R1T pickup truck range by about 50%.

Rivian R1T
Rivian R1T

Charging

When it comes to charging an EV, it’s not as simple as just plugging it in. All EVs come with a Level 1 charger that plugs into a standard home outlet and can charge up to 6 miles per hour. If drivers want faster charging at home, they can have a Level 2 charger installed for a charge of up to 25 miles per hour, but installation often requires hiring an electrician. If drivers don’t have a private parking space and rely on street or public parking (or they just want a quick charge on the go), they need to determine if there is a public charging station nearby. Level 3 chargers are available at public charging stations and can charge up to 125 miles in 15 minutes for a price per minute.

Commercial fleet companies might consider adding charging stations to their business location for fast, efficient charging of electric fleet vehicles. This isn’t an option for all business owners, though, especially if they are leasing their business location and don’t have support from their property owner to install the infrastructure.

Cost

Many EV buyers hope they will save money in the long run, but calculating how much they will actually save varies widely with each situation. Across the market, the average vehicle in the U.S. right now costs about $46,000. While the average price right now for an EV in the U.S. is about $60,000. Tax credits can help offset some of the cost, but incentives vary based on the state. On average, people can anticipate getting about $7,500 in tax credits. If you buy in the right state, though, tax incentives can be $10,000 or higher.

When it comes to calculating savings of electricity versus gas, it can be even trickier. Kelley Blue Book breaks down potential costs by using a simple formula. Calculate the price you pay per kilowatt-hour by dividing the total of how much you paid in a month by the number of kilowatt-hours you used. On average, U.S. households pay nearly 14 cents per kilowatt-hour, and a conservative rate for EVs is 3 to 4 miles per kilowatt-hour.

Using this formula and looking at a vehicle that is being driven 1,000 miles each month, divide the total number of miles (1,000) by the miles per kilowatt-hour the EV gets (3) to get the amount kilowatt-hours used in that month — about 333 in this example. If it costs 14 cents for each kilowatt-hour of electricity, the electric bill for charging an EV at home would be about $47 a month. On the flip side, with an economical car that gets a combined average of 30 miles per gallon with a mix of city and highway driving with a 12-gallon tank, it would need to refuel a few times a month at least. Estimating an average cost of gas at $4.75 per gallon, the monthly fuel expense would be about $171.

For public charging stations, the cost is hard to calculate compared to the cost of charging at home or at a business location since public charging stations vary in price, charging level, and availability. Overall though, public charging stations tend to be more expensive than charging at a private home or business location.

Another cost many don’t consider when comparing EVs to gas vehicles is the cost of insurance. On average, it costs 23% more to insure an EV than a gas-powered car due to their typically higher purchase costs and the high cost of EV battery packs.

EV Charging Sign for fleet blog

Maintenance

EVs typically require less maintenance than gas vehicles, with fewer moving parts. Friction brakes also don’t suffer the same wear and tear as they do on gas-powered cars since EVs have regenerative braking to assist. EVs still need tire rotations. Especially since EVs typically weigh more due to heavy battery packs, so tires might wear faster than on gas-powered cars. Replacing an EV’s battery can be costly, but federal regulations require warranties to cover EV batteries for a minimum of eight years or up to 100,000 miles, though some companies and states require longer warranties.

Availability

Even if you’re on board for EVs and ready to make the leap, it’s not always that easy. By the time new models hit the market, there is usually already a long waitlist that could take as long as 2 years before buyers receive their vehicles. Some people may not be phased by the wait time, but it’s important to keep in mind when considering potential savings. If a main motivator to switch to an EV is fluctuating gas prices, you’re not protecting yourself from the current gas prices. By the time you actually receive the vehicle, gas prices could be in a totally different place.

At the end of the day, making the choice between an EV and a gas vehicle is a decision that only you or your team can make. If you’re not considering it now, you will at some point in the future. The pros and cons are drastically different for each situation. For some, the lure of being an early adopter to new technology is enough to make their decision, while for others, the cost is going to be the deciding factor. What is undeniable is that EVs are here to stay, and the technology and benefits are only going to improve. For now, though, it’s important to look at all the variables to determine if EV is right for you right now.

About United Leasing & Finance

United Leasing & Finance is a customer-focused and growth-oriented leasing and finance company committed to providing custom financing solutions to businesses across the U.S. and Canada. For more than 60 years, they have partnered with clients to achieve mutual success from small businesses to Fortune 100 companies and has been financing in the fleet space from the beginning. United is also a proud member of the NAFA Fleet Management Association and the International Franchise Association (IFA).