The cost of producing electric vehicle batteries and the reliability of certain electric vehicle batteries are two factors that are hurting electric vehicle adoption among commercial fleets. -...

The cost of producing electric vehicle batteries and the reliability of certain electric vehicle batteries are two factors that are hurting electric vehicle adoption among commercial fleets. 

Photo by Eric Gandarilla. 

Electric vehicles currently hold a tiny presence among corporate fleets, and a large factor driving that fact is the high price tag that comes with an electric vehicle.

Current sales of electric vehicles are largely driven by incentives, and while incentives help move the metal on the new-vehicle front, they have a negative effect when it comes to residual values.

Their small presence among fleets also means that corporate fleets aren't currently remarketing many electric vehicles and the electric vehicles that are making it to auction are being met with high depreciation.

Remarketers from four fleet management service companies discussed the state of electric vehicles among fleets and where they expect the segment to be in the coming years with Vehicle Remarketing.

Electric vehicles currently comprise less than 1% of the overall vehicle fleet in the U.S., according to Darrin Aiken, AVP of Vehicle Remarketing for Wheels.

"A commercial client will go to the cheapest cost to satisfy the need," Aiken said. "If gas is around where it is right now, in the $2 gallon range, clients won't look at electric vehicles much unless they have a green initiative. Manufacturers should continue to sell electric vehicles to see how that technology changes but right now a lot of our clients aren't buying them. That's not to say electric vehicle presence won't eventually grow, but it's not there yet."

The future of electric vehicles among fleets will be primarily reliant on the pace that battery technology is able to advance at, noted Alex Fraser, general manager fleet management services for Cox Automotive Mobility and Chris Clarke, manager, North American Remarketing for ARI.

Clarke noted that as the cost of batteries goes down, the cost of the vehicles will also go down, as the large part of an electric vehicle's cost is directly tied to its battery. Battery reliability also needs to be improved, Clarke added, as a reason that certain electric vehicles don’t do well at auction is because they have a reputation of having batteries with a relatively low lifecycle.

As battery reliability improves and buyers are more comfortable with the longevity of what they're buying, resale value growth should also follow.

"Certain EVs have much better documented battery holding power," said Fraser. "Vehicles with batteries that hold battery well continue to sell well. Tesla in an open market will bring good money. Other EVs that hold their battery well also perform well. We've all experienced the depreciation electric vehicles live with. That puts pressure on manufacturers, not just around cost be reliability. The way people use these vehicles, they need the car to work."

Hybrid-Electric Vehicle Presence

While pure electric vehicles are struggling to find their footing among fleets, hybrid electric vehicles have seen more success.

Jeffrey Perkins, general manager, fleet operations for Motorlease Corp., said that Toyota comprises a large percentage of his company's portfolio. And among those Toyota vehicles, hybrids account for a fair percent, he added.

"With Toyota in particular, we've moved a lot to hybrid versions," Perkins said. "The cost to buy these cars has gone way down so we're seeing good residual values. The residual values for Toyota hybrid have gotten to the point that they make up for the initial cap cost. They have worked for us."

Originally posted on Vehicle Remarketing

About the author
Eric Gandarilla

Eric Gandarilla

Senior Editor

Eric Gandarilla is a former Bobit editor who worked on Automotive Fleet and Vehicle Remarketing.

View Bio