Business Brains

Rising fuel prices push businesses to reconsider fleet options

Posting in Energy

While electric and hybrid vehicles continue to resist mainstream appeal, more fleet operators are weighing their total cost of ownership benefits.

While electric vehicle sales to mainstream consumers continue to disappoint green enthusiasts and automakers, rising fuel prices could inspire more businesses to consider them for corporate fleets, according to a new report by Pike Research.

U.S. gasoline prices continue to hover around $3.80, which is forcing more companies and fleet operators to consider alternative fuel choices when faced with acquiring new vehicles, according to Pike's "Total Cost of Ownership of Alternative Fuel Vehicles for Fleet Operators" report.

While the upfront costs of buying these vehicles usually represents a premium, more fleet operators are looking more closely at the lifetime costs of these acquisitions, the Pike Research analysis shows.

That is promoting more fleet operators to consider midsize hybrid, plug-in hybrid and battery-electric models. These vehicles will offer a total cost of ownership over 120,000 miles, but not if the mileage is under those levels. "With $3.50 per-gallon gasoline, alternative fuel vehicles will provide payback in fleets that do a lot of driving," said Pike Research senior analyst Lisa Jerram.

The other trend you're like to see in corporate fleets is a push for small vehicles, regardless of the fuel type. That is the size that offers the lowest total cost of ownership, regardless of whether the fuel source is gasoline, hybrid or compressed natural gas. Pike Research isn't all the positive about the prospects for flex-fuel and stop-start vehicles, primarily because there are a limited number of models available.

Most of the fleet efficiency and clean fleet news that I see focuses on news related to larger vehicles, but the debate over gasoline prices could prompt more companies to reconsider their clean fleet initiatives related to small vehicles (rather than the vans and trucks being deployed by the likes of AT&T, Verizon, Coca-Cola and FedEx).

One example of a company that is already researching its options is Best Buy, which manages a fleet of approximately 5,000 cars that are used by the company's 20,000 Geek Squad agents.

Over the past two years, the company has reduced is carbon emissions from fuel use by 21 percent through decreased engine sizes, and by choosing the most fuel-efficient vehicles available. It has eliminated ones that weren't efficient and is testing both propane and electric vehicles (such as the Mitsubishi models shown below).

Best Buy joined the National Clean Fleets Partnership in March 2012, and I imagine you will continue hearing about more support of this initiative from businesses that are feeling the pinch at the pump.

Related stories:

Share this

Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure