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What’s in a TCO for Electric Fleets?

January 23, 2020

5 min

A roadmap to looking at various moving pieces in electric vehicle total cost of ownership for your fleet.

(Featured Article -- FleetOwner)

When it comes to commercial electric vehicles, there is no one size fits all formula for calculating total cost of ownership (TCO). That said, fleet operators certainly want and should be taking a close look at the ROI of going electric, so we’ll lay out 5 primary cost components that decision makers should consider.

There will be familiar line-items like the price of the vehicle, charging stations, and the cost of fueling and maintenance. However, electric fleets will also include factors such as government incentives, environmental impacts, and long term “soft” benefits like corporate image and driver satisfaction that impact the TCO calculation. We’ll take a closer look at a roadmap for these cost calculations.


It makes sense that TCO calculation starts with the price of the equipment itself. Over the years, battery technology has improved allowing electric vehicles to become increasingly cost competitive to diesel powered vehicles. In 2018, the North American Council for Freight Efficiency (NACFE) estimates the baseline MSRP for a Class 3 electric vehicle is $80,000. The MSRP will be higher for higher classes of vehicles: Tesla announced starting prices of $180,000 for a 500-mile range electric semi-truck, and electric transit buses could run from $700,000 to upwards of a million dollars.

As with traditional fleets, part of the vehicle cost comes down to drive and duty cycle. Factors like routes and temperature in which the vehicle will be operating, typical load profile, average daily miles the vehicle travels will directly impact the range and performance, thus the type of vehicle and battery size to purchase.

Along with the initial purchase price is the cost of maintaining the vehicles. There is the potential for significant savings on maintenance cost for electric vehicles, being an estimated 25% lower than that of diesel powered trucks. One reason is that electric vehicles can have fewer moving parts, including things like fuel injection systems, exhaust gas after treatment systems, and clutches. They may also extend preventive maintenance schedules for brakes and tires since the use of regenerative braking systems should result in less wear.

At the same time, electric vehicle owners have to consider battery replacement as a component of maintenance. The lifespan of the battery depends on factors such as its operating ambient temperature, charge and discharge levels, and how fast you charge the battery. The general consensus today is that batteries will need to be replaced once they can no longer be charged beyond 80% of their original capacity. As battery electric vehicles gain acceptance and see more widespread use, the cost of batteries will come down as well.


A major consideration for electric fleets is the cost of charging infrastructure, namely charging stations and the electrical upgrades that come with it. Fleets typically work with either Level 2 Alternating Current (AC) chargers or Level 3 direct current fast chargers (DCFC), both of which may require upgrading electric transformer and distribution lines at your facility. Level 3 chargers provide much faster speed of charge - but the cost difference could be significant.

NACFE estimates Level 2 chargers will run $5,000 to $7,000 per unit while DCFCs may cost $35,000 per unit and higher. In either case, it is recommended for fleets to consider investing in ‘smart’ or ‘networked’ chargers. These provide the ability to remotely monitor, control and collect data on your charging equipment and EVs - a key ingredient to understanding the performance of your electric fleet.

Infrastructure costs will vary based on location and the existing electric infrastructure, especially when it comes to labor and installation. What’s critically important is to get your local utility company involved in this process — doing so sooner will ensure a timely and more informed process that minimizes surprise costs. They may also be able to provide resources and guidance on how to go about procuring your electric vehicle supply equipment (EVSE).

The type of EVSE you need depends on factors like fleet size, battery capacity of the vehicle, and how much electrical load your facility can handle. Important operational aspects like how long the vehicles need to run, dwell times, and scheduling and routing will help inform the charger needs. Be sure to take the long-term perspective on EVSEs, since charging stations usually don’t get changed even when vehicles are replaced and sold. That also means the cost of charging infrastructure should be amortized so that the amount is spread across several generations of vehicles.


Fueling costs are another significant factor - in fact the American Transportation Research Board estimates it currently represents 22% of all operational costs for a traditional fleet. However, managing the operational expenses when it comes to fueling an electric vehicle is much different from that of traditional fleets. Gas and diesel prices do fluctuate but typically do so on a weekly basis. With electric charging, the cost of electricity can change rapidly on the hour of day, with prices spiking up to 200 times higher during peak demand hours. Managing the charging of electric vehicles can have a significant impact on what a fleet’s charging costs will be. Fleet operators can get ahead of understanding energy cost impacts by taking advantage of electrification calculators and resources on websites like

What may come as a surprise to fleet owners is that EV fueling costs can change significantly based on how efficiently the battery dispenses energy. Extreme temperatures impact an electric vehicle’s range, though recent reports from the U.S. Department of Energy suggests that manufacturers are improving temperature control technology. In addition, there are things EV drivers can do to improve the efficiency of their vehicles including using accessories wisely, pre-heating or pre-cooling the cab and avoiding hard braking. Fleets need to answer questions about battery efficiency and expected life of the batteries to have a complete picture of what it will take to charge them.


With government encouraging adoption of zero emission vehicle technology, there are grants, incentives or tax breaks available to soften the financial blow of transitioning to electric fleets. These financial incentives should be factored into the cost equation as they could represent thousands of dollars of savings depending on the size of your fleet. For example, carbon credits or offsets may be available to fleets looking to adopt electric vehicles. The goal of the U.S. carbon credit program is to limit the release of greenhouse gas emissions, with an incentive system that could be used to reduce the cost of setting up electric vehicle charging stations.

Other programs like the Low Carbon Fuel Standard (LCFS) first enacted in California can actually help fleet operators realize revenue opportunity. It’s a reliable way to subsidize costs of purchasing electric fleets and charging infrastructure, with some fleets even seeing the credits cover all of their electric fueling charges. Many other States including Oregon, New York, Washington, Minnesota, Iowa and South Dakota, as well as the British Columbia are now offering or will soon adopt similar programs. More information on California's LCFS can be found at

Finally, government financing like California’s Electric Vehicle Supply Equipment Loan and Rebate Program provides loans for the design, development, purchase and installation of electric vehicle supply equipment for small businesses. The maximum loan amount is $500,000 per qualified business. Details can be found at


Other considerations include soft costs that aren’t rigidly defined, but do impact long-term operations. Each fleet has to determine which components to include in its calculation, some of which may look like:

  • Driver and technician retention costs
  • Emissions compliance costs or credits
  • Improvements to brand image
  • Length of time to upgrade electric infrastructure
  • Changes to other overhead factors such as employee training

In addition, the fleet needs to determine how long it plans to keep the vehicle and then project what its value will be at trade-in. This can be challenging at the moment since the data on life cycle of deployed electric vehicles are still lacking to establish a baseline for residual cost trends. Determining the TCO for electric vehicles can be tricky with several of the factors still highly variable. Evaluate the impacts most relevant to your fleet when calculating TCO and consider the long-term perspective to have a better understanding of the investment.

About the Company

Electriphi, Inc. is a developer of EV fleet and energy management solutions. It offers a charging and operations management platform that saves energy costs and simplifies the transition to electric vehicle fleets. The company is based in San Francisco, CA with offices in San Jose. Find out more at

Article was originally adapted and published by Fleet Owner magazine. Read more here.

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