What Is The Return On Investment For EV Chargers?
The return on investment of installing EV chargers depends on a number of different factors.
Location of charging stations
Keeping vehicle downtime low is a priority for fleets. This means avoiding lengthy detours by locating your EV charging stations close to major routes and depots.
Difficult access also causes delays and damage. If you manage a fleet of heavy trucks or buses, ensure your charging stations are as robust as possible and have ample space for maneuvering and charging several vehicles at once.
For rideshare fleets, place charging stations where drivers frequently end rides or wait for new passengers, such as business districts, airports, train stations, shopping centers, or entertainment districts.
Pricing Strategies
- Flexible Pricing Models: Utility companies offer different rates based on the time of day, so fleets can save money by using low-cost windows for charging.some text
- During peak hours, when electricity demand is high, rates go up.
- Off-peak hours, usually at night or during midday lulls, offer lower rates.
- Operational Adaptation: Keep an eye on your vehicle usage patterns and charge when it costs less, without disrupting service.
- Pricing Agreements:some text
- Subscription-Based Pricing: Some providers offer plans where you pay a set rate per month or quarter. This is useful if your charging needs are consistent, as it helps you predict your monthly expenses and simplifies budgeting.
- Fleet-Specific Agreements: Larger fleet operators often negotiate custom pricing with utilities to get better rates based on usage.
Usage Rates
The more consistent you are with charging and using your EVs on the road, the quicker you’ll recoup your initial investment.
Fleet charging management software helps you keep your EVs on the road as much as possible without ramping up excessive charging costs. The software syncs with your daily operational needs and dynamically schedules charging to suit. In other words, your EVs charge at cheap times (avoiding peak rates), while fitting your schedule and minimizing vehicle downtime.
Formula to Calculate ROI
The general formula for calculating ROI is:
ROI = (Total Revenue - Total Cost) / Total Cost x 100
To work out the total revenue, you need to add up income from all your charging station operations, including charging fees, partnerships with other fleets, or advertising revenue. You should also include revenue from your fleet-specific services, such as priority charging for buses or trucks.
To work out the total cost, factor in installation costs of the high-capacity chargers needed for commercial fleets. You should also include operating costs, such as energy used during peak time and maintenance costs, which might be higher if you’re using fast-chargers.
For example, let's break down an ROI calculation for a typical bus fleet.
- Calculate Total Revenue:some text
- Revenue from operating buses is $500,000.
- Let's say we partner with other fleets who use our charging stations, which brings in $200,000 a year.
- Plus, we make $50,000 from advertising on our charging stations.
- So, our total revenue from these sources would be $500,000 + $200,000 + $50,000 = $750,000.
- Calculate Total Costs:some text
- Suppose the installation of high-capacity chargers cost us $500,000.
- Operating costs, including energy usage, comes to $150,000 annually.
- Maintenance of these chargers costs us another $50,000 a year.
- Thus, our total costs amount to $500,000 + $150,000 + $50,000 = $700,000.
- Calculate ROI:some text
- ROI = (Total Revenue - Total Cost) / Total Cost * 100
- ROI = (750,000 - 700,000) / 700,000 * 100
- ROI ≈ 7.14%
In this example, the bus company gets around 7% ROI after covering all costs, which means that the operations are profitable.
How to Estimate Fleet Electrification Savings
One of the best tools you can use to estimate the savings you’ll make by electrifying your fleet is the AFLEET tool from the Department of Energy’s Technology Integration Program. It uses detailed energy, emission, and cost data to help calculate your fleet's environmental and economic impact. The tool automatically assesses the total cost of ownership (TCO), compares different fuel types, and calculates the payback period for your EV investment.
A UK government report revealed that the energy cost of running an EV over the life of its battery is 75% less than fuelling a petrol or diesel car. EV maintenance costs are also 40% lower than ICE (internal combustion engine) vehicles.
Tax Incentives and Funding for EV Charging
- Inflation Reduction Act (IRA): In the US, the Inflation Reduction Act (IRA) means you can get a 6% federal tax credit for each charger you install. You can claim a maximum of $100,000 per charger, through 2032.
- State and local grants: These vary by location, but they can really help cut the upfront costs of charger installation, especially in underserved areas or public transit fleets. They help you offset the initial investment, making it easier to get your charging infrastructure up and running.
- Additional funding for fleet-specific infrastructure: If you’re thinking about electrifying your public transit or heavy-duty truck fleet, there are grants available to help cover the costs. If you incorporate smart charging systems that manage your fleet’s energy demand, you might qualify for further rebates too.
It’s worth taking the time to explore the state-specific benefits available to you. Some states offer additional incentives on top of federal ones
A great tool to help you navigate all this is the US Department of Energy’s Alternative Fuels Data Center. It offers detailed info on what’s available in each state, so you can see exactly what you qualify for. Stacking up federal, state, and local incentives maximizes the financial benefits, while reducing your upfront costs.
Long-Term Cost Savings Associated with EV Charging Infrastructure
EVs tend to have a lower TCO than ICE vehicles for the following reasons.
- Commercial fleets: EVs have fewer moving parts than ICEs, which means lower maintenance costs over time. You don’t have to worry about things like oil changes, transmission repairs, or exhaust system issues. Plus, as fuel prices continue to rise, the savings on fuel for high-mileage trucks really add up.
- Public transit systems: Fuel and maintenance savings lead to lower operational costs over the lifespan of the vehicles. This helps with budgeting and makes your fleet more reliable, with fewer breakdowns, more uptime, and improved service quality.
Immediate Cost Savings
Making the switch to EVs can start paying off right away, especially in terms of fuel costs. For large fleets, these savings add up fast, which add to your overall ROI.
Smart charging management software, like Ampcontrol, takes the savings even further, reducing energy costs by up to 45% for commercial fleet customers. It optimizes charging schedules to take advantage of cheap energy prices. It also integrates with telematics and route planning systems to charge your EVs based on their schedules, cutting down on wasted energy.
Demand management also keeps costs down. Managing the charging load carefully helps avoid peak demand charges. Ampcontrol is ideal for load balancing across multiple charging stations, preventing grid overload and any fees that come with it.
Increasing Property Value with EV Charging Stations
If you run a logistics hub or bus depot, having EV charging infrastructure in place is a major selling point. Fleet operators actively look for locations that support EVs, so properties with charging stations are desirable. This can lead to quicker and higher rental income or sale prices.
Commercial real estate investors are also drawn to sites with EV charging stations. As the demand for EVs grows, properties equipped with charging stations are future-proofed and positioned to generate long-term financial benefits.
Properties near urban areas or major transportation routes with EV charging stations are in high demand. This means real estate investors are starting to partner with fleet operators to offer dedicated charging facilities, which enhances your property value and generates steady revenue.
Other commercial property owners that benefit from EV chargers include:
- Warehouses: Attract logistics companies needing to charge delivery trucks.
- Public parking facilities: Cater to rideshare vehicles.
- Office buildings: Draw in tenants with fleet vehicles.
- Multifamily housing: Attract residents with EVs.
Keep Your Costs as Low as Possible with Incentives and Smart Charging
If you’re still worried about the costs of setting up EV chargers, tax incentives and rebates really knock them down. It means you don’t need as much upfront cash and you might realize a positive ROI sooner rather than later. Rebates and grants also help with the ongoing running costs.
Smart fleet management systems are another great way to cut costs even further. They help you to charge smarter by optimizing your schedule around periods of low energy prices.
Find out how Ampcontrol can boost your EV charging ROI – book a demo.
