With the escalating price of fuel and the movement for businesses to "go green" continuing to pick up steam many businesses are looking for alternatives to traditional gas vehicles. Hybrids and propane/natural gas powered vehicles have been popular for years but some businesses are experimenting with reducing their fuel costs and “carbon footprint” even further by utilizing fully electric vehicles.
For example, FedEx is currently testing electric trucks for short haul urban deliveries and plans eventually to replace up to a third of its 500 vehicle fleet in New York City with electric vehicles (Forbes).
This article examines two electric passenger vehicles, the Chevy Volt and the Nissan Leaf. Is one of these electric drive compact cars suitable for your small business? Let’s find out.
The Chevy Volt and the Nissan Leaf are the first mass produced electric drive passenger cars offered by major automobile manufacturers. Technically the Nissan Leaf is a pure electric vehicle, whereas the Volt is a “range extended” electric car that has a small gasoline engine which can turn on when required to generate electricity for the electric drive motor, giving the Volt a much longer driving range than the Leaf. Both use advanced lithium ion battery packs which have 8 year/160,000 km warranties.
The main knock against electric vehicles (EVs) compared to their gasoline powered counterparts is purchase price. The 2012 Canadian base price for the Leaf is $38,395 + tax and the Volt clocks in at $41,545 + tax. U.S. pricing is nearly the same in U.S. dollars.
In contrast, a Toyota Prius Hybrid or Honda Civic Hybrid can be yours for $26,000, and both of these are proven hybrid designs. The Prius, for instance, came out in 1997 and over 1 million units have been sold worldwide.
Rebate Programs and Benefits
Unfortunately for businesses, the Canada Revenue Agency maximum Capital Cost Allowance for passenger vehicles is currently $30,000, well under the cost of either a new Volt or a new Leaf. Fortunately many provinces have electric vehicle incentive programs that provide substantial rebates.
In contrast to the $7500 federal tax credit for EVs in the United States, Canada’s EV rebate programs vary by province.
In Ontario the Chevy Volt is eligible for a rebate of $8,230, the Nissan Leaf $8500. Ontario is also introducing special green-colored license plates for electric vehicles that will allow EV owners to use the carpool lanes even when there is a single occupant in the vehicle.
In Quebec both vehicles qualify for an $8000 provincial rebate.
In British Columbia the LiveSmart program offers rebates of $5000 for both vehicles plus a $500 rebate for the installation of charging equipment. Interested buyers are advised to monitor the status of these programs as they are time and/or fund limited. For example, the Quebec rebates are available to the first 10,000 vehicles.
The other knock against electric vehicles is driving range. Nissan states that the Leaf has a range of 160 km (100 miles), but this is under ideal driving conditions. Real world EV range can vary greatly depending on weather and the use of accessories such as the heater, air conditioner, wipers, etc.
According to Consumer Reports' road tests the Leaf’s maximum driving distance can drop off to as little as 100 km (60 miles) in cold weather with the heater in use, and being a pure electric vehicle once the batteries are discharged the vehicle must be towed. (The onboard systems do provide plenty of warning when the battery charge is low.)
The Chevy Volt’s smaller battery pack gives it a gas-free range of 40 to 80 km as reported in road tests, after which the gasoline engine runs to generate power to drive the electric motor. The gasoline engine provides up to 450 km of additional driving range, making the Volt more suitable for businesses that have higher vehicle mileage requirements.
The Leaf is EPA rated at 106 mpg equivalent in the city and 92 mpg equivalent on the highway. The EPA rates the 2012 Chevy Volt at 94 miles per gallon equivalent in electric mode, meaning that one gallon of gas converted to electrical energy would equate to 94 miles (150 km) of driving. In gasoline mode the EPA rating is 37 mpg.
In comparison, the Toyota Prius has a combined city/highway EPA rating of 42 mpg.
If your business driving needs consist of short daily trips around town the Leaf or the Volt may save on fuel costs vs. a regular hybrid vehicle and certainly over a fully gasoline powered one.
A full battery recharge from a standard 120 volt outlet takes approximately 10 hours for the Volt and 16 for the Leaf. Charge time on the Leaf can be cut in half with a 240 volt charger, but this costs $2000 to install. The Lithium-ion battery packs in the Volt and Leaf have an 8 year/160,000 km warranty, and according to Nissan the battery can be expected to retain 80% of its initial capacity after five years of use.
Unfortunately there is growing evidence that the batteries fade more quickly with higher mileage or in warm climates, and battery degradation is not covered by the warranty.
Neither manufacturer is posting the replacement cost for the battery pack, but for the Leaf the manufacturing cost of the batteries is approximately $18,000. Unless replacement batteries get much less expensive EVs will have little or no resale value after several years of use.
As it stands, the Chevy Volt and Nissan Leaf are prohibitively expensive for most small businesses.
Even with the various rebates and incentives, a proven hybrid vehicle such as the Prius costs thousands of dollars less than either the Leaf or Volt, and has none of the range limitations or charging issues. Until battery technology can be improved and greatly reduced in cost, electric cars are likely to remain as niche vehicles.
This is reflected in sales numbers, which have been disappointing. The Volt went on sale in the U.S. in early 2011 and approximately 8000 Volts were sold in the entire year. The Leaf did slightly better with approximately 10,000 sold in 2011.
Electric cars may be the vehicle of the future for small businesses, but the future isn’t here yet.