State governments across the country are increasingly turning to electric vehicles (EVs) as a way to reduce air emissions, and save taxpayers millions of dollars in the cost of fueling, maintaining and operating state-owned motor vehicles. EVs also allow state fleets to switch from imported fossil fuels to homegrown sources of renewable power, offering a path to bolstering local economies and energy security.
Unfortunately, the process by which state governments determine what kinds of vehicles to buy is often outdated, not accounting for some of the financial benefits EVs provide over the useful life of the vehicle. The cost to power an EV with electricity can be considerably lower per mile than fueling a vehicle with gasoline. EVs also have fewer parts – leading to fewer mechanical problems – and overall financial savings for drivers. These financial advantages aren’t captured by the traditional purchase determination that states typically rely on when buying a vehicle for its fleet.
How much of a difference can this make? A new report from Advanced Energy United drawing on publicly available data about average fuel costs and vehicle efficiency estimates that the state of Indiana could save $62.4 million over 15 years with its 7,600 vehicle fleet by changing its vehicle procurement process. Indiana currently makes purchasing decisions for its fleet based primarily on the manufacturers suggested retail price (MSRP) alone, but up-front costs are just part of the picture. Vehicles within the same class can vary considerably in terms of the cost to fuel and maintain them. An analysis that factors in a vehicle’s total cost of ownership would lead to more financially savvy purchasing decisions and save Hoosier taxpayers many millions of dollars.
The new report shows that, over a 15-year span, the lower operating costs of EVs could generate significant savings for the state, even when weighed against the most conservative estimates of the upfront price differential, like assuming a $10,000 difference in MSRP and a $5,000 cost to install a separate charger for each EV. The estimated savings of $62.4 million do not include additional savings from EV tax incentives like those in the federal Inflation Reduction Act, which offer direct pay of up to $7,500 to businesses and tax-exempt organizations including state, tribal, and local governments for the purchase of EVs under 14,000 lbs.
Several states, such as Nevada and Virginia, recently updated their fleet procurement processes to incorporate a more complete picture of vehicle costs. By considering the total cost to power and maintain a vehicle over its lifespan, these states will generate significant savings over time. Indiana already recognizes the economic benefits of alternative fuel vehicles in many state policies. Over the past few years, Indiana has cultivated private investment to become a hub of EV-related manufacturing, joined a regional memorandum of understanding to encourage regional collaboration on EV charging infrastructure and policies, and developed state plans to support their growth. The Indiana Department of Transportation will also be allocating almost $100 million toward the installation of EV public chargers across the state as a part of the National Electric Vehicle Infrastructure (NEVI) program. Taken together with the commitments of all major auto manufacturers to shift to zero-emission vehicles over the coming decade, the state can expect large growth in the number of EVs on the road. These changes will make it even easier for Hoosiers to purchase and operate EVs over the coming years, but updating its fleet procurement processmeans Indiana taxpayers stand to gain tremendous savings.
Indiana can take better advantage of these investments in the industry by empowering state government fleets to lead by example.
Learn more about United's work advocating for clean energy and electrified transportation in Indiana.