The startups say their conversions will make economic sense for fleet customers because they drive greater distances over a year than ordinary consumers, and see higher annual fuel and maintenance costs (roughly 30,000 to 100,000 miles a year, compared to about 15,000 on average). In addition to improving fuel economy by between 15 and 100 percent, these conversions will cut costs to fleet operators because the electric motors help with braking, reducing wear on brake pads. The conversions could be particularly attractive to cash-strapped states and cities that can’t afford new vehicles, but want to save fuel and reduce emissions, Fazen says.
Advocates say these businesses could help increase the impact of hybrids and plug-in hybrids by targeting vehicles that are already on the road–cars that otherwise could be in usefor over a decade before they’re replaced by more efficient models. Targeting fleet vehicles helps, since they’re driven farther.
Fleets are “a solid market to go after,” says Eric Fedewa, vice president of global powertrain forecasts for analyst firm IHS Automotive, in part because fleet managers are willing to pay extra up front to save on per mile expenses, the figure that ultimately matters most to them. Savings on maintenance is particularly important, he says, since the time a vehicle is off the road can cost a company potential revenue.
There are plenty of fleet customers, says John Thomas, CEO and founder of Alt-e. “We’re talking to 55 customers with a potential sales list that amounts to 802,000 vehicles.” He says the company hopes reach 90,000 conversions within three years, which would save over 100 million gallons of gas a year. That’s still a drop in the bucket, in terms of addressing total worldwide petroleum consumption, as there are now nearly a billion cars on the road.
If the conversion companies are successful, it could spur investments from major automakers in developing their own hybrid and plug-in hybrid fleets vehicles, says Oliver Hazimeh, a director at the consulting firm PRTM . “If they see some fleets converting, I think automakers will take notice,” he says.
There are already signs that major automakers are interested in producing advanced vehicles for fleet customers. Ford is planning to offer an electric version of its Transit Connect, which can serve as a small delivery van. Recently GM announced a partnership with Bright Automotive, which is developing a plug-in hybrid van designed specifically with fleet customers in mind. There are similar efforts by other automakers, such as Renault.