The Hidden Costs of Transitioning to Electric Vehicles

In the transition to electric vehicles, the term “you can’t put the cart before the horse” is often used. It can be easy for elected officials to come up with an order requiring EVs by a certain year when they don’t know what all that entails.

That’s not to say these government leaders don’t know what they’re talking about. But the process is more complicated than simply buying a vehicle powered by a lithium-ion battery and the infrastructure to charge it.

Any fleet manager who has gone through the process will tell you it’s far more intricate than it seems on the surface. And it’s also far more expensive.

In a September 2023 Government Fleet article, two longtime fleet managers responded to a report by the Arizona Public Interest Research Group Education Fund and Frontier Group on the projected cost savings public sector fleets could see if they electrify their light-duty vehicles. To sum it up, their response was, “it’s not that simple.”

After reading that article, Santa Clara County, California, Fleet Manager David Worthington sent us a list breaking down many of the costs associated with the transition, which those who are not in the thick of the process might not expect. Santa Clara County began adding passenger EVs in 2014, but it had electric vehicles long before then. In 1990, the county added small electric carts. Then in 2002, the county progressed to neighborhood electric vehicles.

To help fleet managers who plan to make the switch, we’ve compiled a list of some of the costs fleet managers may not expect:

• Building modifications, extensions, and occasionally building new fleet facilities entirely to meet OSHA and other safety requirements to protect workers: There are requirements for the amount of space that surrounds an area where an EV is being worked on or parked. If a building cannot meet this requirement, fleet managers must adjust by either modifying their existing facility, extending it, or building a new one altogether. This can cost millions of dollars.
  
  Similarly, there are safety requirements for the storage of new, used, and damaged EV motive batteries that require facility layout changes. These can include air evacuation systems, chemical flooring covering, minimum distance requirements from any other metal in the vicinity, electrical infrastructure, or work bays.
  
  This can result in a loss of work bays due to the additional spacing requirements. Fewer bays can lead to less work that is able to be done on multiple vehicles at a time.
   
• Quarantine locations for damaged EVs are required: These locations require a 50-ft. radius of clear area between the vehicle and the next closest object to prevent an EV fire from causing a fire on another object.
   
• Vehicle recalls on EVs: Many of these are software related. EVs are heavily software-dependent to operate. A recall on an EV requiring a software fix can lead to downtime within a fleet operation.
  
  Additionally, a single recall that requires a vehicle to be towed to and from a dealership can erase the annual cost saving differential of electricity as a fuel when compared to gasoline or diesel, depending on the vehicle type and distance to a dealership. The towing costs are even higher when the vehicle being recalled is a medium- or heavy-duty vehicle, and dealerships for these vehicles are often further away.
   
• Charging infrastructure is not cheap: You can’t have an EV without an EV charger. For Santa Clara County, the current average installation cost for Level 2 stations including the cost of the station itself is $31,000 each. The project average installation cost of a DC charging station including the cost of the station is $185,000 each.
  
  In addition to the high installation costs, you may have to redistribute electricity loads at facilities where you are installing EV chargers, which can take time.
   
• Electricity as a fuel can cost significantly more than what is typically estimated in reports: Demand, or ‘Time of Use’ costs when your electricity consumption is higher than a facility’s allotted amount can exceed the cost of gasoline or diesel for the vehicle to travel the same distance.
   
• Acquisition costs are higher: They vary between 1.5x to 5x depending on the vehicle class and type, with Class 7 and 8 vehicles being the most expensive.
  
  Another thing to consider: some OEM electric trucks do not allow the motive battery to supply electricity to auxiliary equipment added to the vehicle, which then requires a second auxiliary battery to support the equipment. Auxiliary batteries also need to be recharged and require a second charging station next to one that is used to recharge the vehicle motive battery, adding to the cost of the EV.
   
• There are ongoing annual costs for repairs and maintenance of EV charging stations: The cost of purchasing and installing charging stations is not a one-and-done payment. Software, extended warranty, and repair program annual costs can exceed $500 per charging station port.
   
• Mechanic/technician training costs are higher: Every year, workers who may be exposed to electric shock must receive annual contact release training per the NFPA 70E regulation.
  
  OEMs offer training on their vehicles. This is especially useful for learning about the newer technology that powers EVs. But the travel cost to get to the centralized OEM training locations add up.
  
  Furthermore, there are very few mechanics/technicians that have the training, knowledge, skills, and experience to work on EVs, particularly medium- and heavy-duty trucks. This requires fleets to start from ground zero when training.
   
• Changes or replacements to vehicle lifts are required: Hard-wired lifts need to be replaced with battery-operated units with Wi-Fi or radio frequency controls to prevent an arc flash from damaging the facility’s electric infrastructure.
   
• EV collision repair costs are typically much higher than ICE or other alternative fuel vehicles: Insurance companies are more likely to “total” an EV if the battery module has sustained any damage.

While a list like this can be overwhelming, it’s not meant to deter you from transitioning to EVs. Rather, it’s meant to help you plan for the funding required with the transition.