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Fleets Can Improve Fuel Economy 5-40% by Making Switch to Hybrid Vehicles

Fleet operators are finding that hybrid electric vehicles (HEVs) can help them cut fuel costs and meet emissions-reduction targets, according to a new report from Pike Research.

A key finding shows that commercial and government fleet managers can improve fuel economy between five percent and 40 percent and lower emissions 10 percent to 50 percent below comparable vehicles with internal combustion engines (ICEs).

Pike’s researchers forecast that the global market for HEV light-duty (LD) vehicles in the fleet sector will increase at a compound annual growth rate (CAGR) of 17.5 percent from 2010 to 2015, with vehicle sales surpassing 740,000 per year by the end of that period.

The U.S. is expected to be the largest fleet market for LD HEVs through 2015, with vehicle sales of 233,454 vehicles, an 8.1 percent CAGR from 2010. Global HEV fleet sales will reach 740,704 vehicles in 2015, representing nearly 4 percent of global LD vehicle sales.

However, there are still some economic challenges associated with hybrid vehicles, says Pike’s senior analyst Dave Hurst. “Lifetime costs for HEVs, including the cost of the vehicle plus fuel, can often be higher than ICE vehicles. However, a number of government incentives are helping to close the gap for fleet operators. In addition, many fleet managers are electing to purchase HEVs as a means of complying with requirements to reduce fleet emissions, as well as to hedge against higher fuel costs in the future.”

Hurst says that passenger cars will be the largest segment for HEVs in fleet markets, but some of the highest growth rates over the next five years will be in the SUV and pickup truck segments, particularly in the United States.

The study, “Hybrid Electric Vehicles for Fleet Markets”, also finds that for plug-in hybrid electric vehicles (PHEVs) passenger cars will represent 80 percent of the fleet market in 2015, primarily driven by the automakers’ focus on consumer markets for PHEV launches.

Corporate fleets already making the switch include Verizon, UPS, FedEx and Coke.

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2 thoughts on “Fleets Can Improve Fuel Economy 5-40% by Making Switch to Hybrid Vehicles

  1. With all this money the government spent bailing out our automotive industry, why didnt they switch all the federal vehicles and post service trucks to hybrids? We could have actually gotten something for our money…

  2. President Obama’s executive order 13514 dated Oct 2009 directs all federal agencies to submit sustainability plans. Section 2 (a) (iii) states:

    “reducing the use of fossil fuels by:
    (A) using low greenhouse gas emitting vehicles including alternative fuel vehicles;
    (B) optimizing the number of vehicles in the agency fleet; and
    (C) reducing, if the agency operates a fleet of at least 20 motor vehicles, the agency fleet’s total consumption of petroleum products by a minimum of 2 percent annually through the end of fiscal year 2020, relative to a baseline of fiscal year 2005”.

    Executive order 13423, signed in January 2007 by President Bush, states in part:
    “Reduce the fleet’s total consumption of petroleum products by 2 percent annually through the end of FY 2015 relative to FY 2005 (if at least 20 motor vehicles).
    (ii) 10 percent annual increase in the use of non-petroleum fuel, relative to FY 2005.
    (iii) Use plug-in hybrids once cost reasonably comparable, on the basis of life-cycle cost”.

    Another federal directive comes from the energy independence and security act (EISA) that congress passed in 2007:

    “• §141: only low GHG-emitting vehicles will be purchased, if available.
    •§142: 20 percent reduction in vehicle petroleum use, and a 10 percent increase in non-petroleum fuel use annually, by 2015 relative to FY 2005.
    • §246: a renewable fuel pump must be installed for every fleet by January 1, 1010, except for DoD fueling centers with a fuel turnover rate of less than 100,000 gallons of fuel per year.
    • §526: alternative fuels cannot be used if lifecycle GHG emissions are greater than from conventional petroleum sources”.

    And finally we have energy policy act (EPAct) of 1992:
    “§701: Vehicles with dual fuel capabilities shall be operated on alternative fuels”.

    So the federal government can claim a paper trail to incorporate hybrids and other low petroleum use vehicles into their fleet use. I hope that President Obama has raised the priority and visibility of these federal requirements enough to ensure that they are adhered to by all federal agencies.

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