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How Logistics and Last-mile Delivery Companies Save Money by Leasing out Electric Vehicles

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Electric vehicles (EVs) could be the next big thing in fleet optimisation and last-mile delivery services. If you’re considering an electric vehicle, leasing may protect you from the accelerated devaluation that electric vehicles can experience. You’ll miss out on some tax benefits if you lease instead. Are you curious as to why? Take a look at this article!

Electric vehicles have arrived a far way from one‘s initial conceptual designs. Electric vehicles have progressed from their initial stage of being a personal mobility solution to more extensive utility criteria. Today, electric vehicles (EVs) are one of the most remarkable inventions, meticulously designed to meet quality standards for an IC vehicle.

Surprisingly, today’s last-mile delivery companies, from small to large logistics companies, rely primarily on electric vehicles (EVs), as these companies have recognised the importance of fleet enhancement. Optimising fleet electrification aims to save a significant amount of money previously spent on ICV maintenance and repair and purchase. We simply mean that electric vehicles are much less expensive to maintain when we say this. They are a low-cost method for providing last-mile delivery services.

 

Renting an electric vehicle may have different financial factors than leasing a traditional vehicle. While electric vehicles are becoming more common, they are still quite different from their gasoline-powered counterparts.

 

When it comes to gas savings and repair costs, the benefits include a lower cost of capital. However, when you consider the cost of setting up a home charging station and fluctuating trying to charge prices, the costs can quickly add up.

 

Here are a few things to consider before leasing an electric vehicle.

Is it preferable to lease or purchase an electric vehicle?

If you’ve decided on an electric vehicle, the next decision is to purchase or lease one. Here are some essential factors to think about.

State and federal tax credits may be available.

You may be eligible for a federal fully electric vehicle tax credit of up to $7,500 if you purchase an eligible electric vehicle. This tax credit might be able to help with the purchase cost.

 

Unfortunately, if you lease an Electric Vehicle, you won’t be eligible to claim this tax credit. On the other hand, the automaker may decide to include the significance of the tax credit in your rental agreement by offering a lower-cost lease.

 

You might be eligible for state-specific tax breaks or rebates as well. Some states may provide leasing tax credits, while others do not. For a complete list of state and federal tax rewards for electric vehicles, visit the Department of Energy’s Alternative Energy Data Centre.

 

The preceding is more than just a vague ideology; it is a fact. Many companies, such as Hero Engines, already have decided to make the most of their electric vehicle arm, Hero Lectro, by collaborating with logistics companies such as Fast Despatch Logistics (FDL) and Exo Mobility to provide last-mile delivery companies. This is one of many industry sectors that have realised the value of electrifying fleets in order to meet the needs of last-mile delivery companies.

 

Various types of business sectors, such as e-commerce, delivery logistics, and vehicle rental firms, have been collaborating to convert one‘s entire fleet to electric vehicles in the country. Given the rise in fuel prices and operating costs of ICE two and three-wheelers, the businesses’ collaboration to opt for EV fleets is a positive development.

 

With the COVID-19 pandemic looming, it’s only natural for new businesses to take a close look at their total operational costs and average fleet utilisation period. As a result, EV manufacturers are wary of the range anxiety and ownership cost concerns that exist among their customers. However, this is what has resulted in the development of EVs that do not require range anxiety or concern about ownership costs.

 

It’s no secret that purchasing a vehicle is not inexpensive. There’s the vehicle itself, which can be paid in full or in monthly instalments, as well as insurance, parking, and maintenance and repairs. When all of this is factored in, you might be tempted to see if a long-term vehicle rental is a better deal when all of this is factored in. We’ve compiled a list of the benefits and drawbacks of long-term rental vehicle vs. vehicle ownership by EMI to help you make an informed decision based on your specific needs and situations.

Pros and Cons of Buying a Electric Vehicle on EMI

An Electric vehicle is a requirement in most of India as well as other countries around the world. It does, however, cost money, and deciding whether buying a vehicle rather than renting or leasing one is worth it can be difficult. Here are a few things to consider before purchasing a vehicle.

The Benefits of Buying a Vehicle on EMI

  • You are the proprietor!
  • If you want, you can personalise the vehicle.
  • Your money will be used to purchase the vehicle.
  • If you really want to upgrade your vehicle, you can sell it or trade it in.
  • There have been no month – to – month mileage restrictions to be concerned with.

 

The Disadvantage of Buying a Vehicle on EMI

  • When compared to renting or leasing, monthly costs are frequently higher.
  • It’s possible that you’ll have to take a loan to pay for it.
  • The vehicle’s value depreciates.
  • The costs of repairs are your responsibility (after the warranty ends, if new).

What usually you don’t calculate when you think of buying on EMI:

  1. Maintenance cost. – Around 500-600 rs per month on average for 3 years. First-year will not need much maintenance, but for next years there is maintenance, changing the parts which are damaged and out of warranty etc. Changing of wearable parts such as tires, brake-related things etc.

 

  1. Technician salary as they need a dedicated technician/mechanic even for a fleet of 20 vehicles. If his salary is 15-20k then it will be 750-1000 rs per vehicle per month cost for the business. 

 

  1. Downtime cost due to insurance claim process, repairing and servicing of the vehicle. We give replacement under 24 hours so that their Delivery boy doesn’t stay idle. Their main cost is a delivery boy whose monthly salary ranges from 15000-25000 depending upon the orders made. So if the vehicle is not available for even a single day, the company or delivery boy loses almost 500-1000 per day income. And if the vehicle is not available for more than a few days, the delivery boy leaves the job and joins another company.

 

  1. Flexibility premium. Business demands are not easy to predict. If some company has 50 vehicles today for delivery purposes, tomorrow that demand might go up to 100 or even come down to 25. So with renting, companies get the flexibility and can save money.

 

Electric vehicles have never been more widely used in all sectors of the economy than they are now. Despite the fact that the cost of purchasing or leasing an electric vehicle is generally higher than that of a diesel/petrol vehicle, goods, parcels, and postal logistic support are no exception.

There are compelling reasons for the increased use of small electric delivery vehicles, particularly for last-mile deliveries. Some of these are applicable to all-electric vehicles, while others are specific to logistics vehicles.

Leases for electric vehicles should be given more thought.

Keep in mind that, aside from depreciation and technological advancements, electric vehicles have serious limitations that conventional vehicles do not. Here’s a quick rundown:

Limitation of the range

Electric vehicles can only travel a certain distance before running out of battery power. Shorter-range vehicles, such as the 2019 Nissan Leaf’s 40-kWh battery’s 150-mile range, may only limit you to native driving only.

Longer trips are possible with vehicles with larger distances, including the Tesla Model 3 Long Range’s 310-mile range.

In any case, you’ll want to think properly for your trip to ensure that you’ll be able to find charging points if your journey exceeds the vehicle’s variety. While charging stations become more prevalent, they still do not have the same level of popularity as gas stations.

 

Charging and depletion of batteries

When you own an electric vehicle, you’ll need a charging station. As a result, you’ll need to park near an electrical outlet. You might well be able to charge your vehicle using a standard exit route in your garage, or you could use Level 2 charging, which requires a 240-volt outlet. You’re unlikely to have one near ones parking spot, so if you live in a neighbourhood or building that enables it, you’ll have to hire an electrical engineer to install one.

Similarly to how the life of your cellular phone battery depletes over time, the life of your vehicle’s battery will deplete over time.

That means your driving range will decrease over time. The battery life may be reduced if you drive the vehicle in less-than-ideal conditions. This is particularly true when the weather is extremely cold.

 

Fuel Consumption is Reduced

Electricity is significantly less expensive than diesel or gasoline. A fuel-efficient electric motor can travel 3 miles more than per kilowatt – hour ( kwh of electricity, or about 4p per mile. (Average electric prices in March 2018 were 12.49p per kilowatt hour.) Because of the varying energy efficiency of engines, calculating actual cost per mile for petrol and diesel vehicles is difficult.

However, according to state average values, the average cost per mile for 1400 cc motors is 11.5p1, so you’ll save 7p per mile right away. This will quickly begin to recoup the extra investment required to deploy electric vehicle’s in your fleet.

 

Maintenance Costs are Reduced

For delivery companies, maintenance costs make up a large portion of their ongoing fleet expenditures for delivery companies. Last-mile delivery costs can be reduced by replacing diesel or gasoline vehicles with electric counter parts. How?

Because there are fewer mechanical devices in electrical vehicles engines, they are mechanically easier than existing engines. In comparison to a conventional vehicle’s complex drivetrain, an electric rechargeable battery, for example, has only one moving part. The fewer mechanical components a motor has, the less likely it is for something to go wrong.

  • The gear transmissions in electric vehicles are easier and less prone to wear and tear.
  • There is no need to change the oil or the fluid.
  • Some electric vehicles have additional features like regenerative braking, which minimise the impact of repetitive use on key functions, resulting in lower maintenance costs.

 

Impact on the Environment

The advantages of fully electric vehicles in relation to the environment are well known. There are no traditional emitters that are damaging to the environment or human health. This is good for the environment in general, but it also helps with compliance in low-emission areas like Greater London. Enhanced electricity consumption, on the other hand, puts more strain on the National Grid, which is still largely fueled by fossil fuels. Electric vehicles’ improved energy efficiency, on the other hand, still equates to lower overall vehicle bon emissions when compared to the conventional vehicle use.

 

Is it better to lease a new or used electric vehicle?

Instead of leasing new vehicles, you can lease used vehicle’s. However, locating a used electric vehicle to tenancy agreement may be more difficult than locating a traditional used vehicle. If you do decide to lease a used electric vehicle, there is one significant difference to be aware of.

Except if your lease guarantee covers it, you may be responsible for the repair or substituting your battery if it begins to fail. Because replacing a battery is so expensive, you’ll want to start making sure the vehicle is still under warranty — or that you’re prepared to pay for a new battery.

Aside from that, leasing an electric vehicle is similar to leasing a traditional vehicle. Find out about used-vehicle leasing to see if it’s a better choice for you than a new vehicle lease.

EVs are becoming a more popular solution to environmental issues that IC vehicles cause. E-commerce behemoths like Amazon and Flipkart have pledged to use 100 percent electric vehicles in their logistics fleets, while new start-ups like eBikeGo and Oye! Full electric mobility is also a focus for rickshaws and moEVing. Electric cycles, two- and three-wheelers are becoming more popular, indicating that electrification is a long-term remedy for e-commerce, logistics, and related industries, with strong potential in India.