Hybrids in Government Fleets

For an individual car shopper, the hybrid car purchase decision is a matter of economics. The dollars and cents question—“Is the extra expense warranted?”—is balanced with personal views on air quality, global warming, and oil dependency. At the end of the day, each consumer makes his or her own decision.

For the manager of a municipal vehicle fleet, the decision to add hybrids to their vehicle lineup is a hundred times more complicated. First, they have to work with local or regional laws, which might not reflect a full understanding of the technology choices and their ramifications. Then, there’s the economics of ever-tightening state, county, or city budgets. And finally, the fleet manager must balance out what employee-drivers want, and what they actually need.

An Exercise in Group Decision-Making

Kent Fretwell, fleet operations manager for the State of Oregon’s Department of Administrative Services, has been working in the field since 1977. He currently manages three motor pools, numerous repair facilities and fuel sites, and 113 hybrids. With a vast amount of experience under his belt, Fretwell is able to develop a thoughtful purchase plan, with a detailed analysis of the relative merits of various kinds of vehicles. Despite this planning,“The decision of what kind of vehicles to purchase is made above and beyond me," said Fretwell.

For example, fleet managers must work within federal guidelines. The federal Energy Policy Act (EPAct) requires that 70 percent of vehicles found in Metropolitan Statistical Areas (MSA)—eight such areas exist in Oregon—must be comprised of alternative fuel vehicles, such as compressed natural gas (CNG) or flex-fuel vehicles. This means that Fretwell is bound to limit hybrid gas-electric vehicles to 30 percent of fleets in those areas.

Mark Simon, director of alternative fuel vehicle programs for the New York City Department of Transportation, is in a similar position. Simon said, “It comes down to what the city says we can buy.” Simon has oversight responsibility for the city’s disaggregated fleets, which includes 1,000 CNG vehicles, and nearly 900 hybrids. New York City’s 3,000-word law governing fleet vehicles currently stipulates the purchase of “alternative fuel” vehicles, which generally means CNG or flex-fuel ethanol vehicles. Simon said that “the cleanest vehicle in each category” would soon replace the use of the term “alt fuel.” The wording of these guidelines often leaves room for various parties to insert their agenda.

On Hybrid Economics, No Single Answer

In some localities, the agenda is economics. Simon said, “If you look at the straight economics, you would buy the least expensive car, like a Ford Focus. That’s the winner.” Fretwell commented, “A Ford Taurus is $13,000, and a Toyota Prius is $21,000. When you look at a six or seven thousand dollar difference in acquisition costs, that’s a serious consideration.” The economic equation gets even more complicated. A conventional gasoline vehicle is generally more expensive to operate and maintain than a hybrid. At today’s prices, there’s a big difference in fuel costs between a Ford Taurus, which gets about 16 or 17 mpg, and a Toyota Prius that achieves real-world mpg in the mid-40s. A CNG car has the lowest mile-to-mile fuel cost of all. And yet, municipal vehicles are commonly driven only a few thousand miles per year.

In addition, fleet managers need to consider resale value. A relatively new hybrid vehicle can sell nearly at the same price as a new model, but the common practice of fleet managers is to keep a car running until the maintenance costs exceed the cost of a new purchase. Hybrids haven’t been around long enough to reach that crossover line, which can occur at 100,000 miles or higher. The issue comes full circle when considering that government grants are widely available to offset the incremental costs of purchasing fuel-efficient low-emission vehicles for public agencies. There are no easy answers.

On the Environment and Driver Preferences

For some municipalities, environmental concerns trump all other issues. The advantages of a hybrid or alternative fuel vehicle—over a conventional vehicle—are distinct. But the choice between the green alternatives is not so clear. Simon said, “Environmentally, you are arguing in one-hundredths of a gram per mile. In the lifetime of a vehicle, differences in the amount of pollution are very small.”

Finally, the fleet manager must deal with the employees who drive the vehicles. Drivers don’t like the inconvenience of learning something new. Simon said, “Employees don’t want to hear about filling a natural gas vehicle.” On the other hand, there’s a lot of buzz about hybrids. Between the ease of being able to fill up a hybrid at any gas station, and the cool factor, employees—even those who drive very low miles—gravitate toward the hybrids, whether or not it makes sense.

Hybrids in the Mix

As public debates about global warming, peak oil, energy security, and air quality continue to rage, the municipal fleet manager’s job will not get any easier. The number of hybrids in these fleets will undoubtedly grow. But the savvy fleet manager, having to do a dance between answering to authorities, balancing a budget, and serving constituents, is unlikely to go exclusively with hybrids. If the costs of hybrids drop, that may change—but for now, it’s a matter of mixing and matching the lineup between conventional vehicles, alternative fuels, and hybrids.

Keith Nyquist, manager of transportation services at Michigan State University, has added 10 hybrids to his fleet in the past four years. He said, “It made sense to test the water and identify the potential for the MSU fleet.” Kent Fretwell said, “It’s about being economical and green at the same time, and getting the optimal mix of vehicles.”