indianapolis freedom fleet 2015 annual report

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© 2015 Vision Fleet, Inc. Indianapolis Freedom Fleet 2015 Annual Report Prepared by: Vision Fleet, Inc. www.visionfleet.us Prepared for: The City and County of Indianapolis May 2015

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Vision Fleet, the company providing an innovative performance-contracting model to modernize and increase the efficiency of the city's vehicle fleet, has released its first report on the performance of the Indianapolis Freedom Fleet from April 2014 to April 2015.In February 2014, the City of Indianapolis entered into a multi-year partnership with Vision Fleet to reduce the City’s vehicle fleet costs, petroleum consumption and greenhouse gas (GHG) emissions.

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  • 2015 Vision Fleet, Inc.

    Indianapolis Freedom Fleet

    2015 Annual Report

    Prepared by:

    Vision Fleet, Inc.

    www.visionfleet.us

    Prepared for: The City and County of Indianapolis

    May 2015

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 1

    Executive Summary In February 2014, the City of Indianapolis entered into a multi-year partnership (titled Freedom Fleet) with Vision Fleet to reduce the Citys motor vehicle fleet costs, petroleum consumption, and greenhouse gas (GHG) emissions. The program will transition the City to cheaper, cleaner miles via an innovative mobility-as-a-service performance-contracting model. The fleet performance contract is largely based on a successful public-private services model (called an energy performance contract, or EPC) that has delivered more than $10 billion in infrastructure upgrades for government agencies across the U.S., all funded through guaranteed energy and operational savings. Indianapolis is the first U.S. municipality to use a performance contract to upgrade the efficiency of its vehicle fleet. This report provides an overview of the operational and financial results of the Freedom Fleet in Year 1 (April 2014 April 2015). The Freedom Fleet project will deploy 425 plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) collectively referred to as plug-in electric vehicles (PEVs). These PEVs will allow the City to remove up to 536 aging, inefficient, costly-to-operate vehicles from its fleet. Based on performance data from the programs first year, Freedom Fleet is on track to be one of the most successful advanced-fuel vehicle (AFV) fleet deployments in the nation, if not globally. As of this month, it also became the largest deployment of electrified passenger vehicles in any government fleet in the United States. The performance-contracting model provides numerous benefits. First, the City is achieving taxpayer savings by minimizing the upfront capital investment required to refresh its aging vehicle fleet. In Year 1, Vision Fleet invested more than $8.9M (while invoicing the City only $1.5M) to replace old, inefficient, and high-cost vehicles in the Citys fleet. The average age of a vehicle replaced by a Freedom Fleet vehicle was more than 9 years old. Second, by realizing a per-mile total cost of ownership that is approximately 14% lower than the Citys business-as-usual forecasts, the Citys expected savings over the life of the vehicles are estimated to exceed $7.4M.1 Third, by replacing relatively inefficient vehicles (averaging only 16 miles per gallon), Freedom Fleet is on track to reduce the Citys petroleum use by more than 1.7M gallons, generate 15,000 tons fewer GHG emissions, and reduce the Citys dependence on oil. Fourth, by deploying PEVs into non-pursuit use cases where pursuit-capable vehicles were being used, the program has thus far made available 41 such pursuit-rated vehicles for reassignment into pursuit use cases. Fifth, through fleet-performance analytics and car-sharing, Vision will work with the City to effectively right-size the fleet without a decrease in vehicle availability. Finally, this partnership and its results are positioning Indianapolis as a national leader in AFV deployments while showcasing the efficacy of performance contracting in transportation and the Citys dedication to innovation. In Year 1, Freedom Fleet deployed 139 vehicles across several departments, including non-pursuit Police (92), Public Works (15), Code Enforcement (11), Coroner (7), Fire (5), Probation (5), and Engineering (4). City employees now use Freedom Fleet vehicles to reliably deliver a variety

    1 Savings forecast includes additional savings for achieving certain vehicle utilization and efficiency milestones.

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 2

    of City services, including building and property inspections, contract monitoring, and non-pursuit law enforcement. Operational results delivered to-date have exceeded typical municipal fleet performance with plug-ins. Collectively, Freedom Fleet vehicles have been driven more than 571,000 miles (47% of which were electric miles) with nearly 100% operational availability. The associated gasoline savings exceeded an estimated 50 gallons per month per vehicle, totaling more than 26,000 gallons in Year 1. In Year 2, Freedom Fleet is expected to improve on the results from Year 1, working directly with City stakeholders to improve electric-miles driven, vehicle utilization, data-driven fleet management, and car-sharing. Additionally, Freedom Fleet will intelligently deploy an estimated 150 electric vehicle charging stations in the City and implement new car-sharing programs in several departments. Ultimately, the programs metrics and achievements are the result of the Citys dedicated fleet managers who decide where to assign the vehicles and drivers operating the cars. Credit for the to-date success belongs to the City employees directly managing the vehicles, driving them efficiently, and plugging them in at impressively high rates for any fleet. Collectively, these actions make a big difference, as evidenced by the programs documented oil and cost savings.

    Introduction Vision Fleet is a full-service enabler and accelerator of large-scale advanced-fuel vehicle (AFV) adoption for Americas vehicle fleets. The companys mission is to make it simpler and more affordable for fleets to deploy AFVs (such as electric vehicles, in the case of Indianapolis) while maintaining or improving operational performance. Vision Fleets innovative model combines proven elements of the financing innovations that transformed the solar photovoltaic industry (i.e., solar power purchase agreements [PPAs]) and the energy efficiency industry (i.e., energy performance contracts [EPCs]) with technology and operational support that helps fleets to optimize the deployment and performance of AFVs. Indianapolis agreement with Vision Fleet is a unique solution that uses a Total Cost of Ownership (TCO) approach, enabling a true comparison of advanced-fuel and internal combustion engine (ICE) vehicles, with guaranteed savings. Similar to PPAs, Vision Fleet's comprehensive service includes all capital expenses (i.e., vehicles, vehicle monitoring technologies, and charging infrastructure) and all recurring operational expenses (i.e., fuel, electricity, and vehicle maintenance). Vision Fleet professionals support City fleet managers in vehicle selection, driver training, maintenance scheduling, infrastructure site selection, and car-sharing implementation. Similar to EPCs, Vision Fleet works with the City to continuously improve the performance of the fleet by monitoring and providing feedback on vehicle idling, route choice, plug-in rates, driver safety, and vehicle utilization. The cost savings generated by these efforts are then shared between Vision Fleet and the Citythe essence of the performance-contracting model. An in-depth analysis of the Citys existing light-duty ICE vehicle fleet, based on historical Assetworks M5 data, showed a TCO per mile (TCO/mi) that has been climbing at a rate of more than 4% per year and that will average at least $0.75/mi over the next 10 years. In order to reduce

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 3

    and stabilize its fleet-wide TCO/mi, Indianapolis signed an agreement with Vision Fleet that locks-in a lower average TCO/mi rate for a seven-year period. This partnership significantly reduces the uncertainty of Indianapoliss fuel and maintenance costs, as Vision Fleet assumes the operational risks of fueling and maintaining the PEVs utilized by the City.2 The agreement also includes deployment of a network of Electric Vehicle Supply Equipment (EVSEs or charging stations), telematics to monitor vehicle performance, a technology and operations platform to implement car-sharing, and hands-on operational support. A common problem for municipal (and even some corporate) fleets adopting AFVs is underutilization. Data show that fleets adopting AFVs, particularly BEVs, drive them only a few thousand miles a year. On a TCO/mi basis, however, an underutilized AFV can actually cost far more than a vehicle it replaces. The performance-contract approach directly addresses this issue: unlike a traditional lease where a mileage ceiling is given, a performance-contract creates a mileage floor to ensure the more efficient assets are being used. Vision Fleet guarantees the TCO/mi rate based on an average minimum annual vehicle miles traveled (VMT) for the PEV fleet; once that average minimum VMT is met, the City pays a significantly reduced rate for any additional miles. Additionally, the Freedom Fleet VMTs are calculated on a fleet average and annual basis, not car-by-car or monthly, to adjust for factors such as seasonality and departmental use cases. Vision Fleet is also working with the City to reduce the overall size of its fleet, replacing an estimated 536 legacy vehicles with 425 Freedom Fleet vehicles. The program will further maximize the Citys savings by implementing new car-sharing systems, retiring old and underutilized vehicles, and improving its per-vehicle utilization.

    Vehicle Deployment Summary Vision Fleet is working with the City to implement a phased deployment, with gradually increasing scale and complexity, in order to ease the transition to AFVs. This gradual transition has been critical to the projects success. The City has maintained its core fleet management responsibilities throughout this process, including deciding which vehicles to acquire and where to deploy them. Based on the Citys preferences for the Freedom Fleet program, Vision Fleet offers a choice of all available PEVs that can be acquired from local Indianapolis dealerships: Chevy Volts (a PHEV), Ford Fusion or C-Max Energis (PHEVs), and Nissan Leafs (BEVs).3 The deployment strategy includes multiple departments, job functions, assigned and take-home vehicles, as well as car-shared vehicles. At the end of April 2015, 139 vehicles were in operation, 98% of which were Chevrolet Volts (see Figure 1); all purchased through local Indianapolis dealerships.

    2 Vision Fleet will not perform the maintenance itself; rather, it will pay for it as part of its TCO-based agreement. 3 While this part of the Freedom Fleet program is focused on oil-saving plug-in sedans, Vision Fleet is efficient vehicle agnostic. Its performance-contracting framework can work with any efficient or AFV vehicle.

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 4

    Of the vehicles deployed, 96% were assigned to a specific driver. The remaining vehicles are being utilized in car-sharing arrangements, with more than 40 drivers sharing fewer than ten vehicles. This car-sharing initiative aims to reduce the Indianapolis fleet by at least 100 vehicles through enhanced resource efficiency and vehicle utilization. Operating fewer vehicles overall while maximizing utilization of clean and efficient vehicles will reduce operating expenses and increase the fuel and cost savings Indianapolis achieves through the Freedom Fleet program. The PEVs deployed in Year 1 spanned several departments, including non-pursuit Police (92), Public Works (15), Code Enforcement (11), Coroner (7), Fire (5), Probation (5), and Engineering (4). Notably, by deploying PEVs into non-pursuit use cases where pursuit-capable vehicles were previously being used, the program has made available 41 such pursuit-rated vehicles for reassignment into pursuit use cases. During the remainder of 2015, Vision Fleet will work with the City to deploy 286 additional vehicles in a variety of departments and functions. Vision Fleet will also utilize data gathered via its Vision Fleet iQ (VFiQ) software platform to implement additional car-sharing systems, both within and across departments.

    Figure 1. Indianapolis Deployment as of April 2015

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 5

    Freedom Fleet Performance Freedom Fleet currently comprises mostly PHEVs, allowing City drivers to operate the vehicles on electricity (electric-miles) or gasoline (gasoline-miles) once a vehicles battery charge is depleted, without compromising range or functionality. Maximizing electric-miles is the best way for the City to honor its commitment to becoming a national leader in the transition to a post-petroleum vehicle fleet. At the end of April 2015, the Vision Fleet vehicles in Indianapolis had driven more than 269,000 electric-miles, or about 47% of their total miles traveled in the programs first year (see Figure 2). Figure 3 shows how the overall share of electric miles has fluctuated over the course of the year as new vehicles have come into the fleet and drivers have adjusted to the new technologies. Notably, the Freedom Fleets metrics have shown a marked improvement through the first quarter of 2015, a period where the program rapidly deployed a large number of new vehicles (and trained new PEV drivers). Since those new vehicles have come online, the percentage of electric-miles across the fleet has again exceeded 50%, while overall VMT has comfortably exceeded the minimum mileage floor.

    Figure 2. Electric Miles Traveled versus Gasoline Miles Traveled in Year 1

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 6

    Figure 3. Electric-miles per Vehicle versus % of Miles that are Electric-miles (May 2014 - April 2015)

    Financial Summary In almost all cases, AFVs have a higher upfront acquisition cost than their conventional ICE counterparts, creating one the most commonly cited barriers to AFV deployments. By eliminating the bulk of that upfront cost, Vision Fleet reduces this barrier while providing the City with immediate financial savings. To date, Vision Fleet has invested $8.9M in the program, inclusive of all vehicle and program management costs, while invoicing the City for only $1.5M (despite the initial investment savings, overall savings are considered in the context of the entire contract period). The TCO/mi solution also enables Vision Fleet to eliminate the Citys out-of-pocket maintenance and fuel costs. Instead, the City pays a single per-mile cost, providing it with a stable fleet operating budget and acting as a hedge against volatile gasoline prices. Over the life of the project, if the current operating metrics continue, the City will pay a per-mile TCO/mi as low as $0.65, 14% lower than the $0.75 it was forecast to pay under its business-as-usual case (See Figure 4). Total City savings are estimated to exceed $7.4M over the life of the vehicles.4 Importantly, this $0.65 rate is guaranteedmeaning Vision Fleet takes the operating risk for

    4 This savings estimate is $1.3M lower than initially projected at program launch, as the estimates now include $1.3M in required EVSE infrastructure.

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 7

    issues like battery life, maintenance costs, plug-in rates, fuel price fluctuations, and even partial insurance. 5,6

    Figure 4. Average Forecast Total Costs per Vehicle over Next 10 Years

    As outlined in the contract, pricing is also structured to incentivize better and more efficient use

    of fewer assets and to encourage employees to charge their vehicles at home in order to

    maximize the potential for electric miles. These shared savings incentives are designed to

    encourage the city to improve the utilization, efficiency, and plug-in rates of the vehicles. The

    Year 1 financial benefits of these pricing incentives are outlined in Figure 5.

    $22,000 Utilization Savings

    $5,046 Efficiency Savings

    $6,185 Employee Reimbursements

    Once the fleet reaches its

    monthly minimum miles, the

    cost drops by up to $0.26 per

    mile.

    If the fleet outperforms its

    baseline on efficiency and/or

    battery utilization, the City is

    reimbursed per mile.

    Drivers with take-home

    vehicles are reimbursed for

    the electricity they use to

    charge vehicles at home.

    5 Per the Master Fleet Agreement, Vision Fleet absorbs all fuel costs under $4.25 a gallon. Above that, the City would pay approximately 25% of the increase for prices as it would in its business-as-usual case, stemming from the improved efficiency and electric miles driven which, due to reducing gallons consumed, gives a natural hedge to fuel price spikes. 6 As part of the agreement Vision Fleet replaces up to 2 vehicles lost to accidents per year of the program; of note, to date the program has experienced zero vehicles lost to accidents. The data is not sufficient to indicate if this reduction in accident rate is due to the improved safety of the vehicles or the telematics and analytics systems.

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 8

    Figure 5. Year 1 Actual Shared Savings and Reimbursements

    Vehicle Charging Summary Indianapolis employees use Freedom Fleet vehicles to deliver a variety of City services, including building and property inspections, contract monitoring, and non-pursuit law enforcement. At times, this means that mission needs will require traveling more miles than the PEV battery can support. Despite these limitations, City employees have gone above and beyond to find creative ways to maximize their opportunities to plug-in without compromising service.

    For example, the Citys drivers nearly always plug-in when parked at City facilities with EVSEs, achieving a remarkable 94% plug-in rate when parked for longer than five minutes. Employees have also shown a high level of program buy-in through their commitment to at-home charging, for which the City/Vision Fleet reimburses them each month. Home charging accounts for nearly 70% of all electricity used to charge these vehicles (Figure 6).

    As a result of employees efforts, the City has achieved a battery utilization rate of 81%,

    contributing to a higher rate of electric miles traveled (see Figure 7).7

    7 The battery utilization metric describes the share of a vehicle batterys capacity consumed on an average weekday. A figure of 100% would indicate that a vehicle recharges equivalent to one full battery per weekday.

    Figure 6. Total kWh Charged by Location

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 9

    Figure 7. Vehicle utilization summary

    These statistics suggest that Indianapolis drivers are outperforming their counterparts in other city fleets by driving more electric-miles and utilizing their PEVs. Freedom Fleet drivers are plugging in at 2.5 times the municipal and corporate fleet average, and they are utilizing these vehicles at about double the average of comparable fleets. This high rate of plugging in and subsequent electric miles means that the City is exceeding its program goals. In total, drivers of Freedom Fleet vehicles have saved the City more than 26,000 gallons of gasoline in Year 1, equating to 230 metric tons of avoided carbon dioxide emissions (see Figure 8).

    Infrastructure Development The City and Vision Fleet are also working together to intelligently deploy the EVSEs necessary to support charging for the Freedom Fleet and to maximize the total share of electric-miles traveled. Vision Fleet takes a comprehensive, data-driven approach to delivering a cost-effective EVSE infrastructure network. Over the life of the program, the company plans to install approximately 150 new Level 2 charging stations at City work sites. Notably, each Freedom Fleet PEV does not require its own work site charging station the program plans to install only 150 charging stations for its 425 vehicles. Vision Fleet has worked with the City to design the program around the minimum number of EVSEs necessary to achieve their electric-mile goals. As part of the performance-contracting TCO/mi framework, Vision Fleet and the City are not incentivized to install hardware in situations where the EVSEs would be underutilized; instead, the incentive is to maximize electric miles at the lowest overall total cost. By understanding where vehicles have the most cost effective opportunities to charge, Vision Fleet and the City are able to maximize electric miles and charging opportunities without the capital expense of excessive EVSE installations. Since April 2014, Vision Fleet has worked closely with the City on an optimal EVSE solution, which includes maximizing utilization of the Citys 30 existing Level 2 charging stations. The team then prioritized initial vehicle deployments for take-home use cases where drivers can plug in their vehicles overnight. As Vision Fleet collects usage data on these and future Freedom Fleet candidates, we can plan for additional locations where new charging stations will help achieve optimal vehicle charging opportunities. Figure 9 shows an example of the type of data that Vision Fleet uses to analyze EVSE infrastructure needs. The City has also implemented a new electricity reimbursement model whereby employees who plug in vehicles at home are reimbursed for all electricity costs incurred, helping to overcome a common barrier to EVs for fleet operators.8

    8 http://www.greencarreports.com/news/1093867_chevrolet-volts-in-fleet-use-might-as-well-not-have-a-plug

    Figure 8. Gasoline and GHG Emissions Saved

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 10

    Figure 9. Vehicle Charging Summary

    Vision Fleet iQ Analytics Platform Vision Fleet supports the Freedom Fleet program with a proprietary software and reporting platform called Vision Fleet iQ (VFiQ) that is designed to ease fleets transition to and use of AFVs. The VFiQ platform combines vehicle telematics, secure and reliable cloud-based data management, predictive analytics, and an online fleet management portal. The VFiQ data value-chain starts with an on-board telematics system that ties into each vehicles on-board diagnostic (OBD) port to collect vehicle performance and routing data. This vehicle-level data is sent securely to Vision Fleets databases for management and analysis. The analytics and business intelligence component of the VFiQ platform contains proprietary algorithms that Vision Fleet uses to gain insights into the real world operation of EVs and drivers behaviors. The data allows Vision Fleet to provide real-time information and behavioral cues to fleet managers, drivers, and other end users through an online fleet management dashboard. This VFiQ dashboard equips fleet managers and key stakeholders to make data-driven decisions to increase vehicle utilization and reduce overall fleet operating costs. The VFiQ platform also enables Vision Fleet to measure and validate the operational improvements and financial savings.

    Driver Satisfaction The above operational metrics for the Freedom Fleet deployment provide evidence of the programs quantitative success. That progress, however, extends beyond the fuel and cost savings that well-managed AFV fleets can provide. Vision Fleets mission is not only to accelerate deployment of the future of fleets; it is also about providing fleet drivers with vehicles that make their day-to-day jobs safe, easy, and efficient. Vision Fleet enables budget-constrained departments to accelerate their retirement of older, more expensive, and less-safe vehicles and experience the reliability and safety of advanced technology vehicles. More importantly, Vision

  • Indianapolis Freedom Fleet 2015 Annual Report

    2015 Vision Fleet, Inc. Page 11

    Fleet is incentivized to maximize driver satisfaction, as they ultimately determine the programs success through the efficiency, safety, and plug-in rates associated with their driving habits and behavior.

    Based on to-date data, Freedom Fleet has achieved a high level of acceptance and approval from participating City drivers. In addition to regular focus groups and individual check-ins, Vision Fleet distributed an early-2015 survey to all drivers of Freedom Fleet PEVs to measure driver satisfaction and gather feedback about the vehicles and program. A few highlights from the survey include the following:

    87% strongly agree or agree that the vehicle is safe and reliable

    84% strongly agreed or agreed that they are satisfied with the driving performance and features of the vehicle.

    88% strongly agreed or agreed that they have done a good job of plugging their vehicle in consistently.

    82% strongly agreed or agreed that they felt knowledgeable about the vehicle after the driver training they received.

    These numbers are only the starting point: the Vision Fleet team is continually surveying drivers about their satisfaction and suggestions for improving the program. While the vast majority of drivers are very satisfied, we are working hard to address all remaining concerns. We want to help the City select the right vehicle with the right up-fits for the right use case. For example, Vision Fleet is working with Indianapolis Fleet Services, General Motors engineers, and the Citys Police Department to create better solutions for securing drivers service weapons. To date, the Freedom Fleet program has had great success, and the team will work hard to ensure the continued safety and happiness of City drivers.