Wednesday, October 29, 2014

Ballard Administration Lies to Public About Cost Savings From Deal to Rent Alternative Fuel Vehicles

The Indianapolis Business Journal reports:
The city has been working with the venture-capital-backed company, Vision Fleet, for months, but Mayor Greg Ballard only announced Tuesday morning the plan to replace gas-powered cars in the city's fleet with 425 plug-in hybrid and pure-electric vehicles by

Michael Brilawski,
CEO, Vision Fleet
2016. The cars, including such models as the Nissan Leaf and Chevrolet Volt, would be used for a variety of city services, but not for police-pursuit purposes.

Vision Fleet will buy the cars from local dealers and rent them back to the city. The company also will provide all of the maintenance and management with an emphasis on effective deployment. Vision Fleet’s analysis already has helped the city eliminate 100 gas-powered cars from the fleet, Ballard spokesman Marc Lotter said, in addition to the 425 cars that will be replaced.

City officials say the cost of the program will be less than the expense of maintaining the gas-powered vehicles to be replaced.

According to a city press release, each gasoline-powered sedan in Indy’s fleet would have cost taxpayers about $9,000 per year over the next decade, including purchase, fuel, maintenance and insurance. The Vision Fleet vehicles will cost about $7,400 per year over that period, saving taxpayers about $1,600 annually per vehicle.

Lotter said the city will pay its annual fees to Vision Fleet through the savings on fuel and other vehicle costs. He said the city's total fleet costs, including payments to Vision Fleet, will be "nominally less" this year, and will decline by 2016. City officials couldn't immediately specify total fleet costs.
Last year I reported on the bogus savings the Ballard administration claimed when the decision was made to buy hybrid, non-pursuit vehicles for the Department of Public Safety a City officials claimed  the higher priced alternative fuel vehicles would result in a savings of $8.6 million over five years.  Using some elementary math I showed those hybrid vehicles would actually cost $10.6 more over that five year period.

Well, the Ballard administration is using its funny math again.  This time the administration is claiming that using gasoline powered cars cost $9,000 a year versus a $7,400 cost of renting hybrid and electric vehicles from Vision Fleet which would buy the cars.

First of all, let's look at the $9,000 estimate of the cost of driving a gas powered city vehicle.  At the current IRS reimbursement rate of 56 cents a mile, which takes into consideration the average cost of operating a vehicle, that means they would have to be driven 16,071 miles per year. Does anyone believe that the average city vehicle is being driven that many miles annually?

Now let's look at a comparison of gas versus alternative fuel cars.   It is true that electric and hybrid vehicles result in fuel savings. But those fuel savings quickly disappear when you look at the much higher cost of the alternative fuel vehicle and the higher cost of repairs, namely replacing the very expensive batteries.  Fortunately, Daily Finance has crunched the numbers for us using a comparison of a gas powered and electric Ford Focus:

Ford Focus ST Ford Focus Electric
Sale price $24,495 $39,995
Battery replacement N/A $13,500
Major engine repair
(1/5 original sale price)
$4,899 N/A
8-year fuel costs
(15,000 miles/year)
$16,222 $5,067
Total costs $45,616 $58,562
Overal costs don't quite look so promising for the electric. While gas costs vastly outweigh eGallon expenditures, Ford's eFocus starting price already puts it at a $15,500 disadvantage. And when you add in the fact that a battery replacement costs around three times that of a major engine repair, electric owners are still out around $13,000 after eight years of fuel-efficient savings.

So the average gas fueled car costs $5,707 to operate annually according to Daily Finance (and that is at an unlikely average of $15,000 miles per year) compared to the $9,000 claimed by the Ballard administration.  Meanwhile, again according to Daily Finance, electric fuel vehicles cost $7,320 a year to operate which actually is very close to the administration's claim of $7,400.  On net, contrary to the claim that the administration makes that the alternative fuel vehicles save $1,600 per year, those vehicles actually cost $1,613 more per year.  Given how remarkably close those numbers are, one has to wonder if city officials lazily flipped the numbers when they decided to spin the extra cost of the alternative fuel vehicles into a claim they save taxpayers money.  Apparently they weren't concerned that media outlets might do the math and call out city officials on their ludicrous claim of savings.

Certainly there is a strong argument that transitioning to an alternative fuel fleet is good for the environment and worth the extra cost to Indianapolis taxpayers. But the Ballard administration officials apparently do not want to take that honest approach to selling the program.  Instead city officials chose to make the phony claim that using hybrid and electric vehicles will actually save taxpayers money and a lot of it. They apparently want us to believe that millions of Americans, not to mention the leaders of other municipalities, are just too stupid to realize that buying an alternative fuel vehicle would save them $1600 per year or $133 per month.

Of course, in the real world, if it was that much cheaper to have a hybrid or electric car, our roads would be filled with such vehicles. Last time I checked, they are not.

Note:  Advance Indiana has a story today on today's Vision Fleet announcement.  It takes another angle, namely pointing out that the checkered history of Vision Fleet's owner, Michael Brylawski.  It appears the City has once again failed to do any homework before handing out a big pile of taxpayer money.


Flogger said...

- Vision Fleet will buy the cars from local dealers and rent them back to the city. So why do we need Vision Fleet?? Do we not have people on the City Payroll that can speak directly to the Dealerships and cut out the middle person??

Jon said...

This is the parking meter deal with cars. We should have bought our own meters rather than entered into a multi-year lease. I guess it's easier to bilk the taxpayers their way.