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Alternative Fuel Vehicles: Pros and Cons

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Hybrid, all-electric, or other alternative fuel vehicles can help your company save on fuel costs. Depending on the types and numbers of vehicles your company operates, financial incentives, including tax credits and deductions may be available at the federal or state level. You may even save on insurance premiums. However, there are also drawbacks involved with alternative-fuel commercial vehicles, which you should also consider before taking the plunge.

Hybrid Gas/Electric

According to the United States Environmental Protection Agency, hybrid powered vehicles use 30 to 60 percent less fuel than comparable gas powered vehicles. Regenerative braking systems help recharge the electric batteries in hybrid vehicles, further increasing fuel efficiency. That translates to fuel savings, higher gas mileage and fewer carbon emissions. Hybrids may also hold their value better than gas powered vehicles.

On the downside, hybrids are still somewhat more expensive than comparable gas powered vehicles. Maintenance can also be expensive – especially for complex components that must be serviced by the manufacturer. Hybrids often have smaller engines that don’t accelerate as well as conventional gas powered engines. High voltage associated with electric cars makes passengers and drivers more vulnerable to electrocution from an accident.


Unlike hybrid vehicles, plug-in all-electric cars are still eligible for federal tax breaks ranging from $2,500 to $7,500 per vehicle, which somewhat offset their higher sticker prices. The size of the credit varies according to the gross weight and battery capacity of the vehicle. All electric vehicles are also about one-third cheaper to operate on a per-mile basis than gas vehicles.

However, all electric vehicles have a shorter driving range than gas powered vehicles and require several hours for a full charge. And electric charging stations are still not as numerous as gas stations. As a result, it’s not practical to depend on all-electric vehicles for long-range driving. They are also significantly more expensive than comparable gas powered vehicles.

Flex Fuel (Ethanol)

Flex-fuel vehicles can either run on conventional gasoline or use a renewable energy source, in many cases, ethanol without costly conversion. Ethanol is produced from corn or agricultural waste and generates high octane and low emissions. Most existing cars can use blends of 10 percent ethanol (E10) without conversion, while millions of newer cars are equipped to run on E85.

Ethanol made from corn diverts a food crop from human consumption to fuel production, which is increasingly controversial. Farm equipment used to produce ethanol often runs on gasoline, reducing its eco-friendly properties. Ironically, E85 has a 25 percent lower fuel efficiency than gasoline. Fewer than 1 percent of gas stations in the United States sell E85, which makes refueling a challenge.

Natural Gas

Natural gas vehicles run cleaner than comparable gasoline vehicles and are more fuel efficient, which translates to lower fuel costs, and fewer oil changes. Vehicles powered with natural gas often have longer life spans and lower maintenance costs than comparable gas powered vehicles.

On the other hand, natural gas vehicles produce fewer miles per gallon than comparable gas powered vehicles. They also have lower horsepower, which translates to lower speeds and less acceleration. Natural gas tanks are very large and are more difficult to fill than conventional gasoline tanks. Finding fueling stations for natural gas powered vehicles can also be a challenge. Finally, natural gas production from hydraulic fracturing (“fracking”) can produce tremendous ecological damage, including groundwater contamination.


If your company has diesel powered vehicles in its fleet, you can run them on biodiesel fuel without converting the engines. And biodiesel fuel reduces tailpipe or greenhouse gases by 42 percent over comparable vehicles that run on gasoline. Used veggie oil is often inexpensive, and is sometimes free, and older diesel engines can be adapted to use it, although a conversion is required.

While conventional diesel engines can run on biodiesel fuel without conversion, the same is not true for veggie oil. The warranties on your company’s diesel powered vehicles may also only honor fuel blends of 5 percent biodiesel or less. Biodiesel is also more expensive than conventional diesel fuels.

Audrey Henderson

Posted In: Vehicles & Fleets

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