Financial Impacts of Electrifying the Passenger Transfer Vehicles
Converting to electric propulsion technology is expensive and we estimate that electrifying the entire PTV fleet could cost approximately $ 110 million .
Our assumption is that each PTV will cost between $ 2 and $ 2.5 million although we will have a much better understanding of costs once we begin dialogue with potential vehicle manufacturers . In addition to the vehicles themselves , we are assuming one charging station per PTV plus the cost of installation may cost as much as $ 100,000 per unit . 12 As a result , the charging costs for 46 PTVs would be approximately $ 4.6 million . It may be possible to upgrade our electrical infrastructure along the route of the PTVs so that they charge while docked and waiting for passengers . However , as with the expected cost of the vehicles , we expect to get better information on charging options from manufacturers .
Based on the above , our assumption is that the combined investment for 46 PTVs and chargers could be up to $ 110 million . Given such a large capital investment , we are moving in a prudent manner before making such a commitment . We have also been actively engaged with the FAA to seek financial assistance through the Zero Emissions Vehicle ( ZEV ) program to help us make such an important investment and we are encouraged by their response to date .
From a fuel cost perspective , at our current rates , 306 kWh per day , per vehicle translates into approximately $ 19 per day . However , the added demand of the charging infrastructure may increase our electricity costs as well . Therefore , if we assume a 10 % increase in electricity costs due to higher demand charges , the cost would be approximately $ 21 per day , per PTV ; annualized , we expect incremental electricity costs per vehicle of approximately $ 7,665 if operated 365 days a year . For a fleet of 46 , the total incremental utility costs per year would be approximately $ 353,000 . In 2019 , our cost of diesel fuel to power the PTVs was $ 910,000 , so a reasonable expectation of average annual fuel savings is $ 550,000 . This is particularly conservative , given that the actual diesel consumption is based off an average fleet size of less than 46 full-time vehicles as certain PTVs go in and out of service based on maintenance issues .
As it relates to operations and maintenance , again from 2013 – 2018 , our average annual cost of parts and labor for the vehicles was approximately $ 2.3 million . Given that electric vehicles are typically less costly to maintain ( i . e ., no oil to change , fewer moving parts , less brake wear and tear ), if we can save 50 % on O & M , an additional savings of $ 1.15 million per year is possible . A concern related to O & M is how the vehicles ( and the batteries ) perform under actual operating conditions . Given a trend toward 12-year warranties on batteries in the electric bus market , which is the closest proxy market to the PTVs , we expect that the battery decay risk is shifted to the vehicle manufacturer . We are also considering requiring a 12-year warranty as part of our Request for Proposal process when it comes time to select a vendor .
Based on the cost information above , from a return-on-investment perspective , if we are responsible for the entire $ 110 million investment and we assume $ 1.7 million in annual savings ( i . e . fuel savings plus 50 % O & M savings ), our simple payback would exceed 64 years ( on an undiscounted basis ). An outlay of this magnitude with such a low return on investment is difficult to justify until technology advances . As a result , in the near term , as noted , we have had discussions with the FAA regarding the eligibility of this project for a ZEV grant of 75 % of the cost of the new vehicles . With a 75 % grant , the payback on our
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