Economic and Environmental Optimization of Vehicle Fleets Impact of Policy, Market, Utilization, and Technological Factors

This paper focuses on the economic and environmental optimization of decisions about vehicle replacement from a fleet manager's perspective. An integer programming vehicle replacement model is used to evaluate environmental and policy issues such as greenhouse gas (GHG) taxes and fiscal incentives for purchasing electric vehicles (EVs). This research also analyzes the impacts of utilization (mileage per year per vehicle) and gasoline prices on vehicle-purchasing decisions. Energy and emissions reductions for a variety of scenarios using real-world data in the United States are presented as well as break-even points at which EVs are competitive. Findings include the following: (a) fuel-efficient vehicles such as hybrids and EVs are purchased only in scenarios with high gasoline prices or high utilization, (b) current European carbon dioxide cap-and-trade emissions price (around $18.70/ton) does not significantly alter fleet management decisions, and (c) incentives for using EVs (i.e., tax credits) increase the rate of purchase of hybrid and electric vehicles in scenarios with high gasoline prices and high vehicle utilization. This research indicates that the proposed model can be used effectively to inform environmental and fiscal policies on vehicle regulations, tax incentives, and GHG emissions.