Alternative Fuel Vehicles To The Lotus Fleet example essay topic

Abstract The feasibility of adding AFVs (alternative fuel vehicles) to the Lotus Rental Car fleet is examined in the attached research. The advantages and disadvantages of AFVs were analyzed. In addition, the environmental effect of AFV use on future generations is also discussed. By comparing the overall information and data of AFVs vs. petroleum-fueled vehicles, and researching how other fleets have successfully incorporated AFVs, the result is conclusive evidence that the addition of AFVs to the Lotus fleet is a viable course of action for the future of Lotus. The Feasibility of Adding Alternative-Fuel Vehicles To the Lotus Rental Car Fleet In the competitive business environment most organizations are facing today, there is an ever-increasing need to find ways to lower costs, improve efficiencies, and improve customer satisfaction. The Lotus Rental Car Company is not different from other businesses in that respect.

Currently, the Lotus Rental Car management is considering the addition of alternative-fuel vehicles (AFVs) to its fleet as one cost-cutting technique. Adding alternative-fuel vehicles to the Lotus fleet may seem like a good idea up front, but before the company proceeds with this initiative, the Chief Financial Officer (CFO) requested more information and research to determine if this is a feasible option for the company. This research paper will provide information that will enable the CFO to make a decision on this venture. We will define alternative-fuel vehicles and we will compare and contrast the feasibility of the different types of alternative fuels that are currently available. In addition, we will explore the benefits of using AFVs.

We will also examine how AFVs directly affect the environment, and we will provide some real-world examples of rental fleets that have already moved to alternative-fuel vehicles. The results provided will enable the Lotus CFO to make a more educated decision concerning the addition of alternative-fuel vehicles to the fleet. Before the decision is made to add alternative-fuel vehicles to the Lotus fleet, we need to determine if AFVs truly are a feasible option. We must first acquire an understanding of alternative-fuel vehicles.

As discovered in our research, there are currently a wide variety of alternative-fuel vehicles being used today. Alternative-fuel vehicles can operate on fuels other than gasoline or diesel. They come in a variety of forms, from commuter cars to large 18-wheelers. Using alternative fuels helps reduce our nation's dependence on imported oil and improves air quality.

The Energy Policy Act of 1992 (EPAct) defines alternative fuels as electricity, ethanol, natural gas, propane, methanol, hydrogen, and bio diesel (U.S. Department of Energy, What is the Energy Policy Act of 1992, para. 2). One of the main issues that requires examination is to find out more details regarding the many different types of alternative fuels. With that thought in mind, the next step in our research process was to weigh the pros and cons of the various alternative fuel types that would be feasible for the Lotus Company to consider. Since we are dealing with a rental fleet, both the cost of implementing a certain type of alternative-fuel vehicle as well as the availability of refueling stations must be considered when comparing the viability of the different fuel types. According to the U.S. Department of Energy, the availability of refueling stations is an issue for vehicles that run on propane and natural gas (U.S. Department of Energy, Alternative Fuels, para.

8). With the number of refueling stations being inadequate for propane and natural gas, these two alternative fuels can be ruled out as an option for the Lotus fleet because the Lotus customers are not going to rent vehicles if refueling stations are not readily available. In addition, the problems with using natural gas vehicles are going to grow because "Ford, a major supplier of cars and trucks that run on CNG or propane, is discontinuing production of those vehicles after the 2004 model year" (Brown, 2004, p. 34). Methane and Hydrogen fuels also have similar issues in regard to refueling station availability, so that would leave ethanol, bio diesel, and hybrids as the most likely choices for use in the Lotus fleet.

Biodiesel and ethanol do not require any modifications to the vehicle engines, but the infrastructure for the fuel supply is still inadequate in some parts of the country. Hybrid electric cars on the other hand, burn regular gasoline when not using their electric motors, so refueling stations would not be an issue with those vehicles. Adding AFVs to a fleet may be a substantial investment, and this investment may turn out to be more of a significant risk if all of the potential options are not examined. While knowing the advantages of AFVs is vital information, it is just as important to take into consideration what some of the disadvantages or criticisms may be.

One of the shortcomings found in the research was that some critics suggest that several of the hybrid AFVs are not producing the gas mileage originally reported (Flammang, 2005, Debates section, para. 1). In a recent report, there have been several accounts of the hybrid Toyota not meeting customer satisfaction. The Toyota Prius, the gas-electric hybrid sedan that has generated waiting lists of environmentally conscious consumers, is the subject of a government investigation into reports that the engine can stall without warning. All the reports said the engine shut down without warning. About half said the vehicle wouldn't restart and required a tow after the engine shut off.

(Associated Press) There have been other reports from owners of Toyota and Honda hybrids indicating that the hybrids have twice as many reliability issues and mechanical problems when compared to the same models using regular fuel. (Flammang, 2005, Debates section, para. 2) While it is important to consider reports of mechanical issues, it does not seem that everyone using hybrids has encountered these problems. The Denver Public Works Department has had remarkable success with hybrid vehicles. Nancy Kuhn, who is the project coordinator for the Fleet Maintenance Division in Denver, states that: We have 53 Toyota Prius passenger vehicles assigned to agencies in our motor pool. Public Works has a motor pool, and a lot of our Prius cars are in that pool.

They " re great, we love those hybrid vehicles. I can't think of a single issue we have with them. People like driving them. (Brown, 2004, p. 34) Projected sales numbers for hybrid vehicles do not indicate that mechanical issues are a problem either. There still is currently a substantial waiting list, which may delay the arrival of the vehicles to add to the fleet. A documented Toyota report from 2004 states: Prius had its best-ever May, selling 9,461 of the sedans, up from 3,962 a year ago.

Toyota has sold 43,686 Pri uses this year, up from 17,564 sedans sold during the same period a year ago. The automaker has said it plans to double to 100,000 the number of Prius cars for the North American market this year. (Associated Press, 2005) There are currently a wide variety of hybrid vehicles from which to choose. We believe choosing the best model from the most reliable automobile maker will separate Lotus from the other car rental establishments. Consumer confidence with Lotus and with our product is always a goal we strive to satisfy. One of the biggest disadvantages for AFVs, especially hydrogen or fully electric cars, is the lack of refueling stations and little or no existing infrastructure in the United States to support these types of vehicles when looking for alternative fuel locations (U.S. Department of Energy, Alternative-Fuel Vehicles section, para.

6). However, the more AFVs being produced, the more common alternative refueling centers will become due to the increased demand. While the disadvantages are an important consideration for Lotus, our research does indicate that there are more advantages to AFVs than disadvantages. Despite the technology required to design these alternative fuel engines, the prices of AFVs are very comparable to regular fuel vehicles. "The federal government and many states have enacted tax or other incentives to help encourage the alternative fuels market" (U.S. Department of Energy, Alternative-Fuel Vehicle Incentives section, para.

1). To locate the information for each state in which Lotus operates, there is detailed information in the Alternative-Fuel Vehicle Incentives section of the Fleet Buyer's Guide (U.S. Department of Energy, Alternative-Fuel Vehicle Incentives section). Alternative fuels can also help to secure supplies to fleets, such as propane. Using the past as an indicator, there have been previous petroleum shortages which have caused price increases. Alternative fuels have historically had fewer price fluctuations than gasoline (U.S. Department of Energy, Reasons to Buy Alternative-Fuel Vehicles section, para. 4).

While the previously mentioned benefits of AFVs are of a financial nature, there are also environmental benefits to using alternative fuels. One of the most significant advantages to AFVs that does not seem to be disputed is low emissions. All available alternative fuels reduce emissions to some degree. "For example, a light-duty natural gas vehicle can produce 80% fewer tailpipe emissions than a gasoline vehicle. A light-duty propane vehicle can produce 60% fewer harmful emissions than its gasoline counterpart. In addition, a flexible-fuel vehicle operating on ethanol produces 25% fewer tailpipe emissions than a gasoline vehicle" (U.S. Department of Energy, Reasons to Buy Alternative-Fuel Vehicles section, para.

7). Lower emissions can help reduce both air quality problems and pollution problems. In addition to financial and environmental benefits, there are several other advantages to using AFVs. The use of alternative fuels and AFVs can possibly help to decrease America's dependence on oil imports from foreign countries and can decrease the demand for gasoline and diesel. The U.S. transportation sector is 97% dependent on petroleum, 55% of which is imported. These calculations are expected to rise as the numbers of gasoline vehicles are increased in production (U.S. Department of Energy, Reasons to Buy Alternative-Fuel Vehicles, para.

4). While the ethical and environmental concerns are very important to the Lotus Corporation, it is not the company's primary focal point. Focusing in on those particular considerations for advertisement could potentially attract more clientele. Consumers today are more conscious of environmental issues and are more apt to give their business to an organization that he or she feels is also environmentally conscious.

The consideration of the advantages and disadvantages of alternative fuels at a high-level is certainly a requirement in a decision such as this, but perhaps more important would be hearing the success stories of other organizations which have already implemented AFVs into their fleets. There are many examples of fleets that have added AFVs. These fleets include public transit fleets, limousines, taxis, and freight trucks. Los Angeles World Airports have used a fleet of 345 AFVs of various types including hybrids, CNG and propane for 9 years, and they have found AFVs to be a cost-effective alternative to regular gasoline vehicles. (U.S. Department of Energy, Fleet Successes Los Angeles World Airports section, para. 1). The Sacramento Airport is another example of an organization that has implemented the use of AFVs in their fleet.

"Sacramento has actively reduced total air emissions by 15% since 1985, while doubling its passenger activities" (U.S. Department of Energy, Fleet Successes Sacramento Airport section, para. 1). The Sacramento Airport has accomplished this by building a CNG refueling station at the airport to fuel the fleet CNG buses, trucks and vans. (U.S. Department of Energy, Fleet Successes Sacramento Airport section, para. 1). The associated costs of building a CNG refueling station may be something that Lotus would be unable to handle at this time, but when looking at the success the Sacramento Airport has had with this model, it may be a possible alternative in the future. Lotus could possibly approach a local airport or city government to see if there would be interest in sharing the cost of building such a facility.

The City of Raleigh uses a variety of alternative fuels in their fleet, including Biodiesel, CNG, and hybrids. Managers of the Raleigh program report that they have not encountered any maintenance problems with the AFVs during the 4 years they have been running the program. They also report that CNG is cost-effective at approximately $. 69 cents per gallon. (Triangle Clean City Coalition, City of Raleigh section, para. 2).

The Raleigh managers also report that "Bio diesel requires no engine or refueling infrastructure modifications; therefore it is easy to transition an entire fleet" (Triangle Clean City Coalition, City of Raleigh section, para. 3). There is data and examples proving the feasibility of adding AFVs to the fleet of Lotus Rental Car. There are numerous benefits and advantages to adding the AFVs, such as competitive cost. The availability of financial incentives as well as the benefit of lower emissions, less pollutants and better gas mileage, to name a few. It appears the decision to add AFVs to the Lotus Rental fleet is not only feasible, but also recommended when considering the success other fleets in the U.S. have experienced with the transition.

In addition, hybrid vehicles are the most increasingly popular vehicles since the production of AFVs has risen to an all time high (Friedman, n. d., para. 1). While our comparisons of the different types of alternative fuels and AFVs indicated that there are some drawbacks to using these types of fuels, the successes that other fleets have encountered after implementing AFVs seem to overshadow any disadvantages. If the Lotus Rental Car Company chooses to add AFVs to their fleet at this time, there is no reason to believe they will not experience the same success that other fleets have encountered with AFVs. The decision will also have the added benefit of helping the environment and reducing our dependency on foreign oil, which would be a good marketing tool to attract new Lotus customers.

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