How To Use Pay-Per-Mile Subscription Model in High-Mileage Fleets

With high gas prices and a growing demand for electric vehicles by customers, RideShare Carz, which opened in 2021, found a practical way to lease EVs for its fleet through an outreach from Spring Free EV.

“One of the challenges was not understanding there was a leasing opportunity that could get us a volume of EVs and make it worthwhile for us, as opposed to just straight-up financing or acquiring cash vehicles,” said Shamus Hayes, vice president and managing partner at RideShare Carz, which offers rental cars for rideshare, delivery, and gig-economy drivers in Dallas/Fort Worth, Houston, and surrounding areas.

Sunil Paul, co-founder and CEO of Spring Free EV, a financial technology company that offers EVs through fintech products, and Hayes shared their insights on various topics in a recent webinar titled, “Accelerating your Fleet’s Success: Unlocking the Power & Benefits of EVs.”

Paul and Hayes covered the topics of how to lease EVs in an affordable way, driver education, range anxiety, and managing total cost of ownership (TCO).

Pay-Per-Mile Subscription Model

Spring Free EV, which aims to help small- and medium-sized businesses grow their fleets with EVs, offers a pay-per-mile subscription model designed to benefit high-mileage drivers. “We allow a novel form of financing, which we call the mileage purchase agreement, where fleets can sign up to get access to an electric vehicle for a monthly fee that varies according to the mileage driven,” Paul said

One of the advantages of an EV is it costs less to operate per mile than a gas- or diesel-powered vehicle, Paul said. “The sort of insight and the idea behind our unique offering is that you’re paying per mile, and that per-mile fee is offset by the savings in gas and maintenance.”

RideShare Carz has seen a 75% reduction in maintenance expenses on its EVs compared to ICE vehicles. “Generally, the lower cost of maintenance on these vehicles allows us to reinvest into our company and grow our fleet even more, get to more cities, and establish more partnerships,” Hayes said.

Since RideShare Carz caters to Uber and Lyft drivers, the mileage maximum will typically be reached in metropolitan areas such as Dallas/Forth Worth and Houston. But during low season, the vehicles will incur lower maintenance costs due to less wear and tear.

While Spring Free EV will charge per mile, there’s also a maximum mileage cap, depending on the vehicle. “On a monthly basis, if someone’s driving crazy amount of miles, there’s a maximum that a fleet manager would pay,” Paul said.

Cost saving from EV maintenance Regarding cost savings related to the maintenance of EVs involve two main factors:

1. The increased price of oil. “We’re not having to acquire as much oil, so that’s going to be one of the significant reductions in expenses,” Hayes said.
2. Educating the driver on the advantages of the one-pedal driving, which helps prolong the brake life and overall performance of the EV.

Benefits of Driver Education

RideShare Carz emphasizes educating drivers who rent a vehicle, Hayes said. 

“We’re all about your entire experience, which doesn’t just start and end with handing you the keys. It’s all about the full circle where it starts with you coming in the door, the education you receive from our team, and how we help you earn your income all the way to the point where your rental is over.”

One key aspect of driver education is how to properly charge a particular vehicle. For instance, there is a difference in charging a Tesla versus a Chevy Bolt, Hayes said. “There’s a couple of features you must do in the computer that can enhance your charging experience. So drivers don’t call us to say, ‘Hey, it’s taken two hours to charge my car,’ when they can charge the car in 45 to 60 minutes.”

RideShare Carz also stresses how to drive an EV differently on the highway. “Cruise control is your best friend because it helps and keeps that energy usage consistent, and we let them know about hard accelerations and fast breaking,” Hayes said. “The smoother of a driver you are, the better success you will have with your efficiency and the more money you will make because your vehicle will last much longer.”

In addition, drivers must balance factors such as time and money when renting an EV. “For our drivers, the time to charge has to make sense compared to how much they earn and how quickly they earn that money,” Hayes said. “And what does that look like as if they were going to put $40 or $50 or $60 in their gas tank?”

Artificial intelligence can be a conduit for driver education as a tutorial, Paul said. “It is a tutor that never gets bored, doesn’t mind how many dumb questions you ask it, is happy to show you how to start the vehicle, and is available to you 24/7. We think there’s tremendous opportunity in that category.”

To encourage the use and promote the environmental benefits of EVs, RideShare Carz offers rewards such as discounted pricing, and drivers get better pay from some of its partners. The company also offers on-site and virtual seminars on how to enhance the income for gig drivers.

Improving the Charging Infrastructure

RideShare Carz is relying on the cities and its partners such as EVgo and Electrify America to provide fast charging for drivers.

Hayes notes there has been massive investment in deploying public charging stations at the federal, state, and local level, but “in general, the infrastructure is not anywhere where it needs to be.”

Driving from Houston to Dallas can pose a challenge, since drivers are compelled to stay in a metropolitan area, near the charging network, Hayes said. “If they must go to Dallas, they might only find one or two of those stations along the way. And it requires some good management on making sure you can get from point A to point B with enough charge. Once you’re there, depending on the number of chargers available, are you waiting possibly 20-30 minutes for a charger to open?”

RideShare Carz prioritizes providing information of all available charging stations for drivers in a metro area. In addition, once it receives new information from EVgo and Electrify America about new charging stations, it immediately relays that information to the drivers.

GM recently announced its partnership with Tesla that will expand access to charging for GM EV drivers at 12,000+ Tesla Superchargers throughout North America starting next year.

“These changes that are happening on the OEM side will be very helpful as they’re partnering with Tesla to increase the charging network quite quickly across the board,” Hayes said.

The company is exploring options to eventually install charging stations at RideShare Carz locations, which would not only provide access to charging for drivers, but also reduce the turnaround times to re-rent the vehicles, he said. “If a car comes in and gets returned at 10 a.m. on Monday, I want to have the ability by 3 p.m. to turn that car around and get that into another driver’s hands. I can’t do that if I don’t have the infrastructure.”

For Level 3 charging stations, Hayes said the PlugShare app, as well as Google Maps and Apple Maps, provide a lot of information. “I’d encourage anybody who’s unsure about where they can charge their vehicle to go onto one of those apps and put in ‘electric vehicle charging.’”

Relieving Range Anxiety

There will be certain instances when a driver, who may average 200-300 miles per day, runs out of charge, or the charging station is down and the driver doesn’t have enough charge to get to the next station, Hayes said.

To help stranded drivers, the company has rideshare cars that provide roadside assistance in the same way if someone were to run out of gas. It also relies on its partners like OnStar to provide towing assistance.

RideShare Carz advises drivers not to wait too long before they charge their batteries, such as delaying until the battery has 20% charge, and it recommends they should be no more than 50 miles from any available charging station, Hayes said.

Some of the newer EV models have come out with a higher-voltage, larger battery pack, which allows the battery to charge faster and provides longer mileage range. But it tends to add to the price of the vehicle, Paul said. “How are you going to afford that? For example, a model Y has great range compared to a Bolt, but it costs twice as much. We’re talking about a $60,000 car versus a $30,000 car.”

Part of Spring Free EV’s goal in the model behind leasing and a per-mile fee is to make it more affordable to get into these longer-range vehicles, Paul said. “We like that there’s greater range. And we think that this mileage purchase agreement concept can get fleets into longer-range vehicles that they might not otherwise be able to afford.”

Maximizing Total Cost of Ownership

Keeping the total cost down relies mainly on regular maintenance of the vehicle, Hayes said. “We have a 28-day check-in with our drivers, so basically once a month we have our drivers come in and we give the vehicle a whole check-over. I think our total cost that we invest into it over time will continue to reduce because of this monthly maintenance check that we’ve instituted to help keep an eye on the vehicles.”

TCO is one of the magic ingredients of the EV, Paul said. “It’s not widely recognized. The reason why we’re so focused on vehicles that do a lot of miles is that you’re never going to get to a total cost of ownership advantage if you do a small number of miles.”

Paul noted that most EVs accrue an annual mileage below the average miles driven per year in the U.S., which is 12,000-13,000 miles. However, Spring Free’s EVs have an annual mileage well above the U.S. average across the entire fleet. “That means that they’re getting to their total cost of ownership advantage faster,” Paul said. “You’re saving money on gas as you’re putting on more miles. You’re avoiding more maintenance costs as compared to the gas-powered vehicle. The low maintenance cost is one of the under-appreciated advantages of EVs.”

Leveraging Telematics

RideShare Carz now provides a flat rate insurance, which is automatically included with the rental of the vehicle. However, with the availability of telematics in the vehicle, the company can view the driver performance, which may be a critical factor in the type of insurance being offered in the future, Hayes said.

“Will the use of telematics potentially dictate the insurance rates in the future?” he asked. “Can we provide rewards for drivers who are great quality drivers? And do we need to perform risk assessments on drivers who may not be quality drivers and possibly tell them they can or cannot drive for the company based on their risk scoring? All these things will be topics for discussion as costs of insurance continue to rise.”