By Motus
August 1, 2023
Over the past five years electric vehicles have increased in both popularity and production. Even more recently, the federal government has taken steps to improve electric vehicle infrastructure. This development has been received well by consumers and companies looking to decrease their environmental impact. It has also created a small challenge to companies with traditional reimbursement programs. How do you reimburse the owners of electric vehicles for their business miles? Fortunately, Motus has a solution.
As mentioned above, electric vehicles have become increasingly popular. With the chip shortage, automakers have struggled to manufacture vehicles at previous rates. Still, most automakers have at least one or two EV options. That, and a number of states are working toward removing internal combustion engine (ICE) vehicles from government fleets and banning ICE following 2030 or 2035.
But we still have a long way to go before EV’s are the standard and gas-powered vehicles fade into the past. While EV infrastructure was part of new, wide-sweeping legislation, we won’t see a charging station capacity that can support widespread long-distance EV travel until years from now. That doesn’t take electric vehicles out of the equation, specially when it comes to business mileage.
Most mobile workers driving for work won’t be traveling beyond their full charge each day. Depending on their home location and the places they visit, a mobile worker could feasibly make their stops and return home to charge for the following day. If they’re located in a more EV-forward city, they may even be able to charge during lunch breaks or at visiting locations. All of this raises an important question: how do you reimburse employees for use of electric vehicles?
Every year, the IRS determines a mileage rate employers use as a reimbursement guideline. One of the major factors in this mileage rate? The cost of gasoline. With the IRS mileage rate not applicable to vehicles that don’t use gasoline, companies have to look elsewhere. What kind of calculations could help employers reimburse employees for business mileage put on personal electric vehicles? That’s where MPGe comes in.
Miles per gallon-equivalent (MPGe) is a way to measure an electric vehicle’s energy consumption. The EPA devised MPGe to compare how efficient an electrified car is. MPGe also directly links EV travel to how much it costs to charge the vehicle/how much power the vehicle needs to draw to charge. Motus uses MPGe to calculate EV rates.
To calculate EV rates, we leverage the same methodology we use to calculate ICE (internal combustion engine) vehicle rates.
The only real difference in our methods for EVs is the fuel. All fixed components, such as insurance, registration and depreciation use the same methods as ICE vehicles. In the variable costs, we calculate maintenance costs in the same manner as ICE vehicles, but we use parameters based on EV maintenance requirements.
On a recurring basis, we track electricity prices across the country—ensuring rates are accurate and up to date. We update electric rates on a monthly basis to reflect localized averages. Unlike gasoline, electric rates typically do not fluctuate daily, so more frequent updates are not necessary.
Much like any other vehicle program. If you’re a current customer, you can update existing groups or build new groups to use electric base vehicles and an electric “gas grade.” Additionally, Motus account managers can provide a cost comparison for an existing program, answer questions and more. End users will also be able to see EV-specific content in their reimbursement schedules.
Note that there are no additional costs for customers converting existing drivers in their program to an EV program. However, if customers are adding new drivers to a program, there is a cost (normal fees apply).
Using MPGe calculations, Motus customers can provide fair and accurate reimbursements for their drivers who use electric vehicles. That’s a big plus for environmentally progressive employees. However, this is also an opportunity for companies to modernize their corporate reimbursement program by incorporating business driving programs into their environmental initiatives. Depending on your company’s goals, you can make a serious impact on GHG emissions by incentivizing EV use and reimbursing accurately for it.
Interested in learning more? Connect with our team to get the details.
With Motus, accurately capturing business mileage has never been faster or easier.
Contact us today or take a virtual tour of the Motus Platform.
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