Sprint/Nextel Greens Its Fleet the SmartWay

There’s a common perception that in order to “go green,” a fleet must spend a lot of money on plug-in hybrids or other alternative-fuel vehicles to justify making a “green fleet” claim to the public. When considering a price premium of several thousand dollars per unit compared to conventional-powered vehicles, imagine how difficult it is to make a compelling business case to switch.

However, what if you could transition a fleet to more environmentally friendly, fuel-efficient vehicles without paying the premium for hybrid and other alternative-fuel technology? What if your company could legitimately promote to customers it operates a “green fleet” — and be able to do so while actually lowering vehicle acquisition and operational costs?

That’s precisely what Sprint/Nextel Corp. discovered it could accomplish with the U.S. Environmental Protection Agency’s (EPA) SmartWay-certified vehicle program.

What is SmartWay Certification?

The federal government launched SmartWay in 2004 to promote the use of more fuel-efficient and cleaner-burning vehicles. Each model year, the EPA evaluates how vehicles stack up to stringent SmartWay criteria, with separate scores (between one and 10) issued for air pollution and greenhouse gas emissions. The higher the score in each category, the more environmentally friendly the vehicle is considered.

To earn a SmartWay designation, a vehicle must receive a combined score of at least 12, with a minimum air pollution score of five. The EPA considers these vehicles, which include a range of conventional-powered cars and SUVs, mostly equipped with four-cylinder engines, as “very good environmental performers” relative to other vehicles.

SmartWay Elite certification is given to vehicles that receive a combined score of at least 17, with a minimum air pollution score of eight. This designation is primarily awarded to hybrids and other alternative-fuel vehicles.

Sprint’s SmartWay Initiative Pays Off

Since early 2010, when Sprint began its SmartWay initiative, the company has transitioned more than 55 percent of its 1,500-vehicle fleet, comprised primarily of cars and small SUVs, to SmartWay-certified vehicles.

The effort seems to be paying off, as Sprint recently placed sixth out of 500 publicly traded companies in Newsweek’s 2010 Green Rankings, based on a series of metrics that rate a company’s overall environmental impact, including greenhouse gas emissions of which fleets are a significant contributor.

SmartWay Economics

What has been the incremental cost to Sprint for switching to SmartWay vehicles?

“Actually, on acquisition cost, I think we’re saving about $2,000 per vehicle by transitioning from six-cylinder vehicles for our sales reps to  SmartWay-certified four-cylinder cars, without much sacrifice in power,” said Bret Watson, national fleet manager for Sprint. “The SmartWay vehicles offer near zero emissions, yet we can still purchase these vehicles at a standard fleet price — at the same discount level as we buy any other vehicle.”

According to Watson, the issue of fleet discounts, or lack thereof, with hybrids is what has made purchasing conventionally powered SmartWay vehicles a more attractive economic proposition.
“On hybrid vehicles currently, fleets are required to pay full retail price. There are no discounts on those whatsoever,” Watson said. “What we’ve found out, particularly in the Midwest, is that with hybrid vehicles, anytime you run the A/C compressor, the gas engine turns on. So, if you’re running the hybrid on a 60- or 70-degree day or don’t need the defroster or the A/C, you can save a little bit of gas on the hybrid. However, in the Midwest, that seldom ever happens. We go from A/C to heat sometimes in the same day. When we do a fuel analysis, we’re getting worse gas mileage out of [the hybrids] than we are out of our standard SmartWay four-cylinder vehicles.”

What’s the cost difference between the hybrid and comparable non-hybrid SmartWay certified vehicle?

“We figured out gas would have to go over $10 per gallon before we think we could start getting a payback on hybrid vehicles [versus the SmartWay vehicles]. As we back into the lifecycle analysis, we put the price of the hybrid in, we put the price of what we’re paying for our normal four-cylinder, and over a three-year period found gas would have to go over $10 per gallon, before that hybrid started paying back,” explained Watson.

Impact on Driver Acceptance

With the transition from six-cylinder to the smaller four-cylinder engines that meet SmartWay certification, has Sprint encountered many complaints from employees?

“The direct answer is no,” said Watson. “Of the 1,300 or so vehicles I’ve purchased in 2010 through 2011, I think I’ve received maybe three complaints. Basically, they weren’t even really complaints. They were more along the lines of, ‘We could use some more power,’ and came from people in Denver and the mountain regions. Once I explained to them Sprint is committed to being green and explained to the drivers, ‘I would love to get you the six-cylinder car but we have a goal of being green so we’re going to drive these,’ we really haven’t had an issue in terms of driver acceptance. If you look at six-cylinders just four to five years ago, today’s four cylinder engines are putting out the same amount of power. The technology is awesome and is making [driver acceptance] less of an issue to switch to the smaller, more fuel-efficient engines.

SmartWay Certification Standards Do Change

A new vehicle designated SmartWay-certified for 2010 may not be certified for 2011 or 2012 model-years — and this can lead to an unpleasant surprise if you don’t confirm the vehicle’s SmartWay certification status before ordering or purchasing the vehicle.

Sprint found this out the hard way. “I can tell you that in 2010, a Ford Escape was SmartWay certified. However, unbeknownst to us, when 2011 came along, we continued buying Ford Escapes, until we found out the 2011 Ford Escapes [non-hybrid] were no longer SmartWay certified. We did not find that out until after we had already ordered the vehicles. That caught us off guard,” Watson explained.

How did this happen? For example, to earn a “six” for the greenhouse gas score in 2010 (which is what the Ford Escape achieved that model-year) the carbon dioxide emissions needed to fit within a range of 376-421 grams of CO2 per mile. In 2011, the EPA raised the CO2 standard (or, put another way, lowered the allowable greenhouse gas level) to 326-371 grams of CO2 per mile to score “six.”
As a result, even though mechanically there was very little (if any) difference between the 2010 and 2011 Ford Escapes, the same level that earned the vehicle a “six” now reflected a “five,” which combined with a “five” score on air pollution, dropped the Escape below the “12” total score required to earn SmartWay certification.

“We had several hundred 2011 Escapes on order that, if those had been SmartWay certified, our fleet would have been 80-percent SmartWay at this point,” Watson lamented.

The lesson learned: “We now tell the OEMs that — before we order any vehicle — we need to know that their vehicle, for that model-year is SmartWay certified,” said Watson

To learn more about the SmartWay program and the latest list of vehicles that qualify, log onto:  http://epa.gov/smartway/vehicles/smartway-certified.htm