How EV Fleet Operators Can Turn Energy Costs Into an Advantage
This is part 2 of our series on cost-per-mile (CPM), the most important metric for EV fleet operators. In part 1, we looked at how picking the right charging depot location can lower CPM by $0.10 per mile by increasing the relative amount of revenue miles. Today we’re focusing on the other side of the equation: lowering costs.
EV cost structure: same but different
Operating a fleet is all about margins. With EV unit economics improving rapidly, more operators are looking at adding EVs to their fleets. In parallel, entirely new categories like autonomous vehicles (AVs) are rapidly expanding into more cities, with EVs as their foundational platforms.
However, there are fundamental differences to the energy cost structure for electric fleets compared to legacy vehicles. Since energy is one of the largest running costs for an operator, understanding how and where to find meaningful savings is key to unlocking better margins.
Why does electricity pricing vary by region?
For one thing, there are significant regional variations in the price of electricity. EIA projects 2026 commercial rates range from roughly 9 cents per kilowatt-hour in Texas to over 21 cents on the West Coast. Moreover, while EV fleets are insulated from gasoline and diesel price volatility, US electricity costs are also rising: commercial rates rose by around 20% from 2020-2024, and almost 5% in the year to April 2026.
Why does electricity pricing vary by time of day?
What’s more, these are average costs. Traditional vehicle fuel prices vary on a weekly or monthly basis, while electricity prices often vary based on the time of day. EVs can potentially cut per-mile fueling costs by more than half compared to gasoline or diesel on average, but this depends on how and when fleets charge. Managing intra-day electricity consumption becomes a key variable for fleet operators in a way they have not had to face before.
Charging at peak time in California could cost almost 50 cents per kilowatt-hour – double or triple the rate at other times of day. And time-of-use pricing for electricity — electricity rates that change depending on the hour of day, rising during periods of high grid demand — is just the start. Most utilities also levy demand charges — fees based on the highest rate of power a site draws at any point in a billing period, regardless of total energy used — for peak power usage in a given month; they can be as high as $500,000 annually per megawatt of peak load. While states like California have special rates that mitigate demand charges in the near term, understanding how to durably reduce them will be a key factor for fleets in the long run. (Similarly, some markets add “capacity tag” charges — fees tied to a site's power consumption specifically during the utility's peak load hours in a given season or year, used to allocate grid infrastructure costs — to utility bills, which are based on site power consumption during peak load hours in a given season or year.)
How does Terawatt model energy costs for an EV charging site?
Given these complexities, how does Terawatt help customers lower these costs?
It starts with analysis. We model charging needs over the lifetime of a site – accounting for vehicle charge curves, arrival patterns, and changes in vehicle platforms. We then overlay specific utility rate structure of a location to quantify the expected energy costs and contribution of each component (for example, how much of the cost is coming from time-of-use energy charges vs. monthly demand charges). This foundational capability unlocks insights for lowering operational costs in a number of ways.
Primary vs. secondary electrical service: which is better for an EV depot?
Most Terawatt sites are new builds, and site design has implications for utility costs. One common early development decision is whether to choose secondary or primary service. Secondary service means taking lower-voltage electricity (typically 480V) delivered through utility equipment. You spend less on upfront infrastructure, but often pay higher electricity rates – and you’re more likely to be hard-capped on total power available.
Primary service means tapping a medium-voltage feed (ranging from 12.47 to 33.4kV) directly from the utility, and using your own transformers and switchgear to step down to voltages usable at the site — effectively acting as your own substation. This typically suits customers with higher power needs and can unlock meaningfully lower rates, which compounds into real savings over the life of the site and gives you room to scale with your fleet, but it often requires higher upfront capex.
For example, on Pepco's time-metered general service in Washington, DC, taking service at primary voltage cuts the distribution demand charge from $28.15 to $15.11 per kW per month — nearly in half. Those savings recur every month for the life of the asset and become even more impactful as rates increase over time.
Another common design decision is whether to enroll in a special utility rate for EV charging, if one is available. These are intended to incentivize EV deployment by tweaking the components of the cost structure, for example eliminating demand charges in exchange for raising energy rates. This mitigates costs for sites that have relatively low EV charger utilization but high peaks: think of a parking lot with a handful of chargers that are unoccupied most of the day, but want to charge vehicles as fast as possible when they do plug in. Over time, as charger utilization increases, there is typically a point at which the non-EV rate for general commercial customers becomes more cost-effective.
In theory, this gives sites the option to select the rate that works best for them. Yet many EV rates explicitly prohibit non-EV loads from being connected, so a separate electrical service has to be installed for amenity buildings. The design decision then becomes whether the expected site utilization will benefit from the EV rate given the cost of the extra service, or if normal commercial service with demand charges will mean lower overall costs.
Deep understanding of the rate options and projected load profiles is therefore critical to making informed upfront decisions that can yield long-term benefits for customers. For one Terawatt site in LA, our modeling counter-intuitively revealed that the expected site utilization was high enough for the non-EV rate to be preferred, which meant the customer could forgo the additional cost to separate the EV charging from the other site loads.
What utility rate options are available for EV fleet charging?
There are often other utility rate options that customers can take advantage of as well. In deregulated markets, customers can choose from multiple retail energy suppliers and pricing structures, introducing an additional layer of optionality. Rate design also offers further choices, such as participation in demand response or critical peak pricing programs, incentives for solar net metering or battery energy storage, and dynamic pricing tied to hourly grid conditions. The optimal path depends heavily on a site's planned utilization and how demand diversifies over time – and the value of any given program depends on that same load profile, not on a blanket assumption that it lowers costs.
Each of these layers represent complexities that can be challenging for fleet operators used to simply tracking today’s gasoline or diesel price. Working with a partner that has sophisticated tools for modelling future demand can help simplify the utility rate decisions and drive down cost-per-mile.
How do solar and batteries lower EV charging costs?
Once design decisions are made and utility rates are selected, the actual site loads realized in operation become the focus of lowering costs. Terawatt provides operational service to all of our sites, including the use of our proprietary Charge Management System, where we implement strategies like load management and deployment of distributed energy resources (DERs) to deliver value.
Solar canopies produce clean energy that is used directly for EV charging or exported to the grid for utility bill credits. Granular control over chargers allows for minor adjustments in power consumption to reduce demand or shift energy use without impacting the customer experience. Installation of battery energy storage systems (BESS) enables more EV charging load. It also displaces grid power strategically to maximize bill savings and can unlock additional revenue streams from demand response and grid services. As a bonus, batteries offer resilience in the event of a utility outage.
We also design and operate our sites for efficiency at every level, from hardware to software. Our full-stack solution schedules and distributes available power intelligently across vehicles to deliver reliable, cost-effective energy.
How much can fleet operators save per mile on energy costs?
A 5 megawatt, 35-stall depot with 25% utilization will consume ~11,000 megawatt-hours per year. At 25 cents per kilowatt-hour, that’s $2.7M per year. Across the three main levers outlined above – upfront design, tariff selection, and DERs – we see Terawatt customers saving as much as $500k per site per year in energy costs.
The same depot supports about 15 million vehicle miles per year (assuming each vehicle charge supports about 100 miles of driving, and about 12 vehicles charge per stall per day). Working with Terawatt, customers can save 3 cents per mile by reducing their energy costs.
Putting it all together
This is a pivotal moment for EV fleets. Advances in technology are driving down core technology costs, especially in autonomous vehicles, and changing the total cost of ownership equation for electric vehicles of all sizes. At the same time, pressure on electricity prices is ramping up, and strategically located and permitted real estate remains scarce.
As electrification accounts for a growing share of the movement of people and goods, operators are looking for a clearer picture of how much it costs to run their fleets, and how and where they can optimize. Relentlessly focusing on cost-per-mile – the total dollar amount to move a load a fixed distance once all overheads are accounted for – is the best way for fleets to understand their market position and gain a durable advantage throughout the electrification transition. That means partnering with the right provider is one of the highest-leverage choices operators can make.
Terawatt exists to help fleet operators navigate this shift. By moving the needle on both the numerator and denominator, we help our customers lower their cost-per-mile. Through our technology, site development and operations expertise, we offer fleet operators one of the most valuable things in any business: a head start on the future.
FAQs
What is cost per mile (CPM) for an EV fleet?
Cost per mile is the total cost to move a vehicle one mile once all overhead — vehicle amortization, energy, real estate, and operations — is accounted for. It's the core metric fleet operators use to measure their margins and competitive position as they electrify.
How much can fleet operators save on energy costs with Terawatt?
Terawatt customers save as much as $500,000 per site per year in energy costs, which translates to roughly 3 cents per mile, by optimizing upfront site design, utility rate selection, and use of distributed energy resources.
What's the difference between primary and secondary electrical service?
Secondary service delivers lower-voltage power (typically 480V) through utility-owned equipment, with lower upfront cost but higher electricity rates and a hard cap on available power. Primary service taps a medium-voltage feed directly from the utility, requiring the site to own its own transformers and switchgear, but it typically unlocks lower long-term rates and more room to scale.
Why does electricity pricing vary by time of day?
Most utilities charge time-of-use rates, where energy costs more during peak demand hours — in California, peak pricing can run close to 50 cents per kilowatt-hour, double or triple off-peak rates. Utilities also charge separate demand charges based on a site's peak power draw in a given month, which can add up to $500,000 annually per megawatt of peak load.
Do EV fleets pay less for fuel than gasoline or diesel fleets?
On average, EVs can cut per-mile fueling costs by more than half compared to gasoline or diesel. But the actual savings depend heavily on when and how a fleet charges, since electricity pricing varies by both region and time of day in ways gasoline pricing does not.
How does Terawatt lower energy costs for fleet operators?
Terawatt models site-specific charging needs against local utility rate structures to inform upfront design decisions (like primary vs. secondary service), select the most cost-effective utility rate, and deploy distributed energy resources like solar and batteries — all operated through Terawatt's proprietary Charge Management System.