Alternative Fuel Vehicles



Alternative Fuel Vehicles

Introduction

Chief Financial Officer of Lotus Rental Car is looking at the potential advantages and feasibility associated with adding the alternative fuel vehicles to their fleet. In order to make a sound decision, it is essential to determine the benefits it could provide to the company. Where, main focus will be on the federal tax breaks and preserving the environment. However, to really discover in our research that whether alternative fuel vehicles are feasible option, a sound understanding of alternative fuel vehicles must be gained first.

Discussion

Alternative Fuel Vehicles

The alternative fuel vehicles provide wide range of variety that is highly available in markets today. Alternative fuel vehicle can operate on other fuels than diesel and gasoline, and they consist of various forms, that is, from commuter cars to large 18-wheelers. Approximately, dozen, or more than that, alternative fuels are under development for utilizing in alternative fuel vehicles. Not only government, but private sector vehicle fleets are also becoming primary users of these types of vehicles. Further, consumers are also increasingly getting interested in alternative fuel vehicles, as in place of conventional vehicles, these types of advanced vehicles offer less usage of petroleum and reduce vehicle emissions (AFDC, 2013). According to the current report of Government Accountability Office (GAO) on fleet vehicles of United States federal agencies, over the last six years, they have increased the alternative fuel vehicles number in their respective fleets. Where, the overall percentage increase is 33 percent from 14 percent (2005 to 2011) (Government Fleet, 2012). Thus, the use of alternative fuel vehicles is highly increasing in the country; therefore, it will be really better to add these types of vehicles in the Lotus Rental Vehicles, considering its high usage in future as well.

(Source: Government Fleet, 2012)

Advantages of AFVs

There are several advantages associated with alternative fuel vehicles usage, such as it helps improving air quality and reduces the country's dependency on imported oil. Though various benefits are associated with AFVs, but among them two most important benefits are federal tax breaks and preserving the environment.

Federal Tax Breaks

The alternative fuel vehicles associated one of the major advantages and that is the federal tax incentive it provides on purchase. Wide range of federal acts of the government of United States offer various tax incentives on buying alternative fuel vehicles, alternative fuel infrastructure installing, and selling; producing; and using alternative fuel vehicles. The Internal Revenue Code (IRC) highlights these incentives, which are developed to support the highly developed fuels and its vehicle' commercialization in order to decrease our country's dependency on imported oil. The alternative fuel vehicle users can take advantage of these tax incentives, however, there are some conditions, particularly with respect to fuel composition, the way of fuel usage, and the eventual responsibility of paying excise tax, should be satisfied for qualifying for offered incentive (AFDC, 2008).

The qualified alternative fuel vehicles placed in to service or purchased between 1st January, 2005 and 31st December, 2010 are eligible for a federal income ...