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Alternative Fuel

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The feasibility of adding AFVs (alternative fuel vehicles) to the Lotus Rental Car fleet is examined in the attached research. The advantages and disadvantages of AFVs were analyzed. In addition, the environmental effect of AFV use on future generations is also discussed. By comparing the overall information and data of AFVs vs. petroleum-fueled vehicles, and researching how other fleets have successfully incorporated AFVs, the result is conclusive evidence that the addition of AFVs to the Lotus fleet is a viable course of action for the future of Lotus.

The Feasibility of Adding Alternative-Fuel Vehicles

To the Lotus Rental Car Fleet

In the competitive business environment most organizations are facing today, there is an ever-increasing need to find ways to lower costs, improve efficiencies, and improve customer satisfaction. The Lotus Rental Car Company is not different from other businesses in that respect. Currently, the Lotus Rental Car management is considering the addition of alternative-fuel vehicles (AFVs) to its fleet as one cost-cutting technique. Adding alternative-fuel vehicles to the Lotus fleet may seem like a good idea up front, but before the company proceeds with this initiative, the Chief Financial Officer (CFO) requested more information and research to determine if this is a feasible option for the company.

This research paper will provide information that will enable the CFO to make a decision on this venture. We will define alternative-fuel vehicles and we will compare and contrast the feasibility of the different types of alternative fuels that are currently available. In addition, we will explore the benefits of using AFVs. We will also examine how AFVs directly affect the environment, and we will provide some real-world examples of rental fleets that have already moved to alternative-fuel vehicles. The results provided will enable the Lotus CFO to make a more educated decision concerning the addition of alternative-fuel vehicles to the fleet.

Before the decision is made to add alternative-fuel vehicles to the Lotus fleet, we need to determine if AFVs truly are a feasible option. We must first acquire an understanding of alternative-fuel vehicles. As discovered in our research, there are currently a wide variety of alternative-fuel vehicles being used today. Alternative-fuel vehicles can operate on fuels other than gasoline or diesel. They come in a variety of forms, from commuter cars to large 18-wheelers. Using alternative fuels helps reduce our nation's dependence on imported oil and improves air quality. The Energy Policy Act of 1992 (EPAct) defines alternative fuels as electricity, ethanol, natural gas, propane, methanol, hydrogen, and biodiesel (U.S. Department of Energy, What is the Energy Policy Act of 1992, para. 2).

One of the main issues that requires examination is to find out more details regarding the many different types of alternative fuels. With that thought in mind, the next step in our research process was to weigh the pros and cons of the various alternative fuel types that would be feasible for the Lotus Company to consider.

Since we are dealing with a rental fleet, both the cost of implementing a certain type of alternative-fuel vehicle as well as the availability of refueling stations must be considered when comparing the viability of the different fuel types. According to the U.S. Department of Energy, the availability of refueling stations is an issue for vehicles that run on propane and natural gas (U.S. Department of Energy, Alternative Fuels, para.8). With the number of refueling stations being inadequate for propane and natural gas, these two alternative fuels can be ruled out as an option for the Lotus fleet because the Lotus customers are not going to rent vehicles if refueling stations are not readily available. In addition, the problems with using natural gas vehicles are going to grow because "Ford, a major supplier of cars and trucks that run on CNG or propane, is discontinuing production of those vehicles after the 2004 model year" (Brown, 2004, p. 34). Methane and Hydrogen fuels also have similar issues in regard to refueling station availability, so that would leave ethanol, biodiesel, and hybrids as the most likely choices for use in the Lotus fleet. Biodiesel and ethanol do not require any modifications to the vehicle engines, but the infrastructure for the fuel supply is still inadequate in some parts of the country. Hybrid electric cars on the other hand, burn regular gasoline when not using their electric motors, so refueling stations would not be an issue with those vehicles.

Adding AFVs to a fleet may be a substantial investment, and this investment may turn out to be more of a significant risk if all of the potential options are not examined. While knowing the advantages of AFVs is vital information, it is just as important to take into consideration what some of the disadvantages or criticisms may be. One of the shortcomings found in the research was that some critics suggest that several of the hybrid AFVs are not producing the gas mileage originally reported (Flammang, 2005, Debates section, para.1).

In a recent report, there have been several accounts of the hybrid Toyota not meeting customer satisfaction.

The Toyota Prius, the gas-electric hybrid sedan that has generated waiting lists of environmentally conscious consumers, is the subject of a government investigation into reports that the engine can stall without warning. All the reports said the engine shut down without warning. About half said the vehicle wouldn't restart and required a tow after the engine shut off. (Associated Press)

There have been other reports from owners of Toyota and Honda hybrids indicating that the hybrids have twice as many reliability issues and mechanical problems when compared to the same models using regular fuel. (Flammang, 2005, Debates section, para. 2)

While it is important to consider reports of mechanical issues, it does not seem that everyone using hybrids has encountered these problems. The Denver Public Works Department has had remarkable success with hybrid vehicles. Nancy Kuhn, who is the project coordinator for the Fleet Maintenance Division in Denver, states that:

We have 53 Toyota Prius passenger vehicles assigned to agencies in our motor pool. Public Works has a motor pool, and a lot of our Prius cars are in that pool. They're great, we love those hybrid vehicles. I can't think of a single issue we have with them. People like driving them. (Brown, 2004, p. 34)

Projected sales numbers for hybrid vehicles do not indicate that mechanical issues are a problem either. There still is currently a



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