ResponsibleBusiness
The big car switch
For companies with vehicle fleets, converting to electric vehicles is a process both in practical and financial terms. Richard Crump looks at what you need to consider
New petrol and diesel vehicles will be banned from 2035, making it an urgent priority for organisations to work out how and when to transition to an electric fleet. While many companies are well on the way, barriers to adoption persist.
Under the Zero Emission Vehicle (ZEV) Mandate, which came into effect in January, 80% of new cars and 70% of new vans must be zero emission by 2030. And although the government postponed the full sales ban to 2035, fleet owners should not be complacent.
“That breathing room people think they are going to have, it will be there for some vehicles, but it is not going to be there across the board,” David Watts, fleet product manager for electric vehicles (EVs) at Volkswagen Financial Services, says.
UK fleet managers expect to operate fully electric fleets within four years, according to a March 2024 survey by Lex Autolease of 100 fleet managers operating more than 100 cars, which found that a majority had maintained or increased the number of EVs in their fleet.
However, the research also found that businesses are being deterred by the availability of second-hand vehicles, charging times, charging point availability and poor staff engagement, and wanted additional government support to invest in EVs.
Segmentation electrification
The first step towards electrification is understanding its feasibility for a specific fleet. This involves a detailed analysis of your current operations, vehicle usage and energy requirements.
The needs of perk cars – which can often be open to the choice of employees – and operational vehicles, whether vans or branded vehicles where drivers such as engineers, technicians and meter readers get no choice, are very different.
“Don’t think of this as fleet electrification, this is about segmentation electrification. It’s a different approach for your choice-based company cars as for your operational vehicles,” Watts says.
Businesses could have recurring revenue coming in from those chargers.
For operational fleets, organisations must understand how their vehicles are being used. This includes evaluating the range and payload capacity of EVs, especially for businesses with specific transportation requirements.
This should include journey profiling — is the fleet being used for rural, urban or motorway travel? And how far beyond the range of the existing internal combustion engine (ICE) fleet, and how frequently, will the replacement EV have to travel?
“The only way you will understand the capabilities of the vehicle is in your environment doing what you need it to do with your drivers who drive the way they drive,” Watts says.
Watts advises that companies set a realistic roadmap that starts with a pilot on specific vehicles that involves engaged drivers, as “anyone that is automatically anti-EV will only derail the project.”
“Learn from that trial and understand the capabilities of the vehicles because that analysis at the front end is theoretical,” Watts says.
Circuit breakers
One of the biggest barriers to adoption is a lack of adequate charging infrastructure. According to figures from the Department for Transport there are fewer than 45,000 public charging points across the UK– far below the 300,000 target for 2030.
Monitoring energy sources, calculating charging schedules – when is the vehicle being charged, where is it being charged and how long for – will give fleet managers evidence to understand what charging infrastructure is needed to support the business.
This could involve installing chargepoints at the workplace or at an employee’s home in addition to using public charging stations, while scheduling charging sessions to take place during employee’s downtime.
Tom Bloor, managing director of EV charger company evec, says his company has installed chargepoints at his office car park and have been able to take advantage of government grants that allow companies to claim back money for the cost of the charger and installation.
“All of our sales time now is in electric or hybrid cars. We wanted them to have somewhere to charge when they come into HQ,” Bloor says.
The company also opened some of the chargers for the public to use. “That could be another consideration for businesses to have recurring revenue coming in from those chargers,” Bloor says.
Switching doesn’t have to be taxing
Government schemes, grants and tax incentives to go electric.
1
Electric Vehicle Chargepoint Grant
People living in flats or rental accommodation are eligible for an electric vehicle chargepoint grant that covers either £350 or 75% off the cost to buy and install a socket, whichever amount is lower.
2
Workplace Charging Scheme
The scheme provides support for organisations towards the cost of installing up to 40 EV chargepoint sockets at their sites. It covers 7% of the total costs of the purchase and installation (including VAT), capped at £350 per socket.
3
BiK Tax Relief
Company car drivers who drive an electric car will pay benefit in kind of just 2% until April 2025. This will then increase by 1% until 2027/2028.
4
Vehicle Excise Duty
Electric vehicles are exempt from vehicle excise duty until 2025. This exemption applies to both commercial and passenger electric vehicles.
5
Enhanced Capital Allowances
ECAs enable businesses to claim 100% first-year capital allowances on investments in certain energy-saving and low CO2 emission assets, including electric vehicles and charging infrastructure.
6
Clear Air Zones
Several cities across the UK have Clean Air Zones to address air pollution. These zones may offer incentives or exemptions for electric vehicles, encouraging businesses to switch to cleaner alternatives to avoid charges or penalties.
7
Plug-In Van Grant
The plug-in vehicle grant can be claimed on certain electric vans. Eligible vans with a gross vehicle weight of less than 2.5 tonnes can receive as much as 35% of the purchase price, up to £2,500. The cap is £5,000 for larger vans.
The total cost of ownership
While the upfront cost of electric vehicles may be higher, the total cost of ownership over the vehicle’s lifetime tends to be lower due to reduced fuel and maintenance expenses.
“EVs require less maintenance than traditionally fuelled vehicles, thanks to them having fewer parts, mitigating the risk of expensive downtime,” Matthew Walters, head of consultancy services and customer value at LeasePlan UK says.
The standard approach to TCO is to use the Worldwide Harmonised Light Vehicles Test Procedure — a global standard for determining the levels of pollutants, CO₂ emissions and fuel consumption of traditional and hybrid cars, as well as the range of fully electric vehicles.
But Watts says the number businesses should focus on is the worst-case scenario number, which in the case of an operational fleet is winter fully loaded. This, Watts says, will ensure the vehicles are fit for purpose throughout the year.
In principle, ICE vehicles should have a greater frequency of mechanical failure than EVs and that has a cost to the business of suddenly being off the road and whether that is KPIs you are missing, sales, productivity, renting another temporary vehicle.
But there is a flipside to EVs as it stands right now, says Watts. “Because of the immaturity of the repair market there is every chance the EV will be off the road less frequently but there is a reasonable chance that when it is off the road it is off the road for that little bit longer,” he says.
