The financial & operational benefits of electrifying your fleet.
2020 marked the first time that sales of electric vehicles in the UK overtook their conventional counterparts as the EV market grew rapidly. According to the Society of Motor Manufacturers and Traders, new registrations of Battery Operated Electric Vehicles (BEV’s) and Plug-in Hybrid Vehicles (PHEV’s) rose sharply with a 180% year-on-year rise. The sales of petrol and diesel fuelled vehicles hit a 28-year low. The growth of the EV market is set to continue with the UK Government’s plan to ban sales of all new cars and vans that are fuelled solely by petrol or diesel by 2030.
Across all markets, a new era of sustainability has been emerging as customers are becoming increasingly motivated by ethical consumerism. Since 2014, global sustainability and environmentally responsible investment has increased by 68% -and it now estimated to have exceeded USD $30 trillion.
Our environment remains high on the political agenda after the Paris Climate Change accord was adopted by almost every nation in 2015. On top of this, the UK government has continued to raise the bar on tackling climate change by announcing the most ambitious target to cut greenhouse gas emissions by 78% by 2035. If achieved, the UK would be three quarters of the way to their previous commitment of achieving net-zero emissions by 2050, compared to 1900 levels.
The UK and Europe are certainly leading the way when it comes to air pollution with more than 10 countries operating clean air zones. With significant Government backing, more will be hot on the heels of the existing 200 Clean Air Zones (CAZ) and Ultra-Low Emission Zones (ULEZ). Whilst the environmental and health gains are clear, the entry tariffs imposed presents another challenge for urban delivery providers operating a conventional van fleet – and is another expense for stretched budgets to absorb. Some cities have also announced plans to go further still with complete bans for diesel vehicles by 2025 – just 4 years’ time.
In short, logistics managers have little choice but to begin to plan for a greener future. However, notwithstanding the more obvious environmental benefits, greening your fleet will deliver more business positives than you might have thought.
CSR is good for business.
More and more business decision makers look for commercial partners whose sustainability policies align with their own when making buying decisions, whilst increasing awareness of global environmental issues continues to change customer behaviours.
In 2020, IBM and the National Retail Federation surveyed almost 19,000 consumers in 28 countries. Their recent report reveals that 77% of global consumers say that sustainability is important to them. Of those customers, more than 7 in 10 are willing to pay a premium for environmentally responsible brands.
Positive brand perception and a strong reputation for ‘doing the right thing’ is big business as consumers now actively seek out brands that demonstrate their corporate social responsibility. Those with more environmental business operations gain the competitive advantage.
Financial savings and Government incentives.
Governments throughout Europe in particular have demonstrated their commitment to increase the number of ultra-low emissions vehicles on the roads with a range of plug-in grants for the purchase of cars, vans and trucks. Whilst the subsidies were recently reduced slightly, the scheme was also extended, providing far more organisations with the opportunity to turn their fleets green, for less.
Qualifying company cars receive £2,500 so long as they cost under £35,000, have emissions under 50g/km and a zero emissions range of 70 miles or more. The good news for commercial vehicle operators is that there’s no upper price limit with grants of between £3,500 – 6,000 for vans with emissions levels under 75g/km and a zero emissions range of 10 miles. Motorcycles and mopeds are also included with a contribution of up to £1,500, ideal for last mile logistics couriers and green deliveries. The best part for busy fleet departments is that the leasing company or dealership applies for grants so there is so lengthy paperwork to grapple with.
Reduced total cost of ownership.
The Government grants available mean that the total cost of EV ownership falls largely in line with comparable petrol and diesel models. No longer only associated with the innovative and higher priced manufacturers of Telsa or Rivian, the majority of global manufacturers have now entered the electrified market. Volkswagen alone plans on launching 70 new electric models by 2028, an increase from the 50 they originally planned. The significant reduction in battery costs has seen the overall purchase prices fall sharply. This is great news for business and individuals alike as more choice means more competitive pricing and leasing options.
With projections that by 2050, EV’s will make up two thirds of all vehicles on our roads, the savings are expected to grow; it is estimated that fleet managers could see a 15-25% lower overall cost of ownership, compared to conventional vehicles.
Maintenance costs for EV’s are also considerably lower. With fewer moving parts, no oil changes and very few part replacements required, the increased reliability eVehicles spend less time on the workshop ramp and more time out on the road working hard for your business.
Day to day cost-efficiencies.
As any fleet operator will tell you, logistics costs continue to soar year-on-year but BEV’s and PHEV’s offer a rare opportunity to reduce day-to-day running costs for commercial fleets. EV owners have reported that they have seen a 20 – 25% cost saving as a direct result of their greater efficiency and more affordable refuelling.
EV’s can be driven for 1p per mile compared with
8-10p for the most fuel-efficient conventional vehicles.
Whilst the majority of people know that the cost of the electricity is cheaper, the alternative fuel also offers more predictable pricing as the market does not fluctuate in the same way the fossil fuel industry does. In addition, for each year of ownership, Vehicle Excise Tax is applied at a standard rate of £0 for zero emission EV’s, which can provide a huge saving across your fleet.
Previous anxieties are no more.
Five years ago, fleet managers considering the purchase of a commercial EV had two barriers to early adoption – range anxiety and concerns regarding the lack of a suitable fast-charging infrastructure. After all, any financial saving on fuel would soon pale into insignificance if drivers sat idle in motorway services whilst their vans recharged, slowly.
Yet considerable technological advances have been made. Advanced battery technology has radically improved vehicle range whereas smart charging has accelerated charge times and stations are becoming widespread.
The UK Government’s Electric Vehicle Homecharge Scheme provides up to 75% of the cost of home charge point installation, although realistically, this is only helpful for homes with driveways and garages. Unfortunately, this provides little support for those living in an apartment block or upon a terraced street.
However, there are solutions that are available to all. Businesses can claim grants for installation of on premise charging stations for up to 40 vehicles and savvy car park operators are identifying new revenue streams by creating urban hubs in their under-utilized car parks, particularly beneficial for those that are located in Ultra-Clean Air Zones. The UK Government has also committed £38 million for development of public charging points, many free of charge.
The emergence of smart EV hubs provides an easy to manage, cost-effective charging solution. Many van operators are now turning to large EV charge parks for their fleet parking. In much the same way as the vans would be kept at an operational depot at the end of each working day, their vans are returned to the EV park for overnight fleet charging so they’re ready to go when the drivers arrive the following day.
Offering added peace of mind, many purpose built charge parks install a solar-energy supply to dramatically reduce the risk of any power failure that may be experienced with networked power supplies.
There is a fast-moving transition by national and international businesses who are not only recognising the importance of greening their fleets but are evaluating the business operational case to do so in terms of carbon emissions, total costs of ownership and ongoing operational costs.
Cutting emissions by more than half, the number of medium to heavy EV’s is expected to double by 2023. Urban logistics will need to be revolutionised alongside the rapid expansion of low emissions zones in Europe and beyond. Improved batteries, technology innovations and solar-powered smart electric charging parks have removed potential barriers so responsible, forward-thinking organisations can demonstrate that they do listen to the ethical requirements of their customers.
At a time where protecting your bottom line has never been more important, EV’s not only provide an environmentally friendly alternative for businesses but are the cost-efficient choice for a resilient future.