Electric Vehicle Fleets: The Only Way Forward?
Once the stuff of science fiction, electric vehicles are fast becoming a reality. With more and more manufacturers bringing out models, and as pressure grows on the government to clean up our air, so vehicle owners are looking to electrically powered cars. But what of the fleet sector? Given the restrictions on range, the lack of available charging points and the limited choice of models, will we soon see fleets of electric cars or are they still an emissions-free pipe dream? In this latest blog from Quick Fleet Insurance – the fleet insurance specialists – we look at the viability of electric fleets and consider whether they are the only way forward.
Let's be honest; it's not been an easy time to be a fleet manager or owner over the last few years. Since the VW 'dieselgate' scandal, faith in the fleet's staple fuel, diesel, has been badly eroded. The government has piled vehicle excise duty (VED) on to diesel cars and with the increasingly loud calls for cleaner air, owning or leasing a diesel has almost made you public enemy number 1. With major cities such as London, Nottingham, Oxford and Bristol all considering the introduction of so-called Clean Air Zones (CAZs) which will ban higher polluting vehicles (effective shorthand for diesels) it may soon be the case that running fleets of these will no longer be viable.
It's little wonder then, though it is shocking at the same time, that diesel is no longer the most popular fuel for fleet owners. Petrol vehicles now account for around 53% of fleet vehicles according to recent figures from the Society of Motor Manufacturers and Traders (SMMT), a rise of 13% in just 6 months. This is in keeping with the tumbling demand for diesels which saw year-on-year sales in the UK plummet by 40% in April, a worryingly long-term trend that has massive ramifications for the commercial vehicle sector as whole.
Although electric vehicles have been in existence since 1828 when Ányos Jedlik, a Hungarian who invented an early type of electric motor, created a small model car, unless you drove a milk float or a forklift, electrically powered vehicles are likely not something you'll have come across. Increasingly though the industry is seeing them as the future. Manufacturers including Vauxhall, Ford, BMW and Audi all either currently offer or have electric models on the way, and the revolution is even sweeping into the arena of special types vehicles and trucks as the likes of Daimler and Tesla roll out their electric lorries.
But what are the practicalities of making the switch, and what are the pros and cons? Let's take a look…
• Running Costs – this has long been one of the great promises of electric fleets. With estimated costs per mile (CPM) of around 2-4p, electric cars are significantly cheaper to run than their traditionally fuelled counterparts, which weigh in at about 10-12p. Add to this the purported increase in reliability given the relative simplicity of their motors, which means lower garage bills and less time off the road, and they start to look like worth considering. If fuel prices continue to rise as they have been of late – the RAC reported a record 8.5p pump price rise in March – then traditional fuels may simply become uneconomic
• Tax – company car drivers have always been a target of Chancellors of the Exchequer and the current incumbent, Phillip Hammond, seems no exception. In April 2018 VED rose again for diesel drivers, partly under the guise of helping to improve our air quality. With the government having already pledged to ban the sale of new diesels by 2040, it seems pretty likely that the tax burden will only go one way from here
• Cleaner Air – clean air is one of those things you don't put a value on, until it's not there! The European Union estimates that there are around 70,000 premature deaths annually as a result of polluted air. The UK government is already being fined for its failure to clean up the UK's air and that could be another reason for its support for CAZs. Whatever the case, one thing looks certain; the incentives to switch to a cleaner, electric future are likely to persist. Indeed, the government announced in April that it will be extending its electric car and van grants to October 2018
• Electric Vehicle Grants – as mentioned above, the government are offering companies incentives to go electric. Grants of up to £5,000 off the price of an electric car, 20% off the cost of a van, and grants available for up to 75% of the cost of installing a charge point are all on offer
• Lack of Range – a Ford Mondeo on a full tank of fuel will give you a range of somewhere in the region of 700 miles. An electric car – even Tesla's Model 3 – will struggle beyond 200 miles. The Mondeo driver can also be assured of finding somewhere to fill up and being able to do so in seconds. While there are more and more electric charging points in the UK with predictions that by 2020 they will actually outnumber traditional filling stations, that still leaves fleet drivers with something extra to worry about. Add to this the time it takes to recharge a vehicle – a Tesla 3 will give you enough charge to get home from a turbo charger in 20 minutes – and practicality is still a massive issue
• Fleet Insurance – at present there are relatively few insurers who are offering electric fleet insurance and this is having a knock-on effect on premiums. However, as they become mainstream, so electric fleet insurance costs should drop and, given their reliability and simplicity to repair, even become cheaper options
• Lack of Models – the choice of models is limited. Although most of the big fleet players – Vauxhall, BMW, Honda Toyota etc. – have something to offer, the choice is nothing like as wide as for traditionally fuelled vehicles. However, as most see electric as the future and with manufacturers such as Volvo already having pledged to go electric-only, this situation will soon change
Between tax, clean air and fuel costs it seems that electric fleets are the future. How close that future is remains the big question. Manufacturers are lobbying hard for more government infrastructure support in terms of battery technology and charging points and fleet owners, recognising the cost savings, are increasingly willing to switch if it can be made practically possible. That electric fleets will come seems almost inevitable. The first step will doubtless be a move to hybrids and as the technical barriers are overcome so green fleets will start to ply our streets. Now that sounds like a breath of fresh air to us.
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