This article was first published by Fleet World.
The UK Government’s plan to “end the sale of new conventional petrol and diesel vehicles” by 2040 represents a significant boost to the adoption of electric vehicles (EVs). This commitment is starting to impact fleet management. Indeed three in four fleet managers anticipate significant change in the next five years (according to a recent Shell/Fleet World Study) and this is being fueled by three other factors.
Firstly, vehicle manufacturers are already switching production. Manufacturers are committing to phase out fossil-fuelled vehicle production. It's likely that in the future a petrol or diesel car will be uncompetitive for commercial and personal use.
Secondly, the market shows increased confidence in EVs. Overall improvements in range, capability and style are driving growth in sales. Tesla, BMW, even the Renault Kangoo ZE, are challenging perceptions. Every year since 2014, sales of EVs in UK have increased by over 60%. A growing appetite will only further incentivise production and reduce costs.
Finally, legislation will force vehicle choice in future fleets. Governments are increasingly penalising conventionally powered vehicles. Norway leads the charge, committing to ban fossil-fuelled vehicles by 2025. This will cement the ‘enforced’ adoption of EVs for commercial use.
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Cost is no longer the issue
As EVs are increasingly commonplace, they are also becoming increasingly competitive in price; both in initial outlay and whole life cost. There are also likely to be further incentives, such as the Plug-In Car Grant, so fleet managers who have previously been concerned about the price to switch should no longer be concerned.
The simple response would therefore be to replace current fleet with equivalent EVs. Fleet managers would then continue to deal with the typical challenges of a traditional fleet, for example driving down cost, increasing efficiency and driver management, but with a different set of vehicles.
However, this approach comes with risks. Fuelling EVs, for example, takes longer than pumping 10 gallons of diesel, at least in the short term. For those considering a like-for-like replacement, the logistics are unlikely to work. Fleet managers will need to address the practical reality of operating with EVs, which will mean change to current operations.
Furthermore, many organisations already seek alternatives to assets with long depreciation cycles (such as vehicles). EVs will remain a more expensive up-front purchase in the short term. So prioritising cost could limit the size and scope of a company’s fleet, even more than with traditional vehicles.
Mobility is where true value lies
To effectively respond to this change, fleet managers need to think beyond incremental cost reduction and consider the value of mobility to their organisations and how it is provided. The purpose of any fleet is to enable a business to operate, so rather than asking, “How can I reduce the average total cost of ownership of an EV?” fleet managers should be asking, “How does mobility enable our business and add value?”
As EVs cannot be considered a like-for-like exchange for conventionally-powered vehicles, this change provides an important opportunity to change business models - how we use vehicles to live, work and move around.
Fleet managers are entering a new and challenging period for fleet managers. Their focus must be on supporting their business in providing low-cost and clean mobility options. This will require a different mindset, but there are clear advantages in making the switch.
Charlie Henderson is a roads expert at PA Consulting Group