Battery Electric Fleet Vehicles: Is Now the Golden Opportunity?
For fleet operators, the necessity of making the jump to electric has become widely accepted. The prescient question is in determining exactly when to make the leap, given the government subsidies and the current outlook of battery technology.
The number of Ultra Low Emissions Vehicles (ULEVs) has been rising rapidly in the UK over the past 11 years as ULEV options have become more attractive with improvements in technology.
A similar trend also applies to electric light goods vehicles (LGVs). At the end of Q2 2020, there were 10,000 electric LGVs that qualified for the plug-in van grant registered in the UK, 10% of which were added in Q1 of 2020 alone. Despite the increase in the number of electric LGVs registered in the UK, they still make up only a small proportion of the 4.1m LGVs registered in the UK.
The UK Regulatory Timeline for Vehicles
The timeline above shows the impending ban on new petrol and diesel vehicles from 2030 onwards. This will pose challenges to fleet operators across the UK as they will have to electrify their fleets.
What’s the Attractiveness of Electric Fleets?
One of the most influential motivational factors for fleet operators to switch to electric vehicles is the desire to limit carbon emissions and air pollution. According to data from the Arval Mobility Observatory, 43% of fleet managers reported that they were looking to limit carbon emissions and air pollution. Reducing carbon emissions not only helps organisations to fulfil regulatory requirements, but it also helps to improve company image. Indeed 37% of fleet managers reported that this was a key reason for their adopting alternative fuels for their fleet vehicles.
Undoubtedly, though, it is the potential for battery electric vehicles (BEVs) to offer not only short-term but very impressive long-term savings compared to traditional internal combustion engine (ICE) vehicles that make the prospect an attractive one.
Short term savings:
Advances in technology and falling prices of raw materials mean that the difference between BEVs and ICE vehicles is shrinking dramatically, a recent analyst report by KPMG predicted that there would be a price parity by next year
Subsidies for upfront costs of BEVs, such as an £8,000 plug-in grant for BEV vans
Tax incentives such as a 100% capital allowance on the purchase price of BEV vehicles and a 100% tax exemption on Vehicle Excise Duty
Long term savings:
The major long term cost advantage that BEVs have is fuel costs. BEVs cost ~3.5 pence per mile which is 75% cheaper than diesel, costing ~14 pence per mile
Service, maintenance and repair costs are between 40% - 60% lower for BEVs than for ICE vehicles due to a significant reduction in mechanical parts
However, the other force at play is the consideration around how long the significant subsidies offered by the UK government will remain. The subsidies at the moment are likely to change in the future, as the solar energy subsidies changed in 2015 which made solar power much less attractive to both businesses and individuals. There is an argument to be made that we are at the peak of subsidies; as the government attempts to motivate early adopters and as the prices of BEVs reduce, so too will the government subsidies.
The questions presented in this article are likely to dominate the fleet sector for the foreseeable future. At Deecon, we believe that the timing of the switch to BEVs is crucial and that there is a golden window of opportunity to take advantage of subsidies whilst ensuring technological improvement is captured. Through our advanced modelling and market insight, we can produce a bespoke plan to ensure a smooth integration of BEVs into your fleet which maximises value and minimises operational disruption.
Get in touch to find out how Deecon can help prepare for the future of your fleet today.