Tennant Group adopts whole life cost model to support EV switch

Tennant Group has switched to a whole life cost (WLC) model to construct its company car list and accelerate the electrification of its fleet.

The move was recommended by the company’s leasing provider Arval UK.

Tennant Group operates more than 120 vehicles, in total, under its Tennant and Vaclensa brands.

The cleaning firm’s head of human resources, Michelle Terry, took over responsibility for its fleet in 2019. She immediately started to investigate opportunities for new approaches that would potentially bring cost savings and sustainable operational improvements.

Terry said: “I had limited experience with fleet management, but I wanted to make sure that our operations were in line with the latest thinking, especially when it came to electrification, something for which we were seeing increasing interest from drivers because of the low benefit-in-kind rates that electric vehicles (EVs) attract.”

Tennant Group previously used lease rates to build its company car list, but with the help of Arval’s consultancy team it switched to a whole life cost based method of deciding which vehicles would be added to the company car list. This made electrification of the fleet much easier by providing a “more rounded” picture of costs.

The fleet has added electric and plug-in hybrids to its choice list for the first time.

“In addition to the obvious and very welcome environmental benefits, we have employees who have saved £250 per month by choosing an EV over their previous internal combustion-engined car. This is a development that has been very well received within the company and we are already seeing a marked swing away from petrol and diesel,” Terry added.

As a further result of the Arval consultancy exercise, a whole new fleet replacement policy was introduced at Tennant Group and all vehicles were brought onto a leased four year/80,000 mile model for the first time, rather than using mixed acquisition methods.

David Watts, senior consultant at Arval UK, added: “When it comes to integrating EVs, fleets which have constructed their choice lists based on lease rates have frequently encountered the same issues as Tennant Group. We’ve helped  a large number of customers over the last couple of years to undertake consultancy exercises that have seen them move to WLCs and in turn increase the number of EVs on fleet and give staff a virtual pay rise due to tax savings. 

“It has long been our view that WLCs are a better and more complete method of deciding which models should be made available to employees. In this way, it is possible that the switch to electrification could play a part in helping the company car sector as a whole to make a shift to better methods of calculating vehicle costs while CO2 emissions are reduced.”