Fleet News

NEWS INSIGHT: Electric vehicles - will fleets adopt them

With the imminent arrival of a new range of electric cars, which will come with up to a £5,000 Government subsidy, it is no surprise there is a renewed focus on electric vehicles (EVs).

But with the high cost of these new cars - £32,000 for the Mitsubishi i-Miev (before the subsidy is applied) – and questions persisting over vehicle range,  battery life and residual values, it is also no surprise that fleets and vehicle lease suppliers are treading very cautiously down the EV road.

As Jonathan Shine managing director of electric vehicle supplier Drivelectric said, it is no surprise fleets are reticent about adopting EVs. “The costs are way in excess of a comparable diesel,” he said.

“There are positives to EVs – low running costs, no fuel price volatility, fun to drive, good image, etc - but there are a lot of challenges. Can they do the job - there are technical risks compared to a diesel, such as battery reliability and there are financial risks with residual values. And where a lease company sees a risk it will put the RVs down.”

The low running costs are undeniable: according to Calvey Taylor-Haw, managing director of Electromotive, which supplies EV recharging stations, it costs just 2p per mile for an electric car and 5ppm for an electric van.

But these are not wholelife costs and so do not take into account the very high initial purchase price nor the questions over when battery packs need to be replaced.
A battery pack for a Transit-based electric van currently costs £20,000 to replace.

However, one company has been supplying fleets with electric vehicles for over nine decades and may have many of the answers fleets are looking for.

Smith Electric Vehicles has been manufacturing EVs since the 1920s and supplies mainly blue chip company fleets with zero-emission commercial vehicles.

After 90 years of making battery-powered commercial vehicles – from the once ubiquitous milk floats to the luxury mini-coaches now used to chauffeur VIP shoppers to their favourite London store, Smith has an almost unrivalled depth of knowledge about how EVs really perform in the used market, how driving styles can dramatically affect vehicle range and just how long EV battery lives really are.

“The cost of running internal combustion engines is going to continue to rise and the more the costs and the punitive taxes against diesel rise, the more convincing the argument for EVs,” says Kevin Harkin, Smith’s sales director.

“Some predictions suggest the cost of oil will increase by 100% over the next five years.”
On battery life and range – two of the most pressing issues for fleets – Harkin says technology is developing all the time, but its lithium-ion packs already come with a five-year warranty, although he says they will last much longer.

“We say five, but we know they will go for 10 even 15 years. The batteries suffer just 1% degradation on charge each year,” he explains. “With new technology coming out we will see some batteries with a 30-year guarantee.”

The consensus is that when a battery cannot be charged to more than 80% of its original capacity it should be replaced. “But even then there is a ready market for these batteries; they are not worthless, the energy companies will buy them.”
This changes the RV risk picture. As does the fact that, according to Smith, its vans are performing well in the used market. “We will see one of our vans, which are £55,000 new getting £10,000 after five years.

“We have this data already and are talking to the lease companies.”

The other great fleet concern – vehicle range – can be addressed, but is not an issue for many van fleets.

“Twenty per cent of LCVs (up to 12 tonnes) do less than 60 miles a day and then return to base,” said Harkin. “And the main factor in range is the driver, which is why we are very strong on driver training, it can have a dramatic effect on range.”

Range is also being addressed through new battery technology. “Battery technology will move on and we will see EVs with a 200-mile range so the need for rapid charging stations will diminish,” said Taylor-Haw.

But with more employees likely to switch to EVs to take advantage of the five-year BIK tax holiday that starts next year, new questions are now being raised.
“How long before HMRC and employers seek payment for the electricity used by employees for charging their cars at work?” asks Taylor-Haw.

“If a company has 200 cars plugged in all day that cost will have to be recovered by the company and is likely to be viewed by HMRC as a benefit-in-kind.”

There is also a likelihood that extra taxes will be levied on electricity to counter the Treasury’s fall in fuel duty income as more people switch from fossil-fuelled vehicles.

That other great concern – vehicle recharging infrastructure - is beginning to be addressed. The Plugged-in Places initiative will kick-start the introduction of multiple charging points in cities around the country, while in the Northeast is working to install 300 charging points in the region.

In addition, Transport for London has just published details of how 1,000 electric vehicles for the Greater London Authority (GLA) fleet and 8,500 charging points will be secured.
TfL has created the UK’s largest procurement frameworks  for electric vehicles and electric vehicle charge point infrastructure.

Eventually in London, the framework will contribute to the delivery of 25,000 charge points and 1,000 GLA electric vehicles by 2015.

The frameworks will also lead to the creation of a shortlist of approved suppliers, which will be open to other private and public sector bodies to use to help them progress the take up of electric vehicles.

The framework will enable organisations to purchase electric vehicles and charge points in a more efficient way.

But the need for rapid-charging points – those that can charge from flat to full in less than 30-minute – is being hampered by the fact there is still no common standard and the rapid charging equipment is expensive and is likely to require a manned station.

These issues are creating a confused picture of future EV adoption. The consensus at the recent Base - Business and a Sustainable Environment - conference that looked at the prospects for electric vehicles in fleets was that rather than there being three million EVs on the UK’s roads by 2020, the figure will more likely be 300,000.

To try to predict the likely uptake of EVs a new research project has just been confirmed.
It is one of the three research projects announced by the Energy Technologies Institute as a part of its £11 million low-carbon vehicle plan to support the roll-out of electric vehicles.

The research aims to identify and quantify the factors that will influence consumer behaviours, focussing in particular on attitudinal drivers for plug-in vehicles.

Computer models will be constructed based on the findings, which will be used to forecast the uptake and use of both future conventional and plug-in vehicles.

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