Fleet News

Fleets 'crucial' to UK increasing electric vehicle adoption rates

UK fleets making the switch to electric vehicles (EV) will continue to be the main catalyst for rapidly increasing adoption, according to a new report.

Cornwall Insight and PricewaterhouseCoopers', ‘Leading the charge! - a catalyst for the EV revolution' report, confirms that fleets will be a crucial component in increasing EV adoption and expects this sector to represent half of the number of all EV sales in the UK by 2030.

The report said that based on Office for National Statistics 2018 data, if all 5.3 million fleet vehicles were to switch to zero tailpipe emission models, it would save as much as 30 million tonnes of CO2, around 25% of all UK transport emissions.

The appetite for electrification is increasing among fleets, with leasing companies reporting record levels of demand from company car drivers.

Company car drivers will pay no tax on a pure electric vehicle (EV) this tax year, while drivers of plug-in hybrid vehicles (PHEVs) are also enjoying much more favourable rates.

Daniel Atzori, research partner at Cornwall Insight, said: “The electrification of fleets is set to gain momentum, driven both by sustainability commitments and by compelling economic drivers.

“Fleets are likely to play a crucial role in the upcoming electrification of mobility and therefore in the decarbonisation of transport.

“Since fleets can ensure a high rate of utilisation of charging assets, fleet charging offers a range of interesting investment propositions.

“Having a clear and well-defined strategy will be crucial for fleet managers, charge point operators and investors looking to achieve leadership in this emerging market.”

Steve Jennings, PwC UK’s energy and utilities leader, said it was clear that field services, depot-based logistics and leased corporate car fleets have the right characteristics, such as predictable driving and charging patterns, to spearhead EV adoption.

‘Government policy has a critical role to play’

However, Jennings said pent up demand and rising levels of awareness among fleets is not enough to accelerate adoption.

Jennings said: “Government policy has a critical role to play.

“As we emerge from the current Covid-19 pandemic, alongside a strong focus on stimulating economic growth, we may see a growing emphasis on sustainability, including regulatory and strategic support for EV charging, to help address emission levels and improve air quality.

“Without policy certainty for all stakeholders across fleets, EV charging providers and investors, there is a risk that the full potential of this burgeoning EV revolution will not be realised.”

In putting the report together, several fleets called for clarity over company car tax rates in the 2023/24 and 2024/25 period to facilitate forward planning in fleet replacement cycles.

Fleets typically refresh their vehicles around every four years, meaning visibility of tax rates four years ahead is helpful.

The 2020 Budget did provide clarity over a five-year period, indicating that government is seeking certainty for fleet operators.

However, as the transition to e-mobility accelerates, Jennings said continued clarity will be needed for all market players.

In evaluating the electrification of the fleet market, the report identifies which segments of the sector will be crucial to leading the EV revolution and outlining a road map that fleets may follow as they electrify.

The Cornwall Insight and PwC report said that as fleets have a replacement cycle of between two to four years, fleet electrification has the potential to accelerate growth in the private, second-hand market too.

However, as the fleet electrifies, this will reinforce the need and underpin the economics of EV charging infrastructure throughout the UK. This will ensure ‘range anxiety’ does not stall mass EV adoption.

Click here for electric cars and hybrids best practice and procurement insight

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