From driverless cars to the first truly long-range electric vehicles, technology is heralding seismic changes across the automotive industry – while also offering myriad efficiency benefits to firms that operate fleets of vehicles. Director asks experts for a steer on the disruptive trends every business leader should be aware of
It was the stuff of science fiction just a few years ago. But self-driving cars, vans and lorries are now widely expected to be a common sight on Britain’s roads within a decade. Some mainstream manufacturers claim they will be unveiling their own range of ‘autonomous’ vehicles as soon as 2020. What’s more, most of these machines will be powered entirely by electric as the need to cut both the cost of motoring and carbon emissions becomes imperative.
Central to these developments is the fact that such vehicles are connected to the internet at every point in their journey, ensuring businesses operating them can function ever-more efficiently. Indeed, disruptive technology is already dramatically shaping the way that companies are able to move employees around. Previously, a member of staff received a company vehicle that was theirs to keep. Now, of course, it’s just as easy to get them behind the wheel of a pay-as-you-go one for a single journey or see whether a colleague is making the same trip and arrange for them to car share – among myriad other options.
The convergence of evolving mobility models, connectivity, vehicle electrification and – ultimately – autonomous vehicles is ushering in a brave new era for businesses operating fleets. In short, disruptive technology will lead to more changes over the next decade in the powering, operation and use of vehicles than has been witnessed in the past century. And businesses that take note will have rich opportunities to cash in. Here are some expert views on the disruptive trends business leaders should be getting a grip of…
The way companies are able to use vehicles is evolving in previously unforeseen ways. At the heart of this transformation is the universal availability of the internet across mobile devices. Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association, says: “Technology is enabling new disruptive business models that blur the traditional boundaries between car clubs, vehicle rental and leasing. “The explosion in business models has led to the concept of ‘mobility as a service’, which is all about providing businesses with seamless, on-demand access to a range of transport services tailored to their individual needs,” he says. “Businesses are used to managing their corporate travel plans, and this isn’t likely to change – those companies will still consider the most cost-effective and convenient travel options available. They now need to take a ‘user-centric’ approach towards mobility, however, rather than simply thinking about a particular transport mode that needs to be used for a journey.”
Digital disruptors are increasingly entering the market and introducing services that offer a comprehensive range of journey planning and booking services. Rental and leasing companies have also seized this opportunity and are rapidly developing their own IT infrastructure and digital platforms. In the future, they’ll all be providing more flexible access to leased and rented vehicles, as well as offering car sharing, parking services and tickets for public transport, among other options. Indeed, Europe’s largest vehicle leasing operator Arval tells Director that it’s expecting car sharing in particular to gain prominence as younger employees move through the ranks in their companies.
Research from Arval’s annual Corporate Vehicle Observatory Barometer has discovered that 41 per cent of companies believe their youngest generation of employees will easily accept car sharing as an option in the future. Shaun Sadlier, head of consultancy at Arval, says: “In the UK, the one-car, one-user model has remained the norm – although our research shows that the youngest employees could influence this model and companies are recognising this possibility.
“Younger employees have a much more flexible attitude to the idea of ownership and rental when it comes to all kinds of goods and services and they could carry this thinking through into the fleets of the future, making car sharing viable. Technology will play a major part here – with smartphone apps and connected cars making sharing arrangements much easier to manage and administer. Within a decade or so, we could see a fleet sector in which more flexible car and transport provision has become a widely accepted part of the mix within some organisations.”
Modern connected cars, vans and lorries are already a part of the wider Internet of Things. For the uninitiated, vehicles have become connected devices in their own right, capable of sending and sharing data. Connected car consultants SBD Automotive forecasts that 100 per cent of new cars will have an embedded modem by 2020, opening up possibilities that were unimaginable just a few years ago. These vehicles have the capacity to send location information, manufacturer diagnostics and other vehicle data while also enabling drivers to request information about the nearest garage. Increasingly prevalent ‘infotainment’ services from vehicle manufacturers and other providers such as Google, meanwhile, are delivering traffic and navigation data as well as music or GPS point-of-interest information.
Last year, technology giant Microsoft announced a groundbreaking deal that will see it collaborate with connected car-product maker Harman to ensure that the vehicles of the future can function as fully fledged mobile office spaces in their own right. The agreement will see key elements of Microsoft Office 365 incorporated into in-car infotainment systems. Voice-activated personal assistant software will be embedded in vehicles to allow drivers to schedule meetings, hear and respond to emails and join conference calls while on the move. “Bringing the power of Office 365 into Harman’s connected car systems will provide new productivity solutions and transform the driving experience,” says Peggy Johnson, executive vice president of business development at Microsoft. “By ensuring that Office 365 services are seamlessly integrated with car and driver telematics and performance data, we will allow consumers to be more productive during their driving hours, while enjoying far greater convenience, safety and reliability.”
Electric vehicles (EVs) are expected to rise up boardroom agendas with some urgency in the coming months. Increasingly, there are cost implications for businesses that don’t run vehicles classed as ‘pure electric’. On 1 April, a new vehicle excise duty (VED) banding system for new vehicles is introduced. In essence, every new vehicle with zero emissions is exempt from VED, while others will have to pay according to a sliding scale based on emissions in their first year followed by a flat fee of £140 per annum thereafter.
The banding system for vehicles purchased prior to 1 April remains unaffected. In addition, the government is evolving the current benefit-in-kind tax bands – also known as company car tax – to favour employees driving ultra-low-emission vehicles (ULEVs). Chris Chandler, principal consultant at fleet management company Lex Autolease, explains: “The UK fleet market has seen a sharp rise in the uptake of green technology over the last couple of years, primarily driven by tax incentives, a wider choice of plug-in vehicle models, new infrastructure and improvements to driving range.
“The latest Society of Motor Manufacturers and Traders figures revealed alternative-fuelled vehicles reached a record 4.2 per cent share of new registrations in January and it’s safe to say this trend will only gather momentum. Together with a growing desire for environmental sustainability among businesses, the recent changes to salary sacrifice schemes and company vehicle tax bandings revealed in the autumn statement will have a marked impact as we move into the next decade.
“Due in April 2020, the new lower tax bands for low-emitting vehicles, ULEVs and zero-emission vehicles, and the introduction of tax incentives based on the range a car can travel in electric mode will undoubtedly make them more attractive for fleets than petrol or diesel-fuelled vehicles. While adoption is on the rise, some organisations are still reluctant to invest despite the clear benefits – many are put off by the higher up-front costs and are typically unsure if the technology will fit their business requirements.”
IoD member Ken Davis – chief executive of leasing, finance and fleet management company Boss Automotive – agrees with this sentiment, adding: “As far as most companies are concerned, the main issue with pure EVs to date has been the amount of distance the batteries will cover on a single charge. Historically, 80 to 100 miles has typically been the norm, which poses immediate restrictions on most company car and van drivers. But the arrival of some outstanding pure EVs from manufacturers such as Tesla as well as Jaguar’s I-Pace, which allow motorists to travel up to 300 miles on a single charge, could prove revolutionary – although their cost currently means that they’re likely to appeal most to those at the helm of companies.”
All the major manufacturers say they remain committed in the short term to ensuring that businesses have access to a practical range of EVs. For example, Volvo has announced its intention to implement one of the automotive industry’s most comprehensive electrification strategies. “This includes a commitment to having our first battery EV on sale in 2019, and the aim to sell one million electrified cars by 2025,” explains Selwyn Cooper, head of business sales at Volvo Car UK. “With constantly improving battery technology, reduced costs and increasing public acceptance, electrification is set to play an ever-more important role in what we offer our customers in the years to come.”
Years of technological disruption across the entire automotive industry will culminate – ultimately – in the presence of autonomous vehicles on Britain’s roads. And this is widely predicted to occur at some point over the next decade. Nonetheless, early indications are that the idealised image of an employee being able to type away at a mobile device while their car or van safely relays them to the next business appointment might be premature. Chandler says: “Some of our research on the topic revealed that almost half of all employees oppose the adoption of self-driving cars and 68 per cent believe the transition, which will likely see a mix of driver-controlled and autonomous vehicles on the road, could raise some significant safety concerns.
“However, the potential of this technology to reduce the level of accidents and their severity, to better manage traffic flows and available road capacity, as well as free up driver time, means autonomous vehicles are likely to become a reality in the future. The rate of the technology’s adoption across fleets will depend on a range of factors, from price and availability, to driver attitudes and government legislation. The transition stage will be key and businesses must help drive a culture shift and educate their employees on their responsibilities and the safe use of the technology, especially regarding driver assistance versus full autonomy.”
Luxury car manufacturer Jaguar Land Rover UK is among those currently developing a range of fully and semi-autonomous vehicle technologies. Managing director Jeremy Hicks says that the company is taking its commitment to business drivers very seriously: “We’re developing a fleet of more than 100 Jaguar and Land Rover connected and autonomous test vehicles over the next four years,” he says. “We will use this fleet to test these technologies in the real world. We are also taking a leading role in collaborative connected car and autonomous vehicle research projects. These will help develop the infrastructure, the technology and the legal and insurance landscape needed to make autonomous vehicles a reality in the next decade.
“We want these technologies to enhance the driving experience for business drivers. Autonomous technologies can help with the challenging or more tedious parts of driving, but even when it’s the driver doing the driving, these intelligent systems will still be working in the background to help keep you safe and get the most out of your drive. Our vision is to offer a choice of an engaged or autonomous drive and to make the self-driving car viable in the widest range of real life, on- and off-road driving environments and weather conditions.”
With disruptive technologies offering so much potential for firms with motoring costs to consider, it seems clear that the successful leaders of the future will be the ones who keep their eyes firmly fixed on the road.
Ken Davis is a member of IoD West Midlands