Are electric vehicles ready to meet your company car needs?

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Electric vehicles charging socket

Electric vehicles (EVs) provide businesses of all sizes with the potential to cut costs and carbon emissions – but are pure EVs truly ready to meet your everyday needs yet? Switched-on industry insiders give their views

The way company cars are powered is undergoing nothing short of a revolution. Our reliance on petrol- and diesel-fuelled vehicles is in decline as a new family of electric vehicles – or EVs – finally steps up to the mark. These hybrid, plug-in, battery electric and fuel cell-vehicles are now delivering the range and cost of ownership required to make them serious contenders for business use.

In short, an industry that was once dominated by mechanical engineers has been transformed into one led by electronics. Lower battery costs, more widely available charging infrastructure and increasing consumer acceptance are driving this revolution. In addition, the huge scrutiny on real-world diesel emissions and the potential threat of air quality-related taxes and parking or low-emission zone measures are also playing a major role in the increasing use of EVs.

Indeed, this uptake reached a record high earlier this year. According to the most recent research from the Society of Motor Manufacturers and Traders (SMMT), sales of “alternatively fuelled vehicles” such as EVS increased by 21.3 per cent during the first six months of 2016 compared with the same period in 2015. By contrast, diesel and petrol registrations grew by 2.3 per cent and three per cent respectively.

These figures are borne out by Britain’s biggest fleet management company Lex Autolease. Chris Chandler, Lex Autolease’s principal consultant, explains: “The uptake of plug-in electric vehicles in the UK fleet market has been dramatic in the last 18 months. We’ve witnessed the initial flow turn into a torrent. The number of our plug-in vehicles has increased to more than 6,000, with more than 5,600 being plug-in hybrids that run on both electricity and petrol or diesel. The dramatic growth has been fuelled on one side by tax incentives and grants promoting ultra-low emission vehicles – and potentially significant fuel cost savings – and on the other by the increasing availability from vehicle manufacturers of more vehicle models.”

Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), places the importance of what’s happening in context: “Diesel’s hegemony is under threat from ever more innovative electric powertrain applications. These range from pure electric vehicles to an extensive array of hybrid and plug-in hybrid variants. In short, EV sales continue to accelerate and businesses are leading the way with this. Nearly six per cent of all new vehicles acquired by fleets in the first quarter of 2016 were either hybrid or pure electric. But this growth is being driven by hybrids. Fleets are likely to continue to prefer this compromise powertrain until we see a strengthening in pure electric range, charging infrastructure, incentives for early adopters and vehicle residual values.”

Pure EV anxieties

It’s these anxieties that have prevented a more widespread adoption of “pure” electric vehicles to date. Nonetheless, the AA says that any concerns could be resolved “sooner rather than later”. In the summer, it launched a partnership with Chargemaster, which runs the UK’s largest electric car charging network, to deliver a range of benefits including preferential charging rates for its members and increased charging infrastructure.

The AA’s president, Edmund King, says: “The EV revolution is about to take off and we want to help people understand the benefits of low-cost, low-emission driving and to show them it is accessible and affordable. For each mile driven, an EV is five times cheaper than the average petrol car and carries no vehicle excise duty. Modern EV designs and performance are comparable to conventional internal combustion-powered vehicles. Concerns and regulations about diesel emissions may prove to be a tipping point. We expect the market to grow substantially, as buyers overcome their misconceptions.”

King points out that some businesses remain unaware that government grants of up to £4,500 off the list price of certain new EVs remain available – which can result in plug-in hybrids being priced at the same level as an equivalent diesel. He believes concerns over battery range are misplaced: “Myths about batteries not lasting long have been blown away by use – some of the earliest models have clocked up high mileages with almost no diminution of battery capacity.”

Company car caution

But Paul Marchment, SME development manager at leasing company Arval, says firms must “fully scrutinise” the way their vehicles are used prior to deploying EVs. He explains: “The attraction for many drivers is a reduction in the benefit-in-kind payments they’ll make. For example, when I switched from a conventional diesel to a Mitsubishi Outlander PHEV (plug-in hybrid electric vehicle), I made an immediate saving of £200 a month. But the MPG [miles per gallon] figures provided by manufacturers are relevant only when it comes to ideal driving conditions – and companies must think through the way those vehicles will be used for work purposes.

“We’ve carried out our own tests on those EV and PHEV vehicles we supply to our clients to ensure that we understand their capabilities and provide our customers with the most accurate picture. Nonetheless, I do believe that we’ll see the number of EVs deployed by businesses rising rapidly in months to come as premium manufacturers continue to launch new pure electric models.”

Indeed, all the indications are that major vehicle manufacturers are targeting EVs as an area for rapid growth in coming years. Volkswagen Group told Director that it intends to place “special emphasis” on electric powertrain technologies and will launch more than 30 purely battery-powered electric vehicles (BEVs) over the next decade. Volkswagen predicts that these vehicles will account for around a quarter of the global passenger car market by 2025 and its own battery electric vehicle sales will be between two and three million vehicles by then.

Selwyn Cooper, head of business sales at Volvo Car UK, agrees that the demand for plug-in and pure electric powertrain options is increasing: “Alternative fuels are no longer for prototypes and here in the UK we’re seeing an increased interest around Volvo’s proposed electrification strategy – so much so we are confident that by 2020 electrified vehicles will account for up to 10 per cent of Volvo car sales globally. Business and company car drivers have quickly recognised the benefits that plug-in hybrid electric vehicles can bring them.”

Into the mainstream

Several mainstream manufacturers are set to compete with trailblazing US brand Tesla over the next few years by making pure electric vehicles with larger battery packs and ranges of more than 300 miles, depending on ambient temperatures and driving patterns. Tesla’s growth in Britain in the space of three years is taken by many to exemplify the constantly accelerating demand for EVs. Since the company opened its first British showroom in October 2013, it has established 14 further locations – including one on London’s Oxford Street – along with four service centres.

The AA’s King is unsurprised that carmakers are responding to demand. He says: “Modern EVs have a much greater range and battery technology is advancing as fast as the cost is falling. Most saloon cars will drive for 80 to 100 miles without difficulty, well over the average journey length.”

This EV revolution is expected to cause more disruption and change in the automotive industry over the next decade than has been witnessed in the previous 50 years. But the BVRLA’s Keaney does not believe that it will result – in the immediate future – in the overthrow of either diesel or petrol engines: “Combustion engines are here to stay for the short to medium term but with a much greater variety of petrol, diesel and hybrid options. As ever, business-focused vehicle manufacturers will have one eye on the customer and one eye on the Treasury, with the knowledge that one simple change to the tax regime can have a massive impact on their order books.

“But I do predict that diesel will continue to lose market share as it is squeezed between a new generation of more efficient petrol engines and a growing range of more affordable and usable plug-in electric vehicles.”

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About author

Ben Rooth

Ben Rooth

Ben Rooth is an award-winning freelance business journalist who has interviewed everyone from Prime Ministers to the chief executives of FTSE 100 listed companies. Over the past 20 years, he’s filed stories from destinations as diverse as Kabul, in Afghanistan, and Palm Springs, in America.

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