A discussion on fleet electrification
Whilst there are many challenges to be addressed with the electrification of transport, it was also noted during the GreenFleet Roundtable at The OEC in Sheffield in November, that diesel costs are quietly creeping up again. A sobering reminder, that the business case for net zero fleets is continually evolving
Fleet managers and industry professionals gathered at the OEC in Sheffield on 3 November to discuss the barriers to fleet decarbonisation and to share best practice on ways around the barriers.
An aspect of fleet electrification that is evolving is staff retention – and it appears that EVs can have a polarising effect. Steve Openshaw, group fleet and transport manager at Eric Wright Group reported instances where employees have challenged the feasibility of using a commercial electric vehicle as they are unsure about charge point availability relating to electric commercial vehicles. Whereas, some fleets, such as BT Openreach, are using EVs to attract employees.
There is an opportunity here for businesses to position themselves in the market according to what type of employees they want to attract.
The charging infrastructure puzzle
Charging infrastructure is a regular roundtable topic, and Sheffield was no exception. Paul Edwards, fleet manager at Sheffield City Council reported that infrastructure has been the biggest problem; whereas vehicle choice and performance is getting better and better (although still not adequate for our blue lights services). Many fleets are opting for a “mixed location” charging strategy (across depot, car parks, home and public charging). Sheffield City Council operates a mixed location charging strategy – with one third of vehicles being depot-based and two-thirds home-based.
The cost of energy also differs from location to location and with depot charging becoming more expensive (and facing power constraints) there appears to be a concerted effort to push vehicles to domestic charging overnight where possible to help control energy costs.
Another benefit of home charging is that employees start their day with a “full tank” meaning they don’t need to take time out of their working day to visit a petrol station.
But what happens to the estimated 50 per cent of homes that are not suitable for EV Charging? Or employees that do not want a liveried van on their driveway even if they do have off-road parking?
Home charging has its challenges
As the EV Charging market matures, fear of “stranded assets” is growing. This could include employees moving house or leaving the company. Fleets must decide if it is worth the cost of removing the chargepoint from the property and relocating it. Or should that asset be written off and another chargepoint installed at the new house? What happens if an employee moves house, and their new property is no-longer suitable for EV Charging? With all these scenarios there is an additional cost incurred and this needs to be allowed for in the initial TCO calculation.
The question of reimbursing employees that charge at home cropped up in our discussion again. Against a landscape of rapidly increasing electricity costs, the current 5p reimbursement rate for electric vehicles was deemed too low by most of the fleets. LeasePlan has overcome this by paying the AER plus an uplift of a further 7.5p with their HR team managing the BIK tax implications.
Ashley Tate, CEO at Mina, the specialist reimbursement provider, has developed a certified end to end remuneration service including a full paper trail, something that Steve Openshaw, group fleet and transport manager at Eric Wright Group is currently exploring.
Mina has worked closely with PWC and HMRC to get their solution certified. Mina, has also developed a solution tailored for prepayment meters (common in rental properties) that puts credit directly onto the meter. This is a difficulty that Catherine Hiles, account director for New Business at LeasePlan has come across in her discussions with fleets.
There was also a question about reselling electricity, but concerns were allayed by Ash Tate that Mina is facilitating payment between the CPO and billing solution – they are not reselling electricity.
Pressure to develop on-street solutions
Almost all the fleets at our roundtable are seeking on-street charging solutions to support employees that were not able to charge their vehicles at home, and there is some frustration at the speed that this is rolling out. Murray Sirel, electric vehicle consultant took us through the Street Fleet solution; a consortium of EV service providers, including Gemserve, that offers a fully funded on-street charging solution, based on data led insights.
And whilst private sector funding is very welcome, the pace of take up appears slow. Caroline Hearne from Redcar & Cleveland Borough Council explained that all avenues must be explored to ensure the best solutions and commercial terms are secured. There are many new products and business models emerging such as the Gul-e project run by Oxford City Council, and Be.EV in Manchester.
Vehicle procurement continues to be challenging
Long delivery times for new vehicles is continuing to put pressure on fleets. Budgetary constraints in particular were causing issues for both the public sector fleets, as well as utilities who’s budgets are regulated.
Alison Grimes, fleet contract manager at Northern Powergrid explained: “We capital purchase 1,250 vehicles on a seven-year replacement cycle; at the end of the regulated period, we cannot carry capital spend over, making it difficult to extend renewal cycles and we must take delivery of the vehicles within the budget period. Orders being cancelled or delay has forced them back to petrol/diesel vehicles to fulfil our regulatory requirements.”
Another fleet observed: There is a game of poker going on; buying vehicles now for 18 months’ time. It is impossible to predict capital spend as sometimes the auto OEMs are not guaranteeing prices. Capital programmes also need to make assumptions on residual value. Currently a shortage of second-hand EV and evolving technology makes this difficult. Catherine Hiles pointed out that leasing solutions, such as that offered by LeasePlan takes the uncertainty of residual value away.
And what about the clean air zone that is due to launch in Sheffield in February 2023? LeasePlan is concerned that they are still seeing tenders coming through that have no consideration for CAZs. With Bristol going live at the end of November, and Newcastle and Gateshead going live at the end of January 2023, it appears that some fleets may be caught out.