Panel of Experts: SME Decarbonisation
While the appetite to switch to zero emission vehicles is high amongst small businesses, the extra expense of EVs and charging worries are holding many back. Our panel of experts discuss what the concerns are for SMEs, and share advice on how to overcome them
Expert panelists: Lee Brown, head of 0Zone, The Grosvenor Group; Richard Parker, corporate sales manager, Webfleet Solutions; Dean Hedger, new business development manager, The AA; and Ashley Tate, CEO and Co-founder, Mina.
Research from the Federation of Small Businesses (FSB) has found that the majority of small firms are concerned about climate change, but only one in three have a formal plan in place to tackle it.
With regards to the move to zero emissions vehicles (ZEVs), the survey showed that 46 per cent cite the extra expense of ZEVs as a barrier to change, and a third (35 per cent) say poor provision of charging points is holding them back. One in six, meanwhile, cite the lack of an established second-hand market for ZEVs.
According to the Grosvenor Group’s Lee Brown, who heads up the company’s 0Zone service, SMEs may be waiting for a “perfect moment”. This he describes as when the model ranges, charging infrastructure and all other factors are in place to make the move to electric vehicles free of any challenges. Whilst the UK is quite a way off that ideal scenario, Lee believes that it’s still better to take small steps towards reducing emissions rather than wait, or take none at all. But it’s wise to also accept that not everyone is in a position to go fully electric yet.
Lee says: “To get the ball rolling, it’s worth carrying out a simple ‘feasibility survey’ amongst all of your company car drivers. This is a short fact-finding questionnaire, which can be done very easily on something like Survey Monkey, to find out how viable it is going to be for each driver to have an electric vehicle.
“For some, it will be straightforward if they have a house with a driveway and can install a home charging point, or if they live in an area where they can gain regular access to fast charges.
“For other drivers it may not be so simple, for example if they live in a flat or their house has no drive, or live in an area where access to charge points is difficult.
“The feasibility survey will give SMEs a very helpful ‘snapshot’ of the types of cars drivers can be offered, and it should also take into account their job role, how they use their vehicle and what types of journeys they do.”
Lee says that this approach will help determine the mix of vehicles that can be offered to drivers, from battery electric and plug-in hybrid through to very low emission diesel and petrol models if absolutely necessary.
Richard Parker, Webfleet Solutions’ EV expert, agrees that an EV feasibility assessment is a crucial first step before switching to electric vehicles. “This should establish the vehicle mix, the typical mileage and journeys undertaken by drivers to determine if these could be performed comfortably by EV equivalents,” explains Richard, who adds that Software tools, such as the WEBFLEET Fleet Electrification Report, can simplify the process.
Richard continues: “Consideration should be given to charging infrastructure. Questions that fleets should ask themselves should include whether charging facilities can be located where drivers’ live, and whethe on-site charge points need to be installed. If so, how many and can they be accommodated?”
Once EVs have been introduced, the business should have a plan to minimise energy costs and optimise fleet performance and productivity, Richard advises. “Important measures here can include encouraging cost-effective charging practices, when energy tariffs are off-peak, for example,” say Richard.
Data insights from a suitable telematic solution can again play a helpful role here, as Richard explains: “Optimal charge levels and charging intervals, for example, can be signposted by information on vehicle usage, routes taken and charge point availability. Access to information on real time battery levels, remaining driving ranges and charging statuses can also prove helpful.”
Considering what’s practical
Dean Hedger, new business development manager at the AA, stresses the importance of making sure any transition to zero emissions vehicles (ZEVs) is achievable for your business, in practical terms.
He says: “Transitioning to electric vehicles isn’t going to be an overnight job, so it’s important to consider all your options, and what your replacement cycle is going to look like. With only eight years before the sales of new internal combustion engine (ICE) vehicles are outlawed, you need to act now to put in a forward-looking sustainable fleet management plan that sets realistic goals based on what future demands on your vehicles will be.
“These should include the timescales for replacing the existing vehicles on fleet, what charging capabilities you have or will need on site, what access to EV charging staff you have at home or in the community as well as what the availability and cost of new replacement vehicles will look like. We know that shortage of new vehicles is keeping prices high in both the new and used markets which may mean a phased approach to transition is more practical.”
Think about the drivers
Echoing the thoughts of the other panelists, Ashley Tate, CEO and co-founder of Mina advises SME fleet managers to think about which drivers and roles will suit EVs today, and what small changes they could implement to make it happen. “This could be as simple as allowing drivers to take their vehicles home instead of returning to the depot,” Ashley advises. “Range is generally no longer an issue for most EV fleets, but where and how their drivers are going to charge most definitely is.
“My advice would be to consider focusing first on those who can charge at home, as this is by far the most convenient and cheapest place to charge. Home chargers can be expensive, but typically pay for themselves after 5,000 miles vs charging in public. If fleets want to eliminate capital costs, with home charging as a service such as our One Fleet plan, fleets can significantly reduce the upfront costs of EV adoption with models starting from just £39.”
Having insights which can help feed into a company’s net zero plans is also useful. Ashley explains: “Within your sustainability plan, you’ll need to consider ways to reduce your fleets’ carbon emissions and if required an approach to be able to accurately report on them. Fleets that take our Homecharge and Chargepass products have access to a dashboard which pulls this data into one place. Amongst other great insights, we’re able to deliver information on how many emissions are produced and the intensity of each charge by driver and collectively as a fleet. This information can allow businesses to make informed decisions on ways to help reduce their carbon footprint and also offers accurate data for reporting if SE&CR is required.”
Beyond the vehicles themselves, there are other ways that businesses can improve their environmental performance, points out Dean Hedger from the AA. He explains: “Much of the work of Drivetech, from the AA, involves promoting safer and more efficient driving. Driver training can ensure good habits become part of the business culture. Paying more attention to how they drive, can help employees cut fuel consumption through a range of simple techniques, from making sure they are not carrying unnecessary loads into the car to simply braking and accelerating more slowly and optimising stop/start technology where possible. Drivetech also offers a range of specific electric vehicle driver familiarisation services.”
Mitigating high upfront costs
The effects of the pandemic and high energy costs may be taking their toll on many small businesses, and some may be putting off the move to zero emission vehicles due to high upfront costs. So what advice our panelists give?
Richard Parker from Webfleet solutions comments: “A challenging economic environment can often prove a trigger for battening down the hatches and adopting a short-term approach to cost control. Business paralysis in the face of cost pressures, however, can lead to a lack of progress that seriously impacts longer-term competitiveness.”
Richard advises however, to look at the whole life costs of the vehicles: “Although electric vehicles are generally more expensive to lease or purchase upfront than their fossil-fuelled counterparts – and soaring energy prices have increased their day-to-day running costs – in most cases, the whole-life cost of operating petrol or diesel equivalents remains higher.
“Total cost of ownership (TCO) calculations have become imperative to fleet budgeting and electrification decision-making. TCO will invariably favour electric cars and vans, when all running costs, including ULEZ charges and financial incentives from government, are taken into account.
“Significant savings are being realised by those that have made the transition. Not only do fleets benefit from a lower cost per mile with an electric powertrain, with fewer moving parts, EVs also deliver lower service and maintenance costs. Furthermore, anecdotal evidence suggests EV drivers have fewer road traffic collisions, leading to lower repair costs and heightened levels of safety.”
Ashley Tate from Mina agrees that charging a vehicle is still cheaper than diesel and petrol so the rise in energy costs shouldn’t put SMEs off moving to electric vehicles. Ashley says: “If employees have the ability to charge at home, this is significantly cheaper than public charging, typically by around 40 per cent, as well as being by far the most convenient. You do, however, need to ensure you have an accurate way to be able to monitor changing tariffs. If rates aren’t tracked, you’ll be in a position of not paying for your drivers’ charging costs accurately, and that will equate to unhappy employees.”
To help with the high up front costs, Dean Hedger from the AA points out that there are still grants available for businesses, especially when it comes to installing charge points via the Workplace Charging Scheme and also for plug-in vans and trucks.
Dean also points out that many cities are now operating low emission or clean air zones, which could result in additional charges if vehicles do not comply. These factors should be looked at to see if they impact the business. Dean says: “In some cases, it may only be a small number of older vehicles that need to be replaced for more compliant options, which may not necessarily have to be EVs in the short-term. The reality is that change is inevitable but there is no one-size fits all approach. With a good servicing maintenance and repair partner in place, you can keep existing vehicles in optimal condition and running efficiently while you plan your transition.”
Dean adds that when more EVs become available, cheaper options are sure to begin presenting themselves. He says: “As battery prices drop and the production of ZEVs scale up, the total cost of ownership of ZEVs will continue to fall. It is predicted to become cheaper than the cost of owning an ICE by the mid to late 20s – well before the UK’s 2030 and 2035 phase out date. This means there is plenty of time to purchase your vehicles individually or through a structured plan that ensures you remain financially stable during your transition.”
Whole life costs
Lee Brown from Grosvenor Leasing believes that SME fleets should not be put off by the high upfront costs, again posting out that their whole life cost works out cheaper in the long run compared to equivalent petrol or diesel models.
Lee offers an example: “A Skoda Octavia Diesel Estate 2.0 TDI 200 vRS 5Dr DSG is a diesel car with a P11D value of £35,010. Its electric equivalent is the Skoda Enyaq IV Estate 150kW 80 Loft 82kWh 5Dr Auto which has a P11D value of £40,915.
“At first sight, the electric model looks expensive and it would be easy to assume that, at almost £6,000 less, the diesel is better value.
“However, if you look at the whole life cost of each vehicle it reveals a very different picture.
“The whole life cost takes into account factors such as running costs, maintenance, tax, fuel/charge and future resale value and shows that the electric model is much better value over its period on the fleet.
“Using the whole life cost calculation, the diesel model works out at £860.50 per month whereas the electric sits at £726.51 per month, which means the electric model is £6432 cheaper overall during a four year period as a company car.
“At Grosvenor Leasing, by moving our customers’ policies to whole life costs has given them the confidence to move forwards with choosing PHEVs and BEVs and once the policy is in place, and the drivers are on board with the process, the transition to a zero emission future will effectively take care of itself.”
A recent report from NatWest Group shows that around 15 per cent of SMEs report that they have already invested in electric car fleets or charging points. Similarly, this number could more than double by 2023 as another 20 per cent plan to do so in the next year. This suggests that around one in three SMEs will have invested in EVs or charging points by next year.
Charging provision for an SME can seem like a daunting task, with options such as workplace, home or public charging needing to be assessed. So what should small firms consider when it comes to charging for staff?
Dean Hedger sheds some light on government plans for public charging: “In March the Government announced plans to support the UK’s charging network to reach 300,000 public EV chargepoints by 2030 – equivalent to almost five times the number of fuel pumps. Backed by £1.6bn, under the Electric Vehicle Infrastructure Strategy charging will become easier and cheaper than refuelling a petrol or diesel car.
“Small firms also still have access to grants if they are planning to install chargepoints at work through the workplace charging scheme. Electricity provided for company car drivers does not count as a Benefit-in-Kind if the journey is business use. Drivers can either pay up front for home and public charging and reclaim the costs, or the employer pays for everything, drivers log private mileage, and the energy costs are deducted from their salary. If employers cover the cost of private mileage by paying for electricity at home or public chargepoints, then this is classed as a Benefit-in-Kind.”
Ashley Tate urges businesses to ensure they know how they are going to pay for the charging costs. He says: “We have so many businesses coming to us after reimbursing drivers through the AER, saying their drivers are unhappy due to them realising they’re being inadvertently short changed.
“The AER is currently set at 5ppm, but with rising energy costs this amount doesn’t cut it. Businesses can increase this reimbursement amount if they can prove the amount of energy being used, but there are tax implications and copious amounts of admin involved.
“You need a solution that will accurately pay for drivers’ home charging costs directly to their energy suppliers along with a tariff management system in place, as well as being able to provide a VAT invoice and we can help with that.”
A future proof strategy
Lee Brown points out some issues that small businesses may face when it comes to charging infrastructure: “For some small to medium sized businesses, the ability to install workplace charging simply isn’t an option.
“Either they don’t have the car parking space, or they are in shared offices with an allocation of parking bays and the decision doesn’t rest with them. In these scenarios, we go back to the feasibility survey to see whether home charging is possible for each driver, and/or whether the local charging infrastructure can support their needs. If not, maybe a fully electric car isn’t yet right for them and they need to look at PHEVs or ULEVs.
“Where home charging is feasible, now that the installation grant has been removed, one way to support drivers financially in getting their home charger installed is via a salary sacrifice scheme.
“For those companies that do have workplace chargers, most are allowing drivers to plug in and use them for free, with no record being kept of who is using it and how much its costing per driver.
“Companies should now be looking to upgrade their existing chargers to Smart Chargers, or installing new Smart Chargers, that can provide data on who is plugged in and what charge they have used so that some form or payment scheme can be put in place.”
Lee points out some other considerations for an SME: “Businesses also need to think about how many charge points they can have on site, the level of investment they need to budget for and whether the existing back office electrics can cope.
“For example, if you are going to charge at 25Kw or more, you need a tethered charge point, which is a significant investment and depending on the demand for workplace charging may, or may not, be a viable spend.
“It’s quite a dilemma, because there’s little point in having slow chargers - otherwise drivers will plug in and take hours to charge which means the facility won’t be able to adequately serve all EV drivers (employees and visitors).
“It comes down to the fact that a ‘future-proofed’ charging strategy is needed, and Grosvenor’s 0Zone team can offer advice and support to find the best solution.”
Richard Parker from Webfleet Solutions advises businesses to establish an EV charging policy – covering both ‘business use’ drivers and all employees commuting to work. “This should outline payment procedures, processes for reimbursing drivers’ charging expenses – either on a per-mile or per-kWh basis – along with charging and recharging protocols at office locations,” says Richard.
Richard continues: “Workplace charging facilities can be of particular value to commercial fleets whose vehicles return to a depot or office premises, for companies whose field-based employees face long car journeys to work, and for those who, due to a lack of off-street parking, are unable to install home chargers.
“Pragmatic considerations should
include whether on-site charging should be free and whether limits should be set on how long employees can charge on a daily or weekly basis.
“Free charging might support staff recruitment and retention, but might equally prove an unsustainable cost burden and discourage drivers from charging overnight at home, when tariffs are most favourable.
“Other considerations should include the possible introduction of meeting room-style scheduling systems and booking etiquette, along with troubleshooting advice for staff and details of who to contact if chargers are not working.”
Other ways to go green
Aside from zero emission vehicles, what other ways can small firms reduce the emissions from their transport operations?
Lee Brown says to look at business travel as a whole, and see what ‘outside the box’ options there may be to mobility. He says: “Less miles travelled means less pollution - unless you have a zero emission, electric fleet. Therefore, the easiest means of reducing their CO2 output is by reducing business travel.
“For many, this has already happened due to the pandemic making the use of Zoom and Teams meetings commonplace, and a lot of businesses continue to use online meetings which results in less miles on the road.
“However, business travel is picking up again and for SMEs looking at how they can rationalise their travel plans and become more sustainable, Mobility as a Solution (MaaS) is worth looking into, and Grosvenor can advise on this.
“MaaS platforms bring together thousands of car hire firms, car clubs, taxis, buses, on-demand shuttles, trains, trams, flights, ferries and bike sharing into a single application.
“By simply entering your starting location and where you are travelling to, it provides the most efficient means of getting there in terms of time and cost, and this can include the option of driving in your company car.
“You can then book your journey with ease, buying e-tickets through the platform plus booking accommodation too if you’re staying over.
“From a sustainability perspective, it can also calculate the CO2 impact of your choice of travel and it provides a complete audit trail of every employee’s journey and the cost, showing a carbon emission and financial comparison of the different travel options, including the one the employee opted for.”
Richard Parker agrees that more sustainable mobility decisions should sit at the heart of business transport.
Richard says: “SMEs should look to review their business models, analyse the role of vehicle fleets within their organisation and consider how things can be done differently.
“By making smarter journey decisions, using fleet data to optimise vehicle usage and reduce the number of trips, while maximising multi-modal transport opportunities, SMEs will not only help fulfil their environmental goals, they can better support the varied needs and demands of their workforce.
“Sustainable options that companies might include into their transport mix, depending upon the nature of the business journeys being undertaken, may include bikes, e-scooters, public transport and electric car sharing for shorter trips. Telematics insights and other supporting software solutions can help optimise journey planning and signpost the most cost-effective and eco-friendly mobility decisions.”
Beyond their vehicle fleets, companies should also consider other business areas where eco-conscious decisions can be made, says Richard. “These may include, for example, the introduction of smart energy management systems, updating office or warehouse light bulbs with more efficient LEDs, reducing plastic packaging, introducing environmental criteria into purchasing policies or going paperless by digitising back-office processes.
“Such moves can not only have a notable environment impact, they can also bring about cost-efficiency gains. Concrete company Wright Mix, to highlight just one example, saw a productivity uplift of more than 25 per cent after switching to a paperless system, underpinned by telematics, for ordering and job scheduling.”
Using resources efficiently
Dean Hedger points out the various “tips and tricks” that SMEs can implement to manage fuel consumption. He says: “In relation to measures that can be taken towards the vehicles themselves, managing fleet vehicle fuel consumption is a crucial point to consider. Whilst fleet businesses can’t particularly cut down on fuel easily, there are various tips and tricks which can help ensure small firms’ drivers are using their resources more efficiently.
“Effective and consistent vehicle maintenance is one example. Fleet vehicles which are not well maintained will consume fuel at a rapid rate. Mishaps with tyres can also result in milage dropping by 0.4 per cent for every PSI decrease in tyre pressure, which could impact the emissions of your fleet vehicles drastically. Maintenance will help to ensure that vehicles on your fleet achieve optimal performance and maintenance programmes are now available for all fuel types with an increasing number of garages equipped to support EVs.
“All well as this, decreasing vehicles on the roads where possible is also a great way of reducing emissions. Car sharing can immediately reduces vehicle pollution at a minimal cost, and it can be a great concept to set on up within your business if you’re looking for easy ways to cut down on emissions. You do need to ensure that your business undertakes regular checks on its drivers to make sure that they have the right insurance in place, their licences including any penalty points are recorded. Similarly up-to-date records for the vehicle including it’s servicing and MOT records need to be kept.”
Ashley Tate from Mina asks businesses to consider whether all company vehicles are needed at all. He says: “I’ve seen businesses in London successfully move engineers in vans and replace them with rucksacks so they can quickly move around without traffic and parking restrictions. So a question I would be asking myself is: ‘Are all our existing company vehicles needed?’
“If the answer is no, an incentive for employees should be implemented, with company recognition for those who take part.”
Expert panelist biographies:
Lee Brown, head of 0Zone, The Grosvenor Group
Lee Brown is head of 0Zone, the Grosvenor Group’s innovative and market leading solution to help companies navigate their way smoothly towards ultra-low emission and electric vehicles. With extensive experience of helping companies make the smooth transition to ultra-low emission and electric vehicles, he offers a perfect balance between how fleets can drive down their emissions and the implications of policy setting.Lee joined the Grosvenor Group in 2001, and is well-known for his clear and insightful advice for companies with car and light commercial vehicle fleets looking towards their zero emission futures.
Richard Parker, corporate sales manager, Webfleet Solutions
Webfleet Solutions’ EV expert Richard Parker has more than 20 years’ experience in the fleet industry and specialises in improving fleet performance through data and digital solutions. In his role as UKI EV Lead, he helps fleets successfully navigate the transition to more sustainable transport solutions. Richard has also recently been named in GreenFleet’s 100 Most Influential and received a prestigious EV Champion award for his commitment to the green transport agenda.
Dean Hedger, new business development manager, The AA
Dean has a deep knowledge of commercial vehicles and the public sector marketplace. Working within the automotive industry since the early 1990s has given Dean a strong understanding of the marketplace, vehicle funding methods, the fleet world, EU procurement regulations, framework complexities and a network of contacts. He’s also an electric vehicle expert and a spokesperson for the future of electrification at the AA.
Ashley Tate, CEO and Co-founder, Mina
With over 10 years’ experience in energy and utilities, Ashley Tate brought his expertise over to the world of electric vehicles. Since 2020, he has been dedicated to accelerating the transition to electric vehicles within businesses and fleets at Mina, by making paying for electric vehicle charging radically simple.