The journey for commercial fleets from traditional fuel to EV isn’t as hard as it may seem. Chris Chandler, Principal Consultant, Lex Autolease, introduces business owners to the top tips for embracing EVs, examining operational considerations and how to ensure that businesses can transition sustainably and efficiently.
It’s a journey, so where do you start?
The first consideration with commercial vehicles is to understand the types of vehicles you are operating. This will help you identify if there are suitable products in the market for electrification. If you’re in the lighter van market, there are a lot of products out there now, but in the heavier, more specialist market, it can be more challenging.
Once you’ve identified the types of vehicles you need and their practical suitability for electrification, its then worth looking at your operational needs. Initially, you would look at the vehicles you’re running, to ensure that they’re the right vehicles for you in the first place. Sometimes businesses are using certain vehicles for legacy or historic reasons, so it’s important that you make sure they are fit for purpose. A further factor is to assess things like conversions and equipment on board.
The next area to think about is operational ability – the sort of mileages you’re doing, the types of driving cycles. Do you need to cover long distances, or are you more locally based? A parcel delivery business will typically involve lots of multi drop offs, vs. an engineer who may be going longer distances to a location and then staying there for a long time. Will the electric options in the market fit the use and will these come from a mainstream or a specialist, more niche provider?
Tying all these points together will help you reflect on the whole-life cost of operation which will be fundamental in helping you to build a business case for electrification.
“I’ve been in sustainable fleets for nearly 25 years, but the last two years have been a tipping point with markets going through sudden change. This has been building for a long time. There were lots of early manufacturers and early adopters, but we’re now really getting to the mainstream with volume vehicles and good propositions that can work well for fleet operators”Chris Chandler, Principal Consultant, Lex Autolease
What are you charging needs?
Once you’ve decided on the vehicles you need to best suit your operation – it’s worth reviewing your charging needs and dwell times.
If someone takes a vehicle home at night, ideally you’d want to have that vehicle charged at home overnight, so it has a full charge. If it’s back to depot, then you’d need to think about your charging needs at the depot and how many vehicles and types of charging you’ll need. Typically, you could charge a vehicle with a 50kW battery, such as the Vauxhall e-Vivaro, overnight using a 7.5Kw fast charger and get well over 100 miles from that vehicle the next day.
Charging infrastructure and thinking of the future
If you need to upgrade your charging infrastructure, it’s an investment. Like any other investment, it is worthwhile to consider the full picture before you proceed. It’s often the case that a lot of the cost of charge-points is actually the civil engineering and installation work, rather than the charge-point itself. For this reason, its important to work closely with a charge-point provider and not just look at how many electric vehicles the fleet might be wanting this year, but its future requirements too.
It may be the case that you only put in three or four charge-points now, but you may want to also put in the underground cabling now for any future requirements. This means in the future, it’s literally just an install, rather than new trenches and new cabling, saving costs in the long term. Clearly this requires good planning, but it will make the transition over the following years a lot easier.
For those businesses that lease their premises, this becomes even more significant.
Property developers nowadays are increasingly integrating charging infrastructure into new buildings, partly because of increased regulations but partly to meet this customer demand. But there’s obviously a lot of existing real estate out there. If you’re leasing premises you must plan early, because there can be delays negotiating with landlords and getting the right access to having charge-points installed. That’s not to say it’s particularly complex, but this process does take time.
Home and public charging
There’s a few things to map out – (i) understanding your fleet operation, (ii) considering your workplace charging and how you’re going to grow it, and (iii) how you will factor in both home charging and public charging. But once, you’ve done that – its really not that different from the status quo.
For those who can charge at home or at the depot, it can actually be quite convenient, because every morning you can have a full ‘tank’ of electricity, so there’s no need to factor in regular visits to petrol stations.
Where it becomes a challenge is when you’ve got vehicles carrying a lot of weight and doing high mileage. Payload affects range just like it does with diesel. Clearly you need to make sure you’re utilising the ‘right vehicle for the right activity’. Electric is not going to suit every commercial vehicle right now.
How to view your fleet
One key piece of advice for those considering electrification is: Don’t look at your whole fleet.
Start with the elements of the fleet that you can electrify now. This will allow you to test the waters, build your knowledge, engage your drivers and start to build your infrastructure. If you start with the low hanging fruit, you can learn from that and then grow the areas that might be harder to do, but now with the knowledge you’ve acquired.
In time, those challenging areas may also become easier, as the sustainability market continues to evolve. As battery density increases and prices come down, newer solutions will be developed to address these challenges. But don’t use the harder to transition areas as an excuse for doing nothing.
A balanced view
Whilst it’s important to find the right vehicle for the right role, its also essential to consider your fleet collectively and its varying constituent parts. A typical business may operate cars, light commercial vehicles, and some specialist vehicles.
For the specialist vehicles, there might be a price premium for going electric, or a cost to build charging infrastructure at depots. However, this can often be offset by the cost savings on the electric cars and commercial vehicles in terms of both efficiencies and lower running costs.
It’s all about building the business case – by deconstructing the fleet into elements and then reconstructing it, you can often deliver the benefits of electrification, either at a smaller cost that you might expect and sometimes even at a cost saving.
De-risking through leasing
Residual values (RV) are central to lease companies. When a lease is set up, the lease provider takes into account the purchase cost of the vehicle and its running costs over three to five years, as well as what price they’ll get when they sell it at the end of the period.
The purchase risk therefore lies with the leasing company, who try to correctly predict the future residual value – to make sure they get back their original investment. But that’s the leasing company’s problem. As a fleet operator, you only need to consider the rental and fuel costs.
Electric vehicles currently have a price premium. The expectation is that cars and vans will see parity for costs around 2025-28, as outlined by research from financial analysts such as Bloomberg .
Some of the benefits of leasing are that you remove some of those risks. The higher vehicle price is amortized into the lease over the period of time. So, you might be paying a slightly higher rental each month than you would for diesel, for instance. But every month, you’re getting the cost saving from reduced fuel costs.
Were you purchase a vehicle outright; you would have to navigate a steep up front cost. A lease company allows you to smooth that, but also giving you predictability of cost as well. So that you know that your van is going to cost you £x per month from month one to month 48, for instance. The lease company also looks after maintenance costs for your vehicles.
Leasing takes some of the risk and allows easier whole-life cost analysis to see whether electric is going to work for you.
Local community benefits
The public awareness of sustainability has really shot up in the last couple of years and its something people really care about.
With smaller businesses, there can be a much greater local visibility, so when running a handful of vehicles, it can be very obvious in the local community.
To have sustainable transport and vehicles with zero tailpipe emissions can be a very strong PR message that you care about the community you’re serving.
There are also potentially greater benefits of better city centre access and reduced costs where Ultra Low Emission zones or congestion charging is in place. Not only that but we know it’s the right thing to do, reducing both noise and air pollution in the areas we live in.
Where will we be in 10 years’ time?
Given the recent legislation changes, we are looking at a position whereby in eight years’ time, all new vehicles are going to electrified with a significant electric model range. That includes both pure electric and plug in hybrids, although we’re waiting for the detail from government on other hybrids.
There’s going to be massive growth needed to hit that target. Everyday manufacturers are talking about bringing more and more electric vehicles to market – effectively a new pure-electric vehicle coming out every week; there’s over 50 new models coming out this year.
As we get to 2030, the question is not going to be so much for the fleet industry and how much of our fleets are electrified but rather the focus will start shifting to the secondhand market.
For fleets operate at the newer end of the market, vehicles are typically replaced on a two-to-five-year basis and so the fleet market will be very heavily electrified.
There might be some specialist vehicles and some regions where that won’t be achieved. But overall, given the pace of change , its likely we will get to that position,
This is a seismic change, because it’s more than just the vehicle. It’s sustainable energy generation. What people initially think is an issue around electrification, starts yielding all sorts of other benefits like grid balancing, or emergency electricity using the car’s traction battery.
We’ve just got to change our mindset to understand that this is bringing us real and significant benefits. The greening of the grid is happening at pace and, supporting infrastructure and transitioning to electrics, should secure us cleaner air and quieter neighbourhoods
With the right advice, the right insights and the right knowledge, it’s an exciting new stage in fleet.
How can Lex Autolease help?
As the largest vehicle fleet operator in the UK, we have a role to play in helping the UK to transition to the low carbon future we need. We also know that it can be difficult to pinpoint exactly what sustainability changes are right for your business.
With Lex Autolease supporting your fleet, you’ll be backed by a team of specialist light commercial vehicle engineers and consultants with over 250 years’ experience in the design and build of commercial vehicles across all industry sectors.
Through our in-depth expertise and cross-sector experience we’re able to explore your sustainability options, make sure you’re consistently compliant and future-proof your fleet. We’ll help you de-risk your move towards electric, with the right balance of vehicles across your fleet to meet your needs as we help you transition to a greener future. Find out more here: Going Electric Article (lexautolease.co.uk)
Listen to Chris Chandler discuss these issues in depth in our exclusive podcast here