17 minute read
Fleet Decarbonisation
from GreenFleet 141
by PSI Media
The stages to decarbonisation
How can companies ensure they adopt the right approach to transitioning to electric vehicles? Research for the Fleets ahead! report has shown that there are broadly five key stages to fleet decarbonisation, which are explored here
As more and more corporates make net zero pledges, many are having to figure out what the pathway to decarbonisation will look like. One of the immediate areas of focus will be fleets. As highlighted in our report, Fleets ahead!, written in collaboration with National Grid and Field Dynamics, fleets are large. There are over six million vehicles in the UK in this segment, made up of corporate cars, taxis, buses, heavy goods and logistics vehicles. Decarbonising these fleets can make a material improvement to air quality and reduce emissions. It can also be a source of major competitive advantage, in terms of ESG credentials. However, getting decarbonisation wrong will be costly and undermine business operations. So how can companies ensure they adopt the right approach to this complex transition?
We interviewed some 40 entities associated with fleet decarbonisation to understand what that transition road map looks like. And our interviews confirmed that some companies have already identified critical milestones on this journey. Our research confirmed there are broadly five key stages to fleet decarbonisation. And in this article we shall share some insights for each of these stages so that companies looking to start on this journey will be well prepared.
1. The importance of collaboration internally and externally
The complexity of the transition cannot be underestimated for fleet managers. They will be moving to a new world where they will need to consider a host of issues not typically associated with internal combustion engines: what type of electric vehicles (EVs) to procure and how to fund them? Which charging models to adopt and charging infrastructure to deploy? How to manage associated power consumption challenges? And not least, ensuring a culture where EVs are readily adopted by employees, just to mention a few examples.
Given this complexity the need to collaborate will be very important and takes different forms.
Decarbonisation is not just a fleet manager responsibility. Other functions will have vested interests and a need to contribute including. This includes finance (funding EV procurement); real estate (exploring the location of charging assets); HR (developing incentives for EV adoption across employees); operations, and many others.
Fleet managers will need to collaborate with companies that provide support in fleet electrification, for example Charge point operator EO Charging is working with Amazon to electrify their fleet. Or managers may need to partner with parties which own strategic real estate, such as the Pod Point alliance with Tesco using the supermarket chain’s retail sites for destination charging.
Then again, it may simply be a question of collaborating with other companies who have already started this journey to understand what they have done and gone through.
Of the fleet managers we interviewed, all are still in the early stages of decarbonisation but will have learned valuable lessons.
2. Access to data to analyse and understand user needs
Quite often companies make the error of discussing which EVs to purchase or what type of charging infrastructure to deploy, before understanding what their actual needs are. And to this point data is critical. One of the first steps for fleet managers will be understanding current driving patterns. Consider the following questions: What are the current routes employees typically use? How often do they make these journeys and how long do they last? Given current fleet cycle times, when is the optimal moment to substitute vehicles? If the fleet is to be replaced by EVs, how will they be charged? Where? And what will the dwelling times for charging be?
3. Assess the charging infrastructure requirements and implications
Once managers have a good handle on driving and potential charging patterns, they will be better placed to consider the charging infrastructure required to support fleets.
Charging infrastructure and charging models will also dictate the volume of EVs required. So for example, a depot-based charging model may guarantee flexibility and scale to charge multiple EVs. However, a home-based charging model for drivers who cannot charge at home (they live in flats) and lack access to on-street chargers may limit the volume of EVs to be procured.
Power consumption patterns will also have ramifications. Overnight trickle chargers (7kW) will consume less power than faster chargers (50kW+). The latter may require grid reinforcement which could result in multi-million pound investments if installing an array of fast chargers.
Some fleet managers have explored industrial estates with existing power capacity for conversion to a charging hub to minimise these costs.
Many corporates also fail to realise how fleet decarbonisation can reshape the existing business and the operating model. Consider servicing. Operators of large fleets may have an in-house function to service their ICE vehicles. As these fleets electrify, companies will need to review whether they wish to develop their own in-house capabilities, or whether it now makes more sense to outsource servicing to the OEMs or other third parties. While electric vehicles have significantly fewer moving parts than an ICE counterpart, the technology is new and complex. If they wish to keep servicing inhouse, service teams will need to be re-skilled and service sites will need to be repurposed to accommodate health and safety measures.
4. Multiple strategies to consider when deploying solutions
Given EVs are an emerging market, it is important fleets are wary of over-dependency on single suppliers. Moreover, fleets will need to explore a combination of strategies: some fleets may decide to stagger the purchase of EVs. Using smaller orders, fleet managers are able to test and trial deployment. Other fleets may decide to place large orders to secure OEM supply. A forward view of the lease cycles of the current fleet should be considered to understand deployment squeezes. As for the procurement of electric vans (eVans), which is a growing trend, this raises other challenges. eVans have received less attention from OEMs so far resulting in limited choice. There is currently a restricted choice of electric vans in the UK. At the time of writing our report, there were 20 eVans on sale in the UK. This is compared to some 90 electric vehicles on sale.
Furthermore, the performance of these vans is also limited (many have low range). It is important corporates work through emerging alliances (such as EV100) and with the OEMs to better inform them of industry requirements and codevelop new vehicles.
Tactically, fleet managers may also need to weigh up the trade-off between payload and range. If range is more important for the fleet then payloads will need to be reduced.
Aside from procurement and charging infrastructure, another major challenge in this phase of the journey is the winning of hearts
One of the first steps for fleet managers to take before buying EVs will be understanding current driving patterns
and minds to encourage EV adoption. When fleets receive their EVs how do they ensure employees adopt and promote the new technology?
Fleet managers have emphasised the need to identify champions in the business. Centrica described three categories of employees: the EV equivalent of ‘petrol heads’ who are enthusiastic for EVs; those who are sitting on the fence and are not too bothered about which way the fleet goes; and the third category, those drivers wedded to their diesel vehicles and hostile to EVs. Companies need to engage the first group to drive change across the organisation.
Anglian Water went one step further and arranged induction days for new drivers. On receipt of their EV, employees were trained on all the basics to ensure the smooth adoption of the technology. Anglian Water specifically identified drivers who lived far away to pick up their EVs so returning home with their new vehicle would allay concerns about range anxiety.
Many firms have also created EV fora to encourage employees to share experiences and learnings about best practice when driving EVs.
5. Adapt and re-iterate
As fleet managers go through this journey they will need to apply continuously the learnings and scale up decarbonisation initiatives. Businesses will need to stay close to other fleets, government and OEMs to constantly learn and evolve.
And one final thought on heavy transport. While the decarbonisation pathway for light vehicles is electrification, the outcome for heavier trucks and 4x4s is less clear. Some electrification of heavier trucks is possible if routes are predictable and short, with readily available charging infrastructure. Municipal refuse trucks are a good example.
However, the fleet managers we interviewed felt the electrification of heavier vehicles with long and unpredictable routes was harder. And while there were some interim transition fuels, such as bioemethane, fleet managers recommended focusing on the electrification of lighter vehicles first, allowing time for viable technologies to emerge later for heavy transport.
Fleet managers face significant complexity as they look to decarbonise their vehicle parc. Many operators are weighing up the right time to begin this process. Move sooner and the organisation may have to deal with challenges including a more restricted choice of vehicles and the need for a more bespoke charging solution. Move too late and the organisation will risk brand damage relative to their competitors. In our view, the date to bear in mind is 2024: the year during which, according to our estimates, electric vehicles will cost the same as their ICE equivalents. At this point, choosing an electric vehicle will become the default option for consumers. Any companies which are not operating low carbon fleets by that time risk being seen as dragging their feet. This gives a window of opportunity of two to three years for fleet operators to transition substantially their operations to low carbon. L.
FURTHER INFORMATION
Download the ‘Fleets ahead!’ report at www.pwc.co.uk
The drive to zero emissions is arguably the most important endeavour of our generation. Fleet companies are in a position to make a significant contribution towards this effort, and E.ON Drive are here to provide expert guidance every step of the way.
We welcomed the Government’s Clean Air Strategy and the move by Parliament to bring the 2050 net zero target into law, and we’re leading by example when it comes to electrification of fleet to support these ambitious goals. We’ve already switched 159 of our own vehicles to electric and installed over 50 charging points across our sites. We aim to have a completely electric fleet by 2030, and are now offering our employees EV leasing contracts as a salary sacrifice benefit.
EVs are rapidly displacing traditional options in fleets across the country, and with numerous financial and reputational benefits available, businesses that make the move today will establish themselves as sustainable pioneers, and be investing in vital infrastructure that will serve them well into the future. EVs are exempt from congestion charges, Ultra Low Emission Zone/Clean Air Zone fees, road tax and BIK tax, as well as being cheaper to fuel and maintain. And with emerging technologies such as Vehicle2Grid (that allows electric vehicles to feed energy stored in their batteries back to buildings, or to the electricity grid), further opportunities to achieve even more cost savings are being created.
Ultimately, moving to an electric fleet is not only the sustainable choice, but the economic choice too. L
FURTHER INFORMATION
www.eonenergy.com
David Butters, general manager, Eon Drive
Advertisement Feature Demand for salary sacrifice at an unprecedented high
There are times when certain products or services grow in popularity. But within the fleet sector it’s hard to remember an occasion when a funding solution grew at such speed. Yet, that’s precisely what’s happening with salary sacrifice which is accelerating at such rapid pace that it’s hard for those in finance, HR and fleet not to have a look at what all the fuss is about
The reason is all down to the very low benefit in kind tax (BIK) on electric cars, which has resulted in salary sacrifice becoming by far the cheapest way to source an EV.
Put simply, if an employee is paying 20 per cent tax on their salary, and decides to sacrifice a portion of that salary for an electric car, the amount of income tax and national insurance contributions they pay will reduce.
Their employer then provides them with a fully funded, maintained and insured electric car, on which they will only be paying very low benefit in kind (BIK) tax, providing an immediate saving compared to buying that vehicle or funding it through a personal lease.
The employer also gains by making Class 1a NI savings as well as offering an additional staff benefit, at no extra cost.
“We are in a very unique moment in time,” explains Steve Beadle, who heads up Grosvenor Leasing’s 0Zone solution, “and this is all down to the very appetising BIK rates on plug-in cars.
“It’s for this reason why interest and uptake of car salary sacrifice schemes has never been higher, and it has become the number one topic of discussion with our existing and prospective customers who are interested in setting up a scheme.
“What surprises most people is how straightforward and risk free a salary sacrifice scheme is.
“Our own offering takes very minimal input or administration to put in place, which means that businesses won’t get bogged down in lots of administration or soak up vast amounts of staff time.
“Also, because our scheme comes with protection against employees leaving the company, or going on extended sick or maternity/paternity leave its very risk free indeed.”
Winner of multiple awards
Grosvenor Leasing is the UK’s largest privately-owned contract hire and fleet management specialist, and has won multiple awards for its work around the green agenda.
Its 0Zone solution, which supports companies with the transition to electric vehicles, was ground-breaking when first launched in 2017. As a result of Grosvenor’s commitment to helping its customers with the move to alternative fuels, approximately 80 per cent of all new car orders now have plug-in capability.
For its corporate contract hire and fleet management customers, a key aspect of Grosvenor’s success is in developing ultralow emission car policies based on whole life costs. The 0Zone team has helped companies appreciate that, while the initial outlay on electric vehicles is higher, their whole life cost while on fleet works out cheaper in the long run compared to equivalent petrol or diesel models.
In fact its work around whole life costs was instrumental in Grosvenor being named Whistl’s ‘Supplier of the Year 2022’ as part of their supplier conference focusing on ESG (Environmental, Social & Governance).
At the time Gareth Hughes, Whistl’s procurement, property & fleet director, commented: “The team at Grosvenor Leasing has done an outstanding job for Whistl in helping us reduce our vehicle emissions.”
One of the best on the market
Grosvenor Leasing’s salary sacrifice solution has been a key part of its proposition for many years, however with conditions being so perfect for a surge in uptake it has recently further enhanced its offering to become one of the best in the market.
As a result, employees who choose to sacrifice part of their salary for a plug-in hybrid or fully electric car benefit from a fully maintained, tax and insured company car, and if they leave they can hand the car back without any penalties.
“If you are going to choose a fully electric car, then salary sacrifice is by far the best option as it will save you up to 40 per cent compared to taking out a personal lease,” continues Steve.
“If you are looking for a vehicle with a CO2 over 75gm/km then salary sacrifice is not an option, however because The Grosvenor Group offers traditional contract hire, specialist fleet management and personal leasing, we can provide a complete solution for all drivers under one roof – even if a plug-in vehicle is not yet suited to their needs or job role.
“Currently, there is no better way than salary sacrifice for encouraging drivers into electric cars, and by having a scheme in place sends out a strong message about a company’s desire to promote carbon zero motoring.”
Financial benefits
To give a flavour of the potential savings of salary sacrifice compared to an employee funding a car through a personal lease, a 20 per cent tax payer choosing a Peugeot E-208 Electric Hatchback 100kW Active Premium 50kWh 5Dr Auto on a three year lease, covering 10,000 miles per annum would save £168.61 per month.
A 40 per cent tax payer choosing a Tesla Model 3 Saloon RWD 4Dr Auto with 15,000 miles per annum over 3 years would save £318.60 per month.
A 40 per cent tax payer choosing a Porsche Taycan Saloon 300kW 79kWh 4Dr RWD Auto [5 Seat] with 10,000 miles per annum over three years would save £491.00 per month.
“Examples such as these demonstrate why the financial benefits are so strong,” continues Steve, “and at Grosvenor Leasing we manage everything for the customer including payroll reports, contract variations and the full in-life management of the vehicle including maintenance, accidents etc. There is also a free work charger for every five orders.
“All the employer has to do is authorise orders with living wage checks, deduct the employee’s salary and carry out P11d reporting, which Grosvenor provides to them in a report. To reduce administration for the employer further, any recharges are also charged direct to the employee rather than the company.
“Quite simply, this scheme has multiple advantages to both employer and employee and is simple to set up and administer.
“It’s for all of these reasons why salary sacrifice is the main talking point at the moment, particularly because the very low BIK rates that underpin the benefits are fixed until 2025, and then once BIK rates begin to rise for plug in cars, which they inevitably will, the benefits will begin to lessen. So this really is a very good opportunity for businesses and their employees to take advantage of the financial conditions and accelerate their shift towards zero emission motoring.”
Outstanding support
Established over 40 years ago, The Grosvenor Group is one of the largest fleet sector companies to have resisted the temptation to adopt a process driven, call centre culture – instead offering organisations with vehicle fleets, in both public and private sectors, a level of attention and support that leads to ongoing cost savings and heightened driver mobility.
With an overall proposition that uniquely combines four distinct offerings, Grosvenor Leasing is an award-winning contract hire specialist providing all forms of vehicle funding and outstanding client and driver support. Interactive Fleet Management is a fleet management specialist dedicated purely to managing fleets. Irrespective of funding method, it’s best described as ‘your very own’ fleet department, managing all vehicles, drivers and suppliers whether you contract hire or own your vehicles.
Grosvenor Salary Sacrifice is a marketleading ultra-low emission and electric vehicle salary sacrifice solution for companies and their employees, and Grosvenor Personal Leasing is a market leading PCH solution aimed at drivers who have decided to opt out of the company car scheme.
Underpinning all of this is 0Zone, Grosvenor’s award winning, and unique, solution to help companies navigate their way smoothly towards ultralow emission and electric vehicles. 0Zone has won multiple awards since its launch five years ago, and the team has been instrumental in supporting companies such as Weetabix, Tata Steel, Whistl and Glenmorangie in reducing their emissions.
Weetabix’s group people & IT director, Stuart Branch, said: “The relationship with Grosvenor Leasing has been very beneficial to us financially and operationally. We have also been impressed with their support around our fleet policy and choice lists, and the feedback from drivers following a workshop they ran was extremely positive. By being on hand to present the thinking behind the policy, the impact on areas such as emissions and tax, why whole life costs are important, and being able to answer all of our drivers’ questions was important in launching our new policy.”
Over and above this, Grosvenor also has a panel of experts to advise and support customers on all aspects of fleet operation. For key issues such as compliance, CO2, taxation, legal, technical, policy, health and safety and many others, the panel is just a phone call, email or LinkedIn message away from answering any question a customer may have.
The most sophisticated technology
Technology also sits at the heart of all services provided by Grosvenor, and they have their own in-house software development team that has been building systems internally for over a decade.
Offering what many believe is the most sophisticated suite of fleet technology available in the fleet sector, the company’s ongoing investment and in-house development is producing industry-leading systems and Apps that are complimentary to all customers. L
Steve Beadle, head of 0Zone, The Grosvenor Group FURTHER INFORMATION
