7 mins read
With a little more than a decade until the EU bans the sale of new petrol and diesel cars, companies with vehicle fleets of all sizes are under significant pressure to begin transitioning to electric vehicles (EVs). Electrifying a fleet is a crucial move towards sustainability and significantly reducing carbon emissions. However, adopting EVs within a fleet presents numerous challenges, requiring careful navigation of various aspects, from cost considerations to finding suitable electric alternatives, to ensuring the new vehicles meet the needs of their drivers.
The challenges of electrifying a Fleet
One of the critical factors fleet managers face when considering commercial fleet electrification is the potential high upfront costs associated with purchasing EVs outright. Coupled with low residual values, this often makes the immediate business case for EVs unclear. Price volatility in the new electric car market, along with a decrease in demand and oversupply, has contributed to a downward trend for residual value on EVs in recent months. Higher-than-expected depreciation on EVs means fleet managers encounter increased costs when it comes to the time to replace these vehicles, posing challenges for overall budget planning. However, as the market matures and consumer confidence bounces-back, the depreciation rates for EVs will become more predictable and stable.
In the meantime, companies can adopt strategies to mitigate the impact of residual values:
- Leasing EVs: Instead of purchasing, leasing can transfer the residual value risk to leasing companies while still reaping operational and sustainability benefits for the company.
- Combining EVs with ICE Vehicles: In the short term, this provides flexibility and balances overall fleet depreciation during the transition period.
- Choosing Established Brands: Opting for more established brands is likely to yield better residual values due to their market reputation and reliability.
- Evaluating Total Cost of Ownership: Consider not just the purchase price, but also the cost of electricity, servicing and maintenance, and other associated expenses.
- Utilizing Financial Incentives: Take advantage of available financial incentives, grants, and tax breaks for electric vehicle purchases and infrastructure development, such as lower Benefit-In-Kind (BIK) taxes and favourable capital depreciation allowances for EVs.
Addressing range anxiety and infrastructure investment
Improved battery technology, expanding charging infrastructure, and home charging has largely made range anxiety a thing of the past for personal EV use. However, fleet vehicles often cover greater distances daily compared to personal vehicles. Even with improved ranges, current EVs might not always meet these extensive daily requirements without multiple recharges. Unlike personal use, which often involves predictable routes, companies (and by extension their fleet) require flexibility.
For fleet managers, the key questions to consider are: What vehicles are in use? How are they used and where do they reside at night? Are they in use 24/7? These factors are crucial in shaping decisions about electrification. If vehicles are parked overnight, setting up charging stations at the company’s location ensures the fleet is fully charged and ready to go each morning. However, alternative charging solutions will need to be implemented if vehicles don’t return to a set location overnight which may mean relying on the public charging network or having employees charge vehicles at home. Understanding these dynamics is essential for a smooth transition to an electric fleet, and can ensure the fleet remains efficient and sustainable.
Importance of driver buy-in
Range anxiety can impact driver behaviour and satisfaction. Drivers accustomed to the convenience of refuelling at service stations may find the limited range and longer recharging times of EVs stressful, potentially affecting job performance and morale. Understanding fleet utilization patterns and operational needs is therefore essential, and implementing telematics can offer insights to enhance understanding of fleet decarbonization efforts and mitigate some concerns.
The importance of driver buy-in cannot be underestimated and is a key requirement for a smooth transition to electric fleets. Some drivers will embrace change, while others may resist it. Making electrification a business goal rather than simply a sustainability issue encourages buy-in from employees. To successfully transition your fleet to EVs, identify and engage those drivers who are enthusiastic and passionate about the switch early on. Their excitement and support will drive the transition forward smoothly.
The path forward
Switching to an electric fleet comes with its challenges, but just like managing a traditional ICE fleet, it demands flexibility and adaptability. Set a clear target for the transition and start working towards it step-by-step. Any fleet can be electrified with time, effort, and a fresh perspective. This transition brings immediate benefits like lower running costs, reduced service and maintenance expenses, and of course a smaller carbon footprint.
The EU’s Corporate Sustainability Reporting Directive (CSRD) represents a significant shift in corporate sustainability reporting for Irish businesses, requiring detailed and standardized disclosure of ESG factors for companies large and small. Fleet electrification can play a crucial role in meeting these requirements by reducing environmental impacts, lowering operational costs, and providing accurate data for reporting. By proactively transitioning to electric fleets, Irish companies can not only comply with the CSRD, but also gain strategic advantages in sustainability and market positioning.
Looking ahead, fleet electrification in totality is about future-proofing your business, reducing dependence on finite resources, attracting investment, and contributing positively to society and the environment.