EV ECONOMICS
A balancing act
Running a fleet of electric vehicles requires considerable investment and planning. Here’s some guidance on how to run a more efficient EV fleet and ensure you have the most cost-effective process in place when transitioning to EV
EV ECONOMICS
A balancing act
Running a fleet of electric vehicles requires considerable investment and planning. Here’s some guidance on how to operate a more efficient EV fleet and ensure you have the most cost-effective process in place when transitioning to EV
Electrifying fleets for financial success
Fleet decarbonisation is well underway, with legislation such as the Government’s zero emission vehicle (ZEV) mandate driving the urgency of change. However, to make electrification viable, there must be a positive business case balancing the significant upfront vehicle and infrastructure costs with the long-term operational savings.
There are multiple areas where electrified fleets can help balance the books. EV TCO (total cost of ownership) versus diesel TCO has already surpassed parity for many vehicle categories, classes and use cases, particularly for high-mileage fleets. Better energy efficiency, lower maintenance costs and reduced taxes mean EV fleets can achieve significant savings.
The other side of the equation is getting access to low-carbon contracts and boosting business and revenue growth. Greenhouse gas reporting requirements are cascading through supply chains, meaning buyers demand low-carbon fleets to meet emissions pledges. Since September 2021, for instance, businesses looking to secure £5m-plus central government contracts need to have implemented a carbon reduction plan. An electrified fleet is a fundamental element of achieving this.
To reap the financial rewards fleet owners must focus now on how to capture the value ahead of statutory deadlines. At VEV, we recommend an integrated approach to fleet electrification, one that consolidates charging infrastructure, energy management and smart use of data. This streamlines upfront costs by up to 15% compared to a fragmented transition. Fully integrating these systems also increases operational resilience by aligning charging to fleet patterns, meaning less downtime and more revenue.
Tackling this level of complexity cost-effectively only comes from deploying a designed solution with integration at its heart to create the necessary ecosystem.
In summary, the economics increasingly favour EV fleets. However, a combined approach to balancing investments and capturing savings will make electrification a more financially viable move for fleet owners.
Mike Nakrani CEO of VEV
“An integrated approach to fleet electrification streamlines upfront costs by up to 15% compared to a fragmented transition”
Dan Cripps Fleet and logistics director, AX
Five steps to effective fleet electrification
Discussion around EVs is dominating the sector. Fleet registrations were the driving force in overall new car registrations last year and they are set to continue to be so in 2024. Subsequently, more and more fleets are turning their hand to the EV transition, however, this requires thought, planning and investment.
When it comes to starting out, we’ve developed a five-step strategy.
First is to understand exactly why you are making the transition. Whether it’s high-level corporate commitments, brand positioning, or cost-cutting opportunities as TCO for EVs falls, understanding the motivation informs the rest of the transition.
Second, use this understanding to determine the pace of change. You may want to start with just a portion of your fleet to further understand processes and overall impact, for example.
Third is cost-benefit analysis. You will need to consider the kind of EVs you are buying, for example, much of AX’s fleet are prestige brands. Charging infrastructure, tax implications and service and maintenance provisions will all factor into this stage of preparation.
Fourth is to construct a complete roadmap of the practical implications of going EV. Plan for additional driver training, different servicing and maintenance schedules, develop a holistic approach to charging, and an appropriate incident management offering capable of catering to EVs.
Finally, establish an implementation strategy and identify key metrics for monitoring progress. You need to understand what success looks like, and the measures that can be used to prove it. This will also allow you to look for ways to further improve efficiencies later down the line, as well as identify challenges, such as which vehicles to prioritise for electrification, or identify problematic drivers (those without drives at home, for example). Within this, you will also need to feature an engagement plan – how are you communicating the EV transition to the business? Winning over drivers will improve efficiencies.
Informed decisions
The shift to EVs stands as the most significant challenge facing businesses in decades, which means there is a huge risk of making poor decisions that end up costing businesses money.
We help businesses make informed decisions through a consultative approach, analysing the key data points from the huge amount of data their vehicles create to pinpoint which vehicles are primed to be switched to EV, and which should remain as they are.
Our experts can determine the ideal phased adoption of EVs in many ways: we analyse trends in both the vehicles and charging technology to determine when the time is right for vehicles to be switched – particularly in the LCV sector where there are unique demands for charging.
But transitioning doesn’t happen overnight. That’s why we offer flexible financing options, allowing customers to retain vehicles for as long as needed, backed by our proactive approach to fleet maintenance.
This way, the funding allows businesses to change vehicles to EV as and when required. The real power in this transition lies in data and its aggregation, and our customers reap the benefits of partnering with us – a collaborator who prioritises their goals over our own agenda.
Rory Mackinnon Commercial director, Holman
Chris Clibbery CEO, Engineius
Consider every aspect of EV transition
Small wins matter in the road to net zero, financially and environmentally, so as fleets transition to EVs, all aspects surrounding the vehicle, not just the purchase, must be considered, including how they are moved.
At Engineius, we drive EVs when we deliver them. I know this sounds obvious but it’s still not uncommon to see EVs being delivered on diesel trucks! This is completely opposed to the environmental cause and not the green start intended for the adopting fleet; not to mention, it’s more expensive.
To be in control of costs and environmentally responsible for EV deliveries, fleet managers need to ask how their vehicle will be moved. EVs are heavier than their fossil-fuelled counterparts, which has implications for transported delivery, where a larger transporter will be required to ensure it has the correct payload. This is both more expensive and less flexible as fewer such trucks are available.
The total emissions for an average EV transported 100 miles on a diesel transporter would be approximately 100kg of CO₂, compared with the total emissions from driving an EV for 100 miles and taking public transport for the return trip, which would be approximately 15kg of CO₂. The difference is huge and should not be ignored.
Engineius ensures its 600-plus drivers follow cost-effective and sustainable practices too. It doesn’t use chaser vehicles and travels to, from and in-between movements by public transport. Research carried out by Engineius found that companies using chaser vehicles can add an additional 24 driven miles for every 10 miles required, doubling the driving distance and emissions and increasing the overall cost of the movement.
Vehicle movement is one small aspect in fleet management, but working from an informed position can reduce costs and support the EV cause.
“The Bridgestone Duravis van tyre offers huge savings whilst simultaneously minimising downtime and contributing to a lower cost of ownership”
Maximise savings for van fleets
As van fleets explore more ways to balance the books against a challenging economic backdrop, Bridgestone has revealed a way to help them save thousands of pounds per year.
The Bridgestone Duravis van tyre is one of the company’s most advanced product across its entire consumer and commercial ranges, offering huge savings whilst simultaneously minimising downtime and contributing to a lower cost of ownership.
According to tests carried out by independent TÜV SÜD, Duravis offers best-in-class mileage for extended tyre life as well as best-in-class dry and wet braking performances. It also achieves the highest EU label rating for wet grip, helping to keep drivers safe on the road, even in challenging wet-weather conditions.
Not content with fleets having to take Bridgestone’s word for the tyre, last year, the company commissioned an independent study with Warwick Business School, where the benefits of operating on Duravis tyre were underlined, both economically and sustainably, with lower CO₂ emissions also proven to be generated as a result.
Boasting an EU label Grade B for rolling resistance, it was benchmarked against Grade D alternatives, with all comparison data sourced from UK government sources. The study factored in fuel prices and forecasted future fuel price rises, with DfT and DVLA data referenced to calculate the number of vans currently on UK roads.
It concluded that 373.12kWh a year for EV vans could be saved a year when operating on a Duravis Van tyre compared to a ‘D’ rated alternative.
The research showed that because the tyre also offers greater longevity than Grade D alternatives, costs are also reduced through fewer annual replacements. For van fleets of five vehicles, overall savings amounted to around £895 a year and for a fleet of 100 vehicles, the figure extrapolates to £17,9004.
The tyre also comes equipped with a revolutionary Sidewall Protector Rib, which ensures that the product can withstand kerbside damage, which represents an occupational hazard for van drivers.
Brett Emerson Consumer sales director, Bridgestone
Nigel Dent Head of sales, Connected Energy
Grid challenges spur energy storage demand
As fleet electrification gathers pace, the grid’s capacity to provide the required power is becoming more of an issue. Increasingly we are hearing from fleet operators, charge point operators and dealerships who want to install charge points at scale but can’t due to grid constraints. This is a growing challenge for three main reasons. Firstly, the grid was never designed with EVs in mind. Secondly, if there is any spare capacity, it’s available on a first mover basis. So, if your neighbour already bought it to support their EV infrastructure, there is now none left for you to expand your charge points. And thirdly, where there is no headroom, distribution network operators are struggling to meet demand for grid upgrades, meaning there are long waiting times, high prices, and complexities around land ownership challenges.
The costs involved in upgrading the grid are so high that it often works out much cheaper to install a battery energy storage system to bridge that power gap. Smart chargers with load balancing technology can help, but this will only get you so far. Operationally it might not be feasible to extend a car or van’s recharge time from, say, eight hours to 12.
A battery energy storage system (BESS) work as a reservoir, trickle charging from the grid during quiet times, but is then able to provide large amounts of power very quickly when needed. This makes BESS ideal for supporting fast and rapid chargers, as well as the new wave of energy-hungry high-capacity chargers which can require up to 350kW of power.
The combination of charging infrastructure and a BESS also opens up significant revenue generation opportunities. National Grid’s new Demand Flexibility Service (DFS) incentivises businesses to reduce their demand on the grid during peak periods. This means that companies can get paid for using less energy. The aim is to help the electricity network to flatten out spikes and significantly reduces the risk of blackouts.
