The key to a successful EV fleet policy
With electric vehicles on many companies’ radar, Fleet World asks the sector specialists about how fleets can successfully create an EV fleet policy. Natalie Middleton reports.
As the countdown continues to the 2030 ICE ban, there are many considerations for fleets; from the choice of electric vehicles and which employees will initially drive them, to funding/finance, charging and reimbursement and finally vehicle maintenance and defleeting.
All of which needs to be carefully encapsulated in the fleet policy. But what’s the right approach and how much of a rethink is needed?
It’s an area that does require a core focus, according to Fleet Logistics UK and Ireland.
Country head Sue Branston says: “The average company car is replaced every 3-4 years, which means that corporate fleets will drive the ‘greening’ of our roads. They are currently acquiring two out of three new cars registered, so are a major influencer. And it is clear that having the right fleet policy in place now to embrace electrification is of paramount importance.”
She continued: “At Fleet Logistics, we believe every user case differs, and this means that fleet policy needs to be looked at for each business on an individual basis, every stakeholder involved should have their say. There is no case of ‘one-size-fits-all’ or an off-the-shelf solution.”
Branston also says it’s important to have everyone onboard from the outset: “To plan a successful EV fleet policy, the key is to roadmap the journey and do it in stages, engaging all stakeholders in decision-making, such as facilities management for infrastructure, operations and so on. Stakeholder buy-in to any decision will make the transition process much easier.”
Meanwhile, Adam Hall, head of electric vehicles at Drax, not only believes that stakeholder buy-in to an EV fleet policy will make things easier, but also says it’s essential.
He outlines: “Fleet policies are more likely to become top-level strategic decisions at the senior business level. This is due to the fact that EV fleets form an important part of the business’ wider sustainability and environmental objectives, and are therefore likely to require more input from a wider group of internal stakeholders within the company.”
“To plan a successful EV fleet policy, the key is to roadmap the journey and do it in stages, engaging all stakeholders in decision-making.”
Sue Branston, country head, Fleet Logistics UK
“With up to 40% of households currently unable to have a home charger installed, understanding how this demographic plays out across individual fleets is key.”
Matt Cranny, director of leasing & complete at ARI Fleet UK
A TARGETED APPROACH
One of the very first areas of focus when rethinking a fleet policy for EVs is the subject of who will make the switch to electric first. And according to many specialists, this will require a targeted approach, taking into account a number of different parameters.
When it comes to deciding who gets an EV, Matt Cranny, director of leasing & complete at ARI Fleet UK, advises: “For commercial vehicles understanding routes, loads and mileages driven is a given. However, for all vehicles taken home overnight, understanding which employees have access to home charging is vital. With up to 40% of households currently unable to have a home charger installed, understanding how this demographic plays out across individual fleets is key.”
Fleet Logistics UK and Ireland also says any roll-out will require careful evaluation of typical journey profiles first.
Sue Branston outlines: “A fleet policy for EVs is directly affected by the types and range of journeys that employees typically carry out within the business, as this will shape the types of vehicles required. “For example, loads carried, journey type and driver behaviour all need to be taken into the equation. In fact, anything that affects range needs to be taken into consideration, as this impacts on journey capability and hence vehicle type.
“At the same time, training drivers in the use of EVs is very important as their behaviour and habits will play a major part in the success of EV pilot projects, and driver input will be essential.”
But Arval UK senior consultant David Watts says that for business car fleets – not commercial vehicles – “there is no need to ‘qualify’ drivers for an EV”.
He continues: “They should be available to everyone – as long as they fit within the applicable whole-list cost budget and meet the job requirements from a model type perspective. The choice to ‘go electric’ should lie with the company car driver in the short term.” (For more in-depth comments from David Watts on this subject, click here.)
THE RIGHT FUNDAMENTALS
One key area, as mentioned above, is ensuring that any choice list policy – whatever form it takes – is based on some form of appropriate whole-life costs David Watts explains: “Plug-in vehicles and EVs will never sit in the right place on your choice list unless you are incorporating whole-life costs, particularly the National Insurance element as actually Class 1A National Insurance is a very big factor these days in the difference between one car and another.
“So that’s your starting point.”
Fleet Alliance commercial director David Blackmore also says that when factoring EVs onto the fleet, the company would always recommend using a whole-life cost approach rather than basing the policy on pure rentals alone.
“The reason for this is self-evident: based on rentals alone the EV will always be more expensive because of the inherent higher front-end prices,” he expands. “However, when you consider a number of other cost areas, the EV can actually work out cheaper than the ICE equivalent.
“One of the biggest cost savings is in the area of Class 1A National Insurance contributions, which are based on Benefit-in-Kind rates and which are far lower for electric vehicles than for fossil fuel equivalents.”
But while there’s no doubting that the switch to EVs needs a comprehensive plan to support the transition, the industry is rethinking the perceived wisdom that existing company car policies must be ripped up and a new policy written from scratch.
Arval’s David Watts says: “The switch to EVs does not require a completely new fleet policy; they are just vehicles that you fuel up differently.
“That being said, there is a need for an EV section within a fleet policy to cover off any differences, such as, reiterating that the use of hire or pool cars is not allowed for long business journeys – the driver has to make the car work.
“There is also the need to clarify, within the fuel section of the fleet policy, how electricity costs are managed or paid for as this may be different. In reality for company car drivers this will simply just revolve around the use of the Advisory Electric Rate (AER), currently set at 4p per mile.”
David Bushnell, principal consultant at Alphabet GB, agrees that a full policy rewrite is not needed and outlines some other areas of focus.
He explains: “When thinking about transitioning to an electric fleet, there is often a misconception that huge changes will need to be made to a company’s existing fleet policy. However, these days this is no longer the case. The only significant adjustments required are around fuel and electricity reimbursement policy, and then the addition of charging infrastructure, whether at home or at work, will also need to be considered to make sure it suits your duty cycle.”
LeasePlan UK also has recommendations on areas of focus.
Caroline Sandall, specialist consultant, clarifies: “While a new policy may not be required every time, companies introducing EVs into their fleets will at the very least need to draft new sections into their fleet policy documents.
“This is necessary as there are a number of key points that won’t be covered in their existing policies – particularly those around charging infrastructure and driver compliance.
“For example, fleet policies should clearly outline whose responsibility it is (employer or driver) to ensure access to a reliable charging infrastructure. Some employers offer to cover the cost of installing charge points at home – but what happens if the driver moves house and requires a new charge point? These are the sort of eventualities that fleet decision-makers need to consider.
“EV fleet policies should also include detailed guidance for drivers on how to properly operate their vehicle and clearly state the ramifications of non-compliant conduct. For example, some existing fleet policies state that the driver is liable for any costs occurred if they mis-fuel their vehicle. Fleet decision-makers may consider including a section that states that if a driver consistently lets their EV battery go flat, then they will be required to pay a penalty charge.”
FULLY CHARGED THINKING
Drax’s Adam Hall also makes the point that charging is a key component of any revised fleet policy.
Hall outlines: “Depending on the individual needs of the business, the extent of the policy changes needed will vary – although all will require some level of updating. For example, EV fleet policies will need to include an additional section around charging access. Fleet managers need to identify whose responsibility it is – business or individual – to have access to charging infrastructure, and then ensure that this is reflected in the policy. They should consider where they’re located and the driving range that their EVs need to be able to handle to inform these policy decisions.”
Hall continues: “In terms of home chargers, there are also policy considerations. Does the business want to pay for an employee to have a charger fitted? What happens if the employee leaves – do they have to give the charger back? What if a new hire already has a different brand of home charger?”
Like Arval’s David Watts, Hall also says fleets must consider the mileage reimbursement rate for their EV fleet – and says some may choose to set a different rate from the AER. There have been rising industry concerns that the AER is not “fit for purpose” and that it’s continuing to leave EV drivers short-changed.
Finally, Vincent St Claire, managing director of Fleet Assist, which specialises in supply chain management and consultancy for the fleet industry, says there are other areas that need consideration too.
“Fleets should be encouraging their drivers to read the EV’s handbook, particularly the charging section to make sure they are confident in charging their car, particularly when they are away from their home charging station.
“Fleets should review their service maintenance and repair work direction policies to ensure that the vehicle is taken to the most appropriate garage, taking into consideration work required, garage capabilities and budgetary controls. EV work should only be directed to garages that have trained technicians that can carry out the work on hybrids and EVs.
“Tyre replacement policies are also important as it is becoming evident that EV range can be compromised by not fitting the OEM-specified tyre. Encourage drivers to read their vehicle’s handbook’ it is all too easy to just assume it’s the same as a petrol or diesel car except you plug it in rather than take it to a fuel station to fill it up!” (For a more detailed look at how EVs are changing fleet SMR, click here.)
NEVER TOO EARLY TO START
While for many fleets, the switch to EVs may seem daunting, the key message from the industry is that many existing processes simply need a rejig, not a complete rethink. And that help is out there, if needed.
Alphabet’s David Bushnell sums it up: “These factors don’t need to cause major upheaval for fleet managers, and businesses should look to draw on the expertise of the right fleet partner to help guide them through these changes. The 2030 deadline is just around the corner, and companies should be focusing on being vehicle-ready from 2025. This will require going beyond fleet and engaging key stakeholders early.
“Finding the right partner is a crucial first step on this journey and will help ensure businesses are ready well in advance of electrification deadlines.”