ACCELERATING THE EV JOURNEY
Alfonso Martinez, UK managing director, LeasePlan talks to Martyn Collins about how the company has innovated in what has turned out to be an unprecedented year. Plus, how this has had a positive effect on EV fleet take up.
Necessity is often the catalyst for innovation, so what new EV-focused innovations have LeasePlan launched during the pandemic?
We’ve seen great progress in the journey of the EV this year. The number of vehicles on the road across the UK continues to grow, alongside an increase in confidence around the place for alternative fuels in company car fleets. We’ve witnessed this first-hand and have adapted to this changing need in a number of ways. Firstly, we’ve re-launched our EV Salary Sacrifice scheme – SalaryPlan (first established in 2010) – as employees and employers alike are looking to take advantage of the low rates of Benefit-in-Kind tax.
We’re also invested considerably in digitising the driver journey: mapping the different experiences that drivers have when it comes to EV; assessing touchpoints from the cost considerations, to helping to choose the best vehicle and charging options. An example of this is our EV Driver Tool, which looks to understand both driving habits and how a car is used, to determine if an EV is suitable.
Lastly, we know customers are seeking far greater flexibility in their mobility solutions. We have bolstered our LeasePlan Flexible fleet with greater numbers of electric and hybrid models and we are developing a new product that enables commercial vehicle customers to take an ICE lease but with the opportunity to switch to an EV during the contract.
With the recent announcement banning the sale of ICE vehicles from 2030 onwards, do you view that as an opportunity? Or do you have reservations of this blanket ban?
The UK Government’s plans to bring forward the ban on new fossil fuel vehicles to 2030 are suitably ambitious, and a welcome sign that it is taking the nation’s transition to EVs seriously.
However, the Government still needs to address the elephant in the room: what happens to EV supply post Brexit? We need urgent answers on what will happen to the continuity of EV supply shipments when trade tariffs are introduced. Likewise, we must ensure that the UK still keeps its place at the table, otherwise we run the risk of simply not having enough vehicles to meet the demand and ultimately failing to meet our environmental obligations in the long term.
The Government also needs to make urgent investments in EV charging infrastructure, particularly in rural areas, to ensure the switch is as frictionless as possible. This needs to happen sooner rather than later; bad experiences with charging stations early on will only serve to dissuade people from going electric, making widespread adoption even more challenging.
“The number of vehicles on the road across the UK continues to grow, alongside an increase in confidence around the place for alternative fuels in company car fleets.”
The Government needs to make urgent investments in EV charging infrastructure, particularly in rural areas to ensure the switch is as seamless as possible.
Are the planned rapid charging hubs the opportunity for fleets that they appear to be?
The truth is that we’ll need a combination of solutions to facilitate a nationwide transition towards fully electric fleets, as one solution will not suffice for all. Supporting a diverse range of fleet needs will require charging stations at home, at the workplace and en-route fast charging stations in places like supermarkets, cinemas, and so-called ‘dwell-spots’. The challenge here is ensuring that the charging stations are universally accessible, reliable and can accept all forms of payment. There is also some evidence to suggest that fast chargers, particularly in hot climates, can contribute to battery degradation, so this will need to be addressed.
Creating and investing in a system that works for everyone will require close examination of current lifestyle habits and seeing how these fit within the parameters of future technology. Only by gaining a full understanding of how and when drivers will charge their vehicles, can we ensure we’re investing in a framework that enables a seamless transition. We’re no longer talking about just the few; every driver on the road will need access to affordable and reliable charging, and this will take considerable planning.
We’re already making great progress: according to LeasePlan’s EV Readiness Index, the UK is the third best prepared country in Europe for the upcoming switch to EV.
With more availability of electric models, do you think more employees will come back to the company car – rather than taking the cash?
Employees now have access to a range of benefit and salary sacrifice schemes, which allow them to make serious cost savings on the things that matter to them. Demand is there: in a recent survey of UK HR bosses and senior decision makers, 59% said there have been more requests or a rise in uptake for environmentally focused benefits, with more than half of employees (57%) showing an increased interest in EVs since March 2020. In addition, 63% said they would choose an EV as a company car if it was an option.
For those serious about making the switch, salary sacrifice schemes are the most cost-effective way to do it as they allow employees to pay for their car with their gross pay, resulting in lower tax payments. At the same time, employers can potentially take advantage of National Insurance savings, while having a great way to reward and motivate their workforce.
Moving forward, fleet sizes are likely to be smaller and the replacement cycles longer – will this suit electric vehicles?
This has been an unprecedented year for fleets, with leasing companies right across the board reporting longer replacement cycles. However, all of the decisions taken this year were designed to mitigate the impact of OEM closures and to provide surety for fleets that they could remain operational.
Moving forward, fleet replacement cycles will vary depending upon business needs – some fleets are looking for greater flexibility with short term contracts of three months, whilst others see that as vehicles become more reliable longer replacement cycles are now an option.
Changes to taxation now favour electric vehicles, but do you think the pandemic has affected the take up of EV fleet?
We believe the pandemic has had a positive effect on the take-up of EV fleet.
This is largely down to the heavy focus this year on the environmental changes we’ve seen as a result of the pandemic, and an increased need for employers to prove their sustainability initiatives. Indeed, our recent research found that over 8 in 10 (86%) bosses stated that it was important to demonstrate their corporate responsibility progress.
At the same time, many of the barriers that once prevented EV adoption are now being removed. Millions of people are now working from home, many of whom will continue to do so in the future, at least on a flexible basis, and as a result, we’re seeing far fewer people commute to work every day. This change in lifestyle has caused a reduction in range anxiety, as more people now perceive EVs to be a viable option.
There are hurdles, of course, including surety of supply post-Brexit, infrastructure availability and reliability, and raising awareness of the whole-life costs of a vehicle. But the taxation changes earlier this year and supporting initiatives are proving that it’s possible to go electric and we want to make the journey for businesses as accessible as possible.
Despite the positive steps taken this year, only a very small percentage of cars being driven in the UK right now are electric. There is still a lot of work to be done, but we are committed to helping all drivers make the switch.
With the likely changes and challenges that running an EV fleet brings, do you see mobility solutions becoming more important moving forward?
Where there is challenge there is also opportunity. One of the biggest challenges we’re facing is the push for flexibility, especially with the current Covid-19 pandemic. Employees are pushing for greater choice and flexibility when it comes to work and travel – with drivers opting for alternative fuels and more agile ways of working to reduce costs and business mileage. We have responded to this by putting in place a number of products, including LeasePlan Flexible, for different business types to both enable them to take a more flexible approach, but also push forward on their drive to electric.
One trend we’re seeing right now is that those who can do without personally owned modes of transport, especially those living in urban areas, are moving away from traditional ownership towards more flexible mobility solutions. These changes are having a profound impact on the automotive industry, with car customers now demanding far greater levels of flexibility and convenience. Pre-Covid, we saw a significant rise in popularity for Cars-as-a-Service (CaaS), where drivers can gain immediate access to a vehicle on demand without the need for outright ownership. While shared mobility has dropped during the pandemic due to health and safety restrictions, we expect this to rise again in 2021 as people come to view ridesharing as a good alternative to more congested forms of mobility that make physical distancing difficult, such as public transportation.
For those who own a car but have limited usage, or those without access to personal transport, there will be a growing number of mobility models to take advantage of. All of this will give drivers and fleets far greater flexibility, while challenging many car owners to consider how to transition to more environmentally friendly modes of transport such as electric cars.
The ability to get from A to B remains vital to today’s society. It allows for personal choice, freedom, and access to opportunities, as well as providing people with a means to connect with the physical world around them.
Do you think companies will be keener to look at alternative solutions, other than a straight lease for EVs?
We understand that each company has their own needs, and as such there must be a range of options for companies to choose from when it comes to working out what’s right for their fleet. This is where the different products we offer come into play, as we can determine exactly what vehicles a company needs, what’s available and what their journey to electrification is, offering them a product that suits their requirements, both now and in the future. It’s important for businesses to have a fleet that’s fit for purpose and our aim is to work with businesses to find that solution and adapt with them when they’re ready to do so.