Governments across the world are passing laws to replace vehicles powered by internal combustion engines (ICEs) by electric vehicles (EVs) in the coming years. It is part of a global push toward zero-emissions transport that has intensified since the 2015 UN Paris agreement on climate change, which included a detailed declaration on the importance of electromobility. 

Fleet managers will be part of the transition from petrol- and diesel-powered vehicles to EVs, along with millions of drivers globally. The deadlines are looming. In the UK and many European countries, new ICE car and van sales (excluding some hybrids) will be banned from 2030. The deadline is 2035 for California and in Spain, Canada and France, it is 2040.

Consumer reluctance often mirrors company concerns when it comes to purchasing EVs. According to the World Economic Forum, cost, lack of charging points, battery range and fire risk are among the main concerns despite improvements across all these areas. But, according to the Research Institute of Sweden, the fire risk for EVs may be lower than for ICE cars.

Saving costs, saving the planet

CFOs are primarily concerned with the bottom line, making cost concerns and financial benefits for the switch to electric fleets key priorities. For many companies, credible business cases still need to be made to persuade decision-makers to make the change, despite the clear environmental and corporate reputation benefits of accelerating the move away from petrol- and diesel-powered fleets. The International Energy Agency (IEA) forecasts in its ‘Stated Policies Scenario’ that by 2030 – the deadline for banning the sale of new ICE vehicles in multiple markets – electric vehicle fleets will displace around 2.5m barrels of oil products per day and 4.2m barrels per day in its ‘Sustainable Development Scenario.’ 

The EV100 Progress and Insights Report by Climate Group, an international climate action non-profit, cited examples of companies that reported fleet cost savings by going electric. Austrian Post has deployed more than 1,000 EVs, particularly as a replacement for ICE vehicles on last-mile deliveries. As well as saving on fuel costs, the postal corporation’s maintenance costs have fallen by 50%. This has been bolstered by government subsidies and tax exemptions for zero-emissions vehicles. Austrian Post also improved its own charging infrastructure. 

“By installing our biggest charging site, with 65 smart chargers, our intention was to take the next step in building zero-emission delivery and show that it is already possible,” said Paul Janacek, head of group fleet at Austrian Post.

 Battery prices have fallen by 85% since 2010 and as more EV models come to market, fleet buyers will have more choice across a wider range of price points. Economies of scale and wider mass market acceptance is also bringing purchase and lease costs down

The cost of EVs, plus installing charging infrastructure at workplaces can deter some companies from replacing ICE vehicles with EVs for fleet use, but the IEA’s Global EV Outlook 2020 highlights the cost savings that can be achieved through electromobility. Battery prices have fallen by 85% since 2010 and as more EV models come to market, fleet buyers will have more choice across a wider range of price points. Economies of scale and wider mass market acceptance is also bringing purchase and lease costs down. 

A study by the US Department of Energy’s National Renewable Energy Laboratory and the Idaho National Laboratory found that significant cost savings can be made by operating EVs instead of ICE vehicles. Depending on electricity tariffs, the study found that switching to EVs corresponded to an average lifetime fuel cost saving of between $3,000 and $10,500 per vehicle.

Calls for stronger government policy to help fleets

While companies can glean significant tax benefits (see box below) and long-term savings by adding EVs to fleets and offering employees salary sacrifice schemes, there are calls for governments to do more to make switching to zero-emissions motoring easier for fleet managers. 

In the US, fleet operators and Ceres, a non-profit for sustainable economic transformation, have called on President Joe Biden’s administration to set stricter nationwide emissions and fuel economy standards for ICE vehicles engines as the transition to zero-emissions transport gathers pace, rather than leaving such initiatives to individual states, such as California.

The World Economic Forum, meanwhile, has urged more widespread road pricing to encourage EV takeup. Fleets are already experiencing cost savings through exemptions from road pricing schemes for EVs in which vehicles with higher emissions pay more to use roads, especially in major cities.

China and the EU have been praised by the World Business Council on Sustainable Development (WBCD) for encouraging swift market change among fleet decision-makers, such as incentives for EV adoption, funding more charging infrastructure and battery storage facilities, and developing renewable energy sources for greener charging, especially as part of Covid-19 pandemic recovery programmes. This has been particularly prevalent in the EU and China.

“Covid-19 underlined society’s need for resilience and shock-preparedness. The crisis is also pushing countries, cities and leading businesses to ramp up efforts to decarbonise,” says Thomas Deloison, director of mobility at the WBCSD. “Going electric makes economic sense today, and will soon be a precondition to operate in cities where zero-emission zones will be the norm."

For companies that have made the commitment to focus on their environmental impact while also improving their relationships with employees – prospective and current – offering electric vehicles (EVs) as a corporate leasing option can supercharge the employer brand.

Millennial job seekers were asked in an academic study, ‘Does CSR matter in your job search.’ And more practically, does a company’s reputation as a good citizen influence its reputation as an employer, its employer brand? This study is one of many that point to the conclusion that yes, corporate social responsibility (CSR) does matter to the employer brand.

The employer brand, though, also relies fundamentally on pay and benefits. If an appealing employer can’t support its talent, its reputation as an employer will decline. The Chartered Institute of Personnel and Development (CIPD) discussed the value of benefits with the Millennial audience in a podcast. HR professionals from the CIPD, Penguin Random House and Home Group agreed, benefits make a difference to the employer brand. And more importantly, flexible benefits that cater to the lifestyles and interests of employees can make a huge difference in attracting and retaining the best talent.

One long-standing benefit in kind, the company car or car lease, can do much more for the employer brand. It can work harder to provide employees with benefits that fit their lifestyles and it can help companies build their reputations not only as employers of choice, but as progressive, environmentally conscious employers of choice.

Employees are beginning to demand more of their employers. Suez UK, the UK arm of an international water, waste and resource management group, puts sustainable business at the heart of its product offer. It has also introduced electric vehicles into its car leasing offer. Emma Jordan, senior corporate affairs manager at Suez, says, “We have seen a massive shift towards employees prioritising a potential employer’s approach to ESG. It used to be ‘how are you mitigating risk?’ Now it is, ‘What are you doing as an employer to help me be more sustainable as an employee?’” She adds, “Our approach to ESG is a critical component to how engaged an employee is.”

"It used to be ‘how are you mitigating risk?’ Now it is, ‘What are you doing as an employer to help me be more sustainable as an employee?’ Our approach to ESG is a critical component to how engaged an employee is”

Employee engagement, in Suez’s case, is rooted in the company’s commitment to be a responsible employer. For British grocer Asda, its strong stance on sustainability is helping it stand out as an employer in a competitive field. Not only has it committed to reducing its energy usage by 30% before 2025 and its commercial fleet’s emissions by 60%, but it has introduced electric vehicle leases as part of its benefits package.

“It’s a huge positive from an employer brand perspective,” says senior reward manager at Asda, Simon Bell.  “It's great for our existing colleagues in terms of choice, but also if you're looking to join the business it does a lot for our [emplyee value proposition] EVP. It shows prospective employees our values and aspirations."

EVs are not only helping build a stronger benefits package, they are actively encouraging people to take up a vehicle lease where they might not have in the past. Because the tax rate on company car leases for EVs is only 1-2% for the next two years, compared to a rate upwards of 15% for cars with combustion engines, EVs are making car leases a more attractive benefit, thereby improving the company’s relationship with its employees in the process. Bell says: “We actually saw a big uptick in those choosing cars over cash.”

With the 2030 government cutoff point for the sale of combustion cars and vans looming, transitioning company fleets to EVs is inevitable. Some common challenges, though, arose for both Suez and Asda. Both companies have introduced EV leases alongside traditional options and both have undertaken an education programme designed to allay common fears and bust myths about the range, charging infrastructure, cost and efficacy of EVs.

Bell says Asda communicated internally through webinars and educational material, but also relied on internal EV champions to share the benefits of EVs with their colleagues. As a result, over 85% of new leases are for electric vehicles. “There’s so few journey types that can’t be served by an electric vehicle,” Bell says. “I think anything you can do from a reward and benefits perspective to improve your offering and improve choice is so important.”

Jordan agrees, adding: “For many organisations, travel will be one of the key areas to target for reducing carbon emissions. Electric vehicle technology and the infrastructure that supports it is developing rapidly, fleet managers have an important role to play in understanding and keeping up to date with the options available.”

She values the role EVs can play in achieving these objectives, adding: “This allows them to advise on how electric vehicles can form part of wider policy that promotes sustainable travel in all forms from walking and cycling to public transport to car travel. By offering a choice of electric vehicles that suit a range of circumstances, fleet managers will support their people in finding an option that is both right for them and that helps them reduce their impact on our environment.”

Employee benefits contribute to the employer brand, as does a company’s positioning with regards to sustainability. Those two values converge in electric vehicle leasing; for the good of employees, companies and the planet.

The deadline is set; by 2030, the sale of new internal combustion engine (ICE) cars and vans will be banned in the UK. This will affect every fleet operator in the country as plug-in hybrid and electric vehicles (EVs) become the norm.

“In the grand scheme of things, nine years isn’t very long at all,” says Matthew Walters, leasing and fleet management company LeasePlan’s UK head of consultancy services. “In terms of leasing contacts, it could be just two leasing cycles away.” Walters urges companies to “proactively look ahead rather than taking a passive approach” to the transition from running petrol or diesel vehicles to building zero-emission fleets.

“If now isn’t the right time to start your journey to electrification, think about exactly when in the next nine years that will be,” Walters says. “Failing to prepare could leave you in the lurch further down the line” he adds, with regards to a rise in demand that might lead to a vehicle shortage or a bottle neck with other laggards.

LeasePlan highlights seven key steps to transition company fleets. Once fleet managers begin considering the shift to EVs and commit to research, they should audit their current readiness for EVs and get support. Following that, the key steps are to develop a transition plan and to make a public commitment. That commitment, the company says, keeps the focus on the transition and empowers brands to stand by their decision to make a positive difference to the environment.

Starting the EV fleet transition

Many companies have started replacing ICE vehicles with EVs, especially for short distances. For example, the online shopping boom has incentivised some last-mile delivery firms to look at electric light commercial vehicles in urban areas.

Once a company has decided to make the EV switch, they should research before investing. An online assessment tool, such as this one from LeasePlan, is a good starting point for working out the scale of the task.

A fleet audit determines which vehicles can be easily replaced with electric alternatives in the short term and which vehicles will be replaced later. Range anxiety, once the chief concern around EVs, has dissipated with improved vehicle advancements. But, one current stumbling block is around the convenience and prevalence of charging. Companies can engage with their employees to educate them about their needs, and allay their fears around EVs. Initially, using EVs for shorter trips can help build confidence in the new technology.

Infrastructure is another major consideration. Will charging points need to be installed at the workplace? Are there charging points nearby? Can employees charge EVs at home? For long-distance driving, are there ample charging points on routes? More filling stations offer charging facilities, as well as local government authorities and shopping centre car parks, but are they conveniently located for an organisation’s business travel needs?

The UK government is offering subsidies for home charging points including drivers named by their employers as primary users of electric vehicles, as well as a scheme to support workplaces that need to install EV charging points.

Promoting the benefits of zero-emissions driving

Communication with employees fosters awareness of the benefits of EVs beyond environmental advantages: EVs are quiet, relaxing to drive in heavy traffic because there are no gears to operate, they are more responsive because maximum torque is achieved instantly, and the low positioning of heavy components in the chassis generally means improved road holding on bends and reduced body roll.

The increased prevalence of battery electric and plug-in hybrids has promoted driver acceptance of alternative powertrains, but all employees who will be driving EVs should be properly trained in how to operate them so they are confident behind the wheel. More motorists have a positive attitude toward EVs – the LeasePlan/Ipsos Mobility Insights Report found that 65% of the motorists surveyed have a favourable view of zero-emission driving and 44% have improved their opinion toward EVs in the past three years. Companies can build on that growing goodwill.

Extra support for fleet operators

Fleet operators must meet corporate objectives while making the zero-emissions transition. Vehicles need to be safe, efficient and contribute to productivity and by 2030, this will have to be achieved via hybrids and electric vehicles to meet wider environmental goals. The UK government is offering some support to make change easier, but as EVs become more prevalent, much of this will be phased out in the years ahead.

In London, companies can save on congestion charges for more polluting vehicles as the Ultra Low Emission Zone expands. Bath and Birmingham have introduced similar schemes and more cities are expected to follow suit in the months and years ahead. “We’re going to see Britain become a patchwork quilt of different clean air policies,” says Walters. “Fleets will need to figure out which ones affect them – and in which ways.”

Previously, zero-emissions vehicles attracted 0% company car tax. This has been increased to 1%, but such a low rate is still attractive. Grant funding covering up to 35% of the list price (up to a maximum of £2,500) is also available for cars with an electric range of at least 70 miles and with CO2 emissions under 50 g/km, as long as they are priced under £35,000. This helps reduce the lease cost for fleets, if not the company car tax.

Walters says: “Start preparing for the EV transition now; 2030, as we keep saying, will come round sooner than many people might think. It’s not as though the benefits of plug-in vehicles have to wait until 2030 – they are a viable and cost-friendly option for many fleets right now.”

If companies don’t put plans into action ahead of 2030, they could risk legally mandated fines on emissions. Similarly, there’s the potential for reputational harm should companies fail to meet corporate sustainability targets.

For those exploring the transition to EVs, click here for LeasePlan’s EV Fleet Readiness tool

Much like private car buyers, vehicle fleet managers find themselves with a raft of decisions to make as electrification continues its creeping takeover of the automotive sphere. But while private owners will be faced with a change in availability when internal combustion engine-only (ICE) light-duty vehicles are no longer on sale in 2030, vehicle procurement professionals, working on a fleet-wide scale, may have less time to put their plans in motion.

“The ICE [sales] ban moving from 2035 to 2030 has pushed the whole fleet industry, and those who support it, into fast forward mode,” says Martyn Collins, editor of Fleet World. “Which is odd, because we’re still in a period of uncertainty – with working from home, and the need for travel and company vehicles unclear.”

As the world readjusts to post-Covid-19 working conditions, fleet managers find themselves with relatively little time to transition their fleets to plug-in hybrid or electric vehicles.

“Usually, fleet cars are kept for approximately four years for every contract, so you’ve probably got two changeovers before the ICE ban comes in,” adds Collins. “I would expect any serious fleet that’s making moves towards electrification to have plans in place, or to be putting a plan in place, working with their drivers and their suppliers on a strategy.”

There are a number of steps that CFOs and procurement officers can take when transitioning their vehicle pool. Key among them is choosing the right vehicle for the right role. Kia UK’s John Hargreaves, general manager of fleet and remarketing, champions vehicle assessment for suitability via extensive trialling.

“We facilitate demonstrators of all our electric range, via dealer network and our own centralised demonstration fleet, for [customers] to really gauge Kia EVs and how they might meet their requirements.”

Often this means matching the vehicle’s size and usable range to the job profile. With modern EV ranges increasing with every design iteration and technology step change, the days of fleet choice being dependent on fuel tank size are fading fast.

“For a lot of the travel we’ll do moving forward, a vehicle with 200 miles of range will be quite suitable for 80-90% of people,” says Collins. “There will still be some people pounding the motorways, but pandemic working has proved that while it’s good, at times, to meet face-to-face, it might not be suitable or possible all the time.”

When transitioning a fleet, it’s also fundamental to factor charging requirements into a strategy – across all aspects of vehicle use.

 “You need to be thinking about your office-based charging strategy, your home-based charging strategy, and your kerbside-based strategy”

“You need to be thinking about your office-based charging strategy, your home-based charging strategy, and your kerbside-based strategy,” says Paul Hollick, chairman of the Association of Fleet Professionals. “You need to know how you’re going to charge these vehicles. The most important thing is to do some data analytics on your current vehicle usage.”

This will include changing the way in which companies budget for fleet vehicles – moving to a whole-life cost model that includes taxation benefits and running costs, but that also covers varying solutions for drivers to charge their vehicles, whether that’s centrally from a hub location, installation of home-charging points, or on-the-road, public power sources. And if that wasn’t complicated enough, different manufacturers will mean different charging location options (Tesla drivers, for example, currently have sole access to the company’s Supercharger network) different models will suit different charging speeds, and different role requirements will dictate different charging cycles.

All these factors need to be included in a transition strategy, which will also depend on training, education and encouragement.

“There are going to be early adopters within your organisation,” says Hollick. “It’s key to use these as ambassadors. But you should also become knowledgeable yourself. Do workshops and roadshows, work with your supply chain, particularly your leasing companies, your OEM partners and your dealers, to support everything you need to do to deploy a strategy.”

In addition to changing the mechanics of the company’s vehicles, it’s also important to adapt the company ethos in line with electromobility.

“There’s a duty of care,” adds Collins. “Going from an ICE vehicle to an electric vehicle can create some issues because of the linear acceleration and the lack of transmission lag; you don’t want to suddenly end up with lots of speeding fines to deal with.”

Electrification as an automotive paradigm shift is looming large. For fleet managers and procurement officers, it’s an even more pressing issue. But with a few key strategies and implementation tools, it’s one which can be navigated smoothly.