03 September 2020

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With renewed incentives and more choice, is now the time to electrify your fleet?

The UK Government has its sights set on zero net carbon emissions by 2050, and transport is firmly in its crosshair. On July 31, the Department for Transport completed its consultation addressing whether to bring the cut-off date for all combustion engine cars and vans forward five years to 2035 or earlier. 

Despite industry concerns about the 15-year deadline for electrification, it may be that the market moves faster. Demand is already rising. In a new car market down 2.4% in 2019, plug-in vehicle registrations were up 25%, according to the Society of Motor Manufacturers and Traders, despite supply constraints and disruption from WLTP re-testing. 

That demand also proved resilient during the first half of 2020, with 50,465 plug-in hybrid (PHEV) and battery-electric (BEV) vehicles registered.

After years of speculation, has the UK’s reached a tipping point? We look at the latest developments steering fleets to make the switch.

Better technology

High cost and low range are major issues for widespread EV take-up, but due to technology improvements, the former is falling rapidly, which is positively impacting on the latter. 

According to the most recent Bloomberg New Energy Finance report [1], battery pack costs have fallen 87% between 2010 and 2019 to £118 per kilowatt-hour of capacity, due in part to economies of scale and improvements to cell chemistry. This cost will halve in the next decade, the report claimed.

The result is that larger packs with longer range are becoming more viable for mass-market cars each year, underpinning more versatile BEVs and efficiency improvements for PHEVs. Newcomers such as Volkswagen’s ID3 are utilising shared platforms and battery packs to cut costs further, which may help solve the issue of high EV purchase prices.

The bigger picture is much broader model ranges. Plug-in options span from city cars to large SUVs, as well as an increasingly wide selection of commercial vehicles including long-wheelbase, high-roof variants. 

540782_fuel_icon_no_strap.png       Curing Charging Challenges

The UK already has a significant public charging network, encompassing 19,015 units and 33,011 connectors according to Zap-Map (July 2020). This offers thousands of fast charging points along major routes, augmented by slower units where people stop for longer, and more are being added every day.

Charging in public has been a consistent issue for many business drivers, who do not want to stop for the long periods necessary to replenish a full battery, but charging rates are getting faster all the time. More effective battery cooling means many mainstream models are now offering charge rates that are twice as fast as their predecessors, enabling 200-mile ranges to be recouped in less than an hour [2].

This is still a significant amount of time out of the working day. But pointing to the future, the electric Porsche Taycan (while not likely to be a common fleet car) can recover 62 miles of range in less than six minutes on a compatible charging point [3], and it would be expected that mainstream models will soon follow suit. How soon though, is the question not yet answered.

Accessibility is also improving. Allstar offers electric vehicle charging as part of its multi-fuel One Electric card, recognising that fleet profiles are becoming increasingly diverse, while every charging point installed since Spring 2020 must also offer ad-hoc access without requiring an app or RFID card, with network-wide refits required by the end of the year.

Find out more about the Allstar One Electric card here.

Renewed incentives

New company car tax advantages were introduced for ultra-low emission cars registered after April 6, 2020, aimed at accelerating fleets’ adoption of the technology. Vehicles emitting 50g/km of CO2 get low bands based on their electric range, capped at a 30-mile minimum. Battery-electric vehicles, at 0g/km tailpipe CO2, qualify for a specific 0% band for the first time in five years, and this is backdated to vehicles registered before April. 

For fleets, this offers a significant reduction in Benefit-in-Kind liability for drivers and Class 1A National Insurance contributions for employers.

Although the tougher new WLTP emissions tests could cause tax rises for petrol and diesel cars, plug-ins are less vulnerable. WLTP won’t affect BEVs’ 0g/km CO2 recorded emissions, while new and refreshed PHEVs typically feature longer electric ranges than their predecessors, which could even put them into a lower tax band.

Purchase incentives are also still available, offering up to 35% or £3,000 off the purchase price of a sub-£50,000 passenger car emitting 50g/km or less and with an electric range of 70 miles or more. Commercial vehicles emitting 75g/km or less and with a 10-mile or longer electric range are eligible for a 20% purchase incentive, up to a maximum £8,000 grant.

Want to know more about WLTP and emission testing? Read our Jargon Busting: Emissions article here. 

For more details on BiK rates for EVs, visit https://www.gov.uk/calculate-tax-on-company-cars

A suite of support

Purchase and company car tax incentives are part of a package of measures put in place to help fleets make the switch. Until March 2021, businesses buying vehicles outright with CO2 emissions of 50g/km or less can claim a 100% first-year allowance, writing off 100% of the cost against that year’s pre-tax profit. 

Full lease costs can also be deducted for vehicles at 110g/km CO2 or less – qualifying non-plug-ins have become increasingly rare since WLTP-based CO2 figures were adopted from April onwards.

This also extends to charging equipment. Businesses looking to let employees plug in at work can claim up to £350 (previously £500, it was capped in April 2020) of the cost of installing charging equipment, and qualify for a 100% first-year allowance on any expenses incurred. Drivers charging at work will also not be liable for Benefit-in-Kind on the electricity used. 

540782_fuel_icon_no_strap.png       So have we reached the tipping point in 2020?

For fleets, the move to electric mobility could turn out to be near-future market pull than longer-term regulatory push, but for many petrol and diesel are still the dominant choice. As the sales figures stated above show, 2020 has seen electric vehicles outperforming the rest of the market – pure electric car sales alone are up 175% year-on-year [4] – but they still represent less than 10% of the registrations of petrol this year.

This is a significant increase on 2019, and the acceleration in available models and sales is noticeable, but choosing an electric car is still the exception rather than the norm. A tipping point has not yet been reached, but with lower cost, improved charging and longer range, that day is coming sooner rather than later.

Sources:

[1] https://about.bnef.com/electric-vehicle-outlook/

[2] https://pod-point.com/guides/driver/how-long-to-charge-an-electric-car

[3] https://www.porsche.com/uk/aboutporsche/e-performance/

[4] https://www.smmt.co.uk/2020/08/new-car-registrations-up-11-3-as-pent-up-demand-helps-lift-market/

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