MOVING fleets towards an electrified future is, to be honest, not top of Rob East’s list of things to do at the moment.
The general manager of the BMW Group’s corporate sales department has his work cut out guiding the firm’s customers through the difficulties of COVID-19.
“We are helping clients in these extreme market conditions and actively engaging with all our end users through this difficult phase,” he says.
Clients include not only small fleets but large corporates, the emergency services and rental companies. It is also about engaging with BMW UK’s Munich colleagues “so they get an understanding of what’s happening in the UK”.
The lack of road traffic, and the clarity of the air with so few air flights during lockdown, offers some idea of what the UK might be like come 2035 when the government plans to end the sales of petrol, diesel and hybrid cars.
Helping fleets on the road to electrification is a key role for all those involved in the fleet and leasing market. The BMW Group’s plan is for 25 electrified vehicles by 2023, which will also include five fully electric vehicles as soon as 2021.
Fleets driving down different roadmaps
But Rob says that the immediate outlook is more complex, more demanding; it’s not a simple point-to-point pathway.
“I think the first part is that not one size fits all. All our end user fleets have a different agenda. Then it’s building a fleet policy that works for them.
“There has been a gravitational shift towards electric vehicles, but every fleet has their own nuance and how to make it work operationally.
“For us as a brand, it’s about providing customers with choice. That means choosing the bodyline, the model and now the powertrain which suits their operational requirements.”
According to Rob, a key consideration for fleets is understanding the right technology for the job. He acknowledges anecdotal stories about first generation PHEVs with charging cables still left in their packaging, but says that has changed. He is not aware of it now and adds that is certainly not the case with current BMW fleet customers.
“For fleets considering plug-in hybrid electric technology the key element is the robustness of the charging infrastructure. All PHEVs need to be charged at every opportunity to ensure that the most is made of the zero emission ability which also reduces operating costs substantially, too. That means fleets need to evaluate whether end users have the ability to charge their cars at home. And, of course, providing the opportunity to charge up at work.”
By the same token, modern diesels still have a role in fleets today reckons Rob.
“We still see diesel on a global basis as a viable proposition. All our Euro 6 diesels are very clean and for those fleets that do high mileage it’s absolutely the right choice. But it goes back to the piece about giving people choice about powertrain.”
Nevertheless, the PHEV route is certainly an easy one into electric technology he believes.
“What we have seen in the last nine months following clarification around BIK is the huge gravitational pull of PHEVs. Demand for our BMW 330e has increased hugely. In many ways, from our X1 to our 7 Series limousine, the PHEV is becoming normalised.”
The Tax Appeal Of Plug-In Electric Vehicles
While the change in company car tax from 06 April 2020 has been most dramatic for fully electric vehicles – dropping form 16% BIK to 0% – the advantages offered by PHEVs is equally convincing.
For example, the BMW X1 xDrive25e Sport Auto has CO2 emissions of 41g/km and has a battery only distance of 32 miles. This gives it a BIK figure of 10%.
Meanwhile the larger BMW X5 xDrive45e xLine Auto has CO2 emissions of 28g/km and has a battery only distance of 54 miles. This gives it a BIK figure of 6%. (Lower CO2, greater battery range – see panel above on PHEV company car tax.)
Both make compelling company car choices, but the X5 in particular looks extremely good value for senior executives. It’s certainly the vehicle for Rob East as his next choice of BMW.
Rob points out that, while there has been extensive coverage of the company car’s waning popularity as part of a business remuneration package, the cash alternative doesn’t work for everyone.
“We are seeing people opting back into company cars; cash is not the panacea for everyone. You don’t have to think about deposit, about insurance and the maintenance risk. There’s just some tax to pay for the benefit. We are seeing this very clearly.”
The attraction of the BMW 3 Series Saloon 330e with its highly efficient tax position is clearly illustrated. The SE Pro Sport Auto model is taxed at the following rates over the next three years:
Taxation Of A BMW 330e As A Company Car
Tax year 2020/21
Percentage charge 10%
Benefit in kind £3,854
Tax payable at 20% £771
Tax payable at 40% £1,542
Tax year 2021/22
Percentage charge 11%
Benefit in kind £4,239
Tax payable at 20% £848
Tax payable at 40% £1,696
Tax year 2022/23
Percentage charge 12%
Benefit in kind £4,625
Tax payable at 20% £925
Tax payable at 40% £1,850
It means a company car driver can pay as little as £64 a month for the pleasure of driving a fully financed 330e. Compare that with the personal lease cost of nearly £400 per month and initial £3500 rental deposit from one of the leading lease car providers. Little wonder drivers are seeing the tax advantage of PHEVs as company cars.
We shall end, though, where we started, with the impact of coronavirus on fleets and vehicle availability. Rob says:
“The world has changed in the last few weeks. We have a good supply of EVs that have been launched but with global plant shutdowns, we will be prioritising those cars already ordered by customers once they start back up. So there will be some uncertainty but we have flexible production at MINI Oxford so we can scale up and down depending on customer demand.
“Still, we continue to actively engage with customers in the hope we can come out of this hiatus and return to some sense of normality.”