MUCH is written about the total cost of ownership (TCO) of electric vehicles (EV).
However, the assumptions required to quantify TCO discourage manufacturers from touting any specific numbers. But the numbers are out there and reasonable assumptions can illuminate meaningful observations.
The chart below compares lease, maintenance and fuel costs for some fairly high-spec EV light commercial vehicles (eLCVs) and their internal combustion-powered (ICE) twins.
To be entirely clear:
- Lease costs reflect a 1+59 BCH quoted by leasing company Vanarama @ 20,000 miles/year.
- Fuel costs reflect WLTP MPG estimates for the diesel-powered van (@£1.50/litre) and 70% of WLTP range for the EV (@£0.18/kWh).
- Maintenance reflects service and repair costs sourced from Clear Vehicle Data and IDS Europe as presented in Fleet Point’s whole life cost calculator.
- The costs were correct at time of research – December 2021.
Eliminating the Mercedes-Benz (which features an L2 configuration at a premium price), monthly TCO for EV is roughly equal to that for ICE.
The chart illuminates a number of issues that bear further discussion:
- Vehicle Cost – Both list and observed retail prices (as reflected in AutoTrader) for the EVs are higher than those for the ICE vans. However, a relatively more modest differential in monthly lease costs indicates that lessors are depreciating EVs much less aggressively than ICEs. In fact, as a percentage of their retail price, EV residuals indicated by monthly lease costs are 50% higher than those for ICEs.
- Fuel and Re-charge – Rising fuel costs have surely burdened ICE vehicles and £1.50/litre (VAT inc) seems a new reality. While electricity costs have also risen, the impact on EVs is less, even when discounting WLTP range estimates by 30%. In the analysis above, a 10% rise electricity cost raises TCO by less-than 2%.
Note: The available blend of home, depot and kerbside charging options make estimating EV fuel costs that much more difficult. The £0.15/kWh (VAT excl) estimate includes depreciation of any infrastructure investment.
More Complex Relationships
For most commercial fleets, the current fleet requirement is not much more than the procurement of correct equipment (a diesel van) and finance for business contract hire leasing or a lease finance, for example.
Conversion to an e-LCV requires a much more complex relationship between the fleet operator, vehicle and battery manufacturers, power supply and distribution infrastructure, funding provision, telemetry and payment data providers.
More Sophisticated Planning
Not all fleet use-cases are appropriate for e-LCVs with the current technology. Some are obstructed by identifiable technical issues (for example, battery range) that may be relieved in the near future. In either case, conversion to an electric van must be incorporated within the fleet manager’s larger plan. Identifying when and how it will take place, and encouraging dialogue with all the key stakeholders.
Fleet managers serve senior executives, SME company directors, corporate boards and other decision makers that are the ‘trigger pullers’ for the conversion to electrified fleets. To commit, they need the confidence of finance and operations executives that EV both saves money and is fit for purpose.
In that four-way conversation between themselves, vehicle manufacturers, power suppliers and telemetry/payables system providers, the fleet operators are likely to require an additional resource in assessing the utility of e-LCVs for every vehicle and every use case. Sure, this is an additional cost, but one well worth incurring in the march towards a cheaper and less ecologically-impactful commercial fleet parc.