MANAGERs of light commercial vehicle fleets are in a bind.
Finance directors have bought in to the total cost of ownership (TCO) benefit of fleet electrification; unfortunately, for the fleet manager, they’re expecting those savings instantly.
On the other hand, their businesses depend on van transport and any loss in functionality could have disastrous consequences.
To top it off, conversion to electric vehicles (EVs) engages a dizzying list of new technical and financial issues leading to that ‘belly drop’ sense of vulnerability. While manufacturers are happy to sell and lease out new electric vans (once the microchips become available), it’s unclear that they or the required recharge infrastructure are yet fit for commercial vehicle purpose.
Welcome To The Perfect Storm: Maximum Exposure With Minimal Support
For cars, the cost comparison between EV and diesel/petrol is so compelling as to be a no- brainer. In nearly all cases, the reduction in fuel, maintenance and taxes overwhelms any incremental holding cost (if any).
For LCVs, however, the issue is not so clear. Sure, the TCO argument remains compelling, but the operating uncertainties are less so. In particular, there are issues over:
- Battery range (given heavier/harder use)
- Vehicle reliability and
- Re-charge vulnerability.
Pinched between financial and operational considerations, most SME fleet managers will require the help of an external advisor in securing executive support for actions that maximise cost-savings and environmental benefit while assuring fleet functionality and mitigating investment.
About half of the UK’s 4.3m vans are company registered while most of the rest will be in some form of commercial use.
At least one third of the toal van parc may be large enough to merit professional fleet management.
Anticipating Total Cost of Ownership
Yes, in most cases, the incremental holding costs (if any) of an e-LCV fleet are outweighed by fuel, maintenance and regulatory/tax savings.
In fact, an external advisor can fairly accurately estimate expected cost savings and extension of these ‘project finance’ analyses can help assess alternative investment scenarios around vehicle/battery selection and various re-charge options.
Ultimately, well-validated financial analyses support the decision maker in identifying the best path to maximise cost savings while ensuring fleet functionality and mitigating unnecessary investment
Deeper Due Diligence
To access EV-related cost savings, the decision maker must be assured that the vehicle and infrastructure are both fit-for-purpose. In most cases, their fleet is critical to the underlying operation and a misguided decision can jeopardise the business itself.
Within a much more complex analysis, each vehicle use-case must be assessed against a raft of EV-related variables from:
- load weight to
- miles/time driven to
- type of miles driven (ie start/stop v motorway) to
- re-charge opportunity and route-available public charge facilities to
- power take-off requirement to
- cost accounting and payment systems to
- vehicle accessories (racking, lifts, gates) to
- depot infrastructure and home charging alternatives and beyond.
Fleet managers require expert advisory from financial/technical professionals that can answer both today’s questions and those that will occur further down the line with additional fleet electrification.
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.