Sitting in a niche covering fleet management, technology, risk management, workplace safety and insurance, CMS has some distinct perspectives on the trends coming to the fore this year and beyond.
Over the next few posts we’ll explore those trends and share our views on what they mean.
In this post we look at Electric Vehicles.
The move to Electric Vehicles, or EV’s is happening at a faster pace than ever before.
In the UK where 59% of the vehicles on the road are company vehicles, the tipping point from majority of vehicles (under five years old) being internal combustion engine (ICE) to EV will happen when the company fleets shift.
That point is itself being driven by government policy, with the banning of new ICE vehicle sales by 2030 , as part of the government’s Green Industrial Revolution.
2030, for fleet management, is only 2-3 renewal cycles away.
Given that deadline, and the renewal cycle, we could potentially see a UK vehicle park of a majority of vehicles, that are three years or younger, being EV as early as 2027, or in just six years time.
Of course, there are some constraints and requirements that need to be sorted to help make the switch to EV – choice of vehicles, mileage or range, price and the supporting infrastructure.
This has largely been addressed, with all major manufacturers having EV offerings in both car and LCV’s, either available now or coming soon.
Even Toyota, which seemed to be clinging to hybrid technology and a rumoured view that hydrogen power might be the green solution, has launched an all electric car. Albeit via it’s Lexus brand, at this stage, with the new Lexus UX300e
When the Nissan Leaf launched, just over a decade ago, it had a range of 73 miles.
In its current iteration that has grown to 226 miles, or effectively three times what it was ten years ago.
As a marker of progress, this is a good one as it shows how battery technology is improving and how EV’s are getting to the magic range number of 300 miles on a charge, which is about equivalent to an ICE car’s distance on a tank of petrol.
However, range anxiety is still a major concern with EV’s.
That is based on if power runs out, in most cases a re-charge will take a significant amount of time (4+ hours).
So, a lot of work is going into the planning around and promotion of not the full charge distance, but the daily mileage needs.
The average working commute in the UK (pre-pandemic) is 20 miles, or 40 per day, which means that an EV car delivering 200+ miles is acceptable, as the user can reckon on doing an overnight charge every three or four days to stay mobile.
But what about LCV’s – how far does a home delivery van travel in a day, for example?
While data on this is scattered across news website articles and reddit posts, an average spread of 75-125 miles a day seems to be a reasonable assessment.
Which means that the 168 miles range of the UK’s best selling e-LCV, the Nissan e-NV200, is fit for purpose, with an overnight charge being needed between each working day.
Of course, there will be outliers in all these scenarios, but for a majority the current range capabilities of EV cars and LCVs are fit for the daily needs of their users.
Additionally, range anxiety will be addressed by the EV infrastructure build up and out (see below) plus technology developments (again, see below)
In a similar way to how the range discussion of EV’s is being reframed from a full charge range to the daily need, the value or cost of electric vehicles moves from the purchase price to the whole life cost.
Electric vehicles cost more to produce than ICE vehicles.
It comes down to the power pack – an internal combustion engine is cheaper to produce than an electric power pack.
This has led to incentives to encourage us to move to EV’s with discounts and subsidies to lower the sticker price.
But now, and in particular for fleets, the maths is changing.
While the purchase price is higher for EV’s, the running and maintenance costs are significantly lower.
So, at a cost per mile, whole life calculation, EV’s are competitive, if not better, than ICE vehicles.
The messaging, business advice, and accounting practices are all changing to this point of view on how to evaluate and decide on transitioning to EV’s, for businessess.
However, such change in business practice may take a while, as recently highlighted in a report by the Association of Fleet Professionals, which stated “The arrival of both electric cars and vans has highlighted the surprising number of businesses that still acquire vehicles largely by looking at the purchase price. This disadvantages EVs, which cost more to buy but less to fuel and maintain.“
This is the biggest constraint or concern of the four.
And it is forcing a strong linkage between transport and energy policies, and public-private partnerships to come up with workable solutions.
In simple terms, will the National Grid be able to cope, when we get back from work, and instead of the spike on the grid coming from the TV and kettle being turned on, it’s now multiplied by us all plugging our cars and vans in?
Projects are in place to look at this – options such as trickle feeds to vehicles during peak time, then full charge happening post midnight, for example
The other side is the charging options away from home or the workplace, to help extend range and reduce or eliminate range anxiety.
The UK Government as part of the National Infrastructure Strategy to support the uptake of EVs has announced a £1.3bn investment in charging infrastructure and grid capacity.
This aims to make motorway and A-roads, as priorities, sufficiently enabled with rapid charging points to meet the needs of long haul freight and logistics operators, as well as supporting those outliers who will max out on their range on certain journeys.
Another area that is being looked at is off-drive charging options for urban environments. Where running a cable from your house, over the public pavement to your car parked 30 metres up the road is not the best solution. For so many reasons.
And while all these concerns are being looked at from University research units to government departments, there will be dead ends and rapid redundancy in outcomes, as the dynamic and changing nature of the technology will no doubt make today’s decision irrelevant a year later.
In many ways, the infrastructure to support EV’s will be like a rapid replay of the industrial revolution where transport moved from cart, to canal to train.
Of course, with all the focus on decarbonisation and the transition to net-zero economies, things are going to change.
Established players and new disruptors will make breakthroughs that will make some or all of the concerns above, redundant or irrelevant by 2030, or sooner.
Key within that, and in many ways going beyond electric vehicles, is battery technology.
The charge rate of batteries, the power from batteries, the charge life cycle of batteries, and the supply of batteries are all parts of the conundrum.
As Elon Musk of Tesla recently tweeted, “Battery cell production is the fundamental rate-limiter slowing down a sustainable energy future. Very important problem.”
However, the landscape is changing all the time.
For example, The Guardian just this week reported on a breakthrough by Israeli company StoreDot, that will allow car batteries to be charged in the same time as it takes to fill up an ICE car with diesel or petrol – about five minutes.
These new fast charging batteries, by StoreDot or other companies, are probably only 2-3 years away from full market deployment.
And they will change the game.
If you can charge your EV in the same time as it takes to fill up with petrol, then how about those thousands of petrol stations up and down the country converting over to charge stations?
Allowing us to continue to “fill up” as we’ve being doing for the last eighty plus years?
And thereby helping eliminate a major hesitation or concern in the early and late majority moving to EVs.
While the appeal of charging at home will remain, the options that these new batteries offer, dismiss range anxiety and open up EV’s to be used “just like a normal car”.
Of course, there is another shift that is going to happen – that of tax revenues.
While the government is incentivising us to move to electric vehicles with lower or zero tax rates etc, and also providing infrastructure investment to support the transition.
In so doing it is also reducing or cutting off a major revenue stream for itself – namely taxation on petrol and diesel.
With nearly 58p tax on every litre of petrol sold in the UK, that’s a serious chunk of change.
About £30bn according to one report.
Indications as reported in Autocar are that the government is looking at options to address this changing dynamic, but no conclusions have been drawn so far.
But with a tipping point that could be only six years away, and a UK general election that has to be called by May 2024, the challenge is going to have to be addressed by this government or very early on, by the next one.
With our vision of a safer world, CMS only welcomes the transition to EV’s as part of the global strategy to address climate change.
Beyond that, EV’s will be both business as usual for our risk management solutions, and a new set of risks to be considered, aggregated, standardised, normalised and reported on to our customers of fleet managers and insurers.
For example, while driving an EV is not too dissimilar to an ICE vehicle, at the start there are enough differences – acceleration rates, noise levels, etc – to make driving somewhat of a new experience, and thereby increasing the risk factor.
Plus how the environment around the EV reacts will be different.
Will people be as aware of quieter EV’s in an urban environment as they are of say a diesel van getting near to them?
Will this create new risks for drivers to be aware of?
Also, the seasonal impact on EV’s could be quite profound in the associated risks they have.
Yes, all wheel drive will be more common, so driving in bad conditions should improve, but the battery drain when cab and window heating, plus more use of headlights are needed in the winter months, will be a new risk factor on the range of the vehicle.
Monitoring of this situation, in real time with alerts for fleet managers when battery levels drop below what’s needed for the planned route, is an example of a capability that our platform, Clara, could incorporate for our customers.
Helping them monitor their fleet situation and making interventions before things become critical.
After all, it is data, and data is what we do.
Finally, as with our conclusions on home delivery, while we can see a path and a new set of needs ahead of us, innovation and disruptive thinking will play a big part in this transition.
That will make the concerns and risk factors that can be seen now, lessened, while, perhaps, creating new and currently unforeseen ones.