Stanlee Kelly, Technical Director at nationwide charge point installer, Crystal EV looks at the benefits and challenges of fleet transition to electric.
As the world accelerates toward a future dominated by sustainability, the automotive industry is no exception. The transition to electric vehicles (EVs) is not merely a trend; it’s an inevitable shift driven by environmental concerns, economic factors, and legislative changes. For UK-based fleet car managers, the question isn’t if they should transition to an electric vehicle fleet but when. Making the switch sooner rather than later comes with a host of benefits that far outweigh the challenges.
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One of the most compelling reasons to transition to an EV fleet is cost reduction and the potential for long-term cost savings across your fleet operation. While the initial purchasing cost of electric vehicles is typically higher than that of their internal combustion engine (ICE) counterparts, the total cost of ownership (TCO) over the vehicle’s lifetime is significantly lower. EVs offer reduced fuel costs – electricity is cheaper per mile than petrol or diesel, particularly on smart charging tariffs – lower maintenance expenses, and fewer moving parts that can fail, keeping employees on the road rather than in the garage.
As the UK government continues to phase out tax incentives for ICE vehicles, fleet managers will see diminishing financial benefits from maintaining a traditional fleet. In contrast, EVs currently benefit from various tax incentives, including lower Benefit-in-Kind (BiK) rates, which can substantially reduce company car tax liabilities for both employers and employees and charge point installation grants. These financial advantages can add up to significant savings, making the upfront investment in EVs a financially prudent decision.
The UK government has introduced several initiatives to encourage the adoption of electric vehicles, which fleet managers should leverage. These include the Plug-in Car Grant, which reduces the purchase price of eligible EVs, and the Workplace Charging Scheme (WCS), which provides financial support for installing charging points at business premises.
Additionally, fleets that adopt EVs early can benefit from favourable depreciation rates and enhanced capital allowances. The government’s current stance is to reward businesses that invest in cleaner technology, but these incentives may not last indefinitely. By acting now, fleet managers can ensure they maximise the financial benefits available today.
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By GlobalDataEmployee engagement
Switching to an electric fleet can also significantly enhance employee engagement, offering perks that attract and retain top talent. Providing employees with at-home charging solutions and/or access to workplace chargers can be a highly valued benefit. Smart chargers at home can automatically bill the company for company car charging, which can bring financial benefits in leveraging lower-rate overnight electricity or smart tariffs designed for EV owners.
Even if the employee cannot charge at home, there are plenty of benefits to driving a modern EV. They are often loaded with the latest technology and safety features and offer a quieter and smoother drive than an ICE vehicle, further increasing employee satisfaction with their role.
Offering EV company cars and operating one as an employee delivers a positive brand message for the business and its workforce in being environmentally conscious. Having EVs as company cars positions your company as a forward-thinking and responsible employer with sustainability at its core – factors that have an increasingly important role in business success.
Sustainability is no longer a ‘nice-to-have’; it’s a business imperative. Companies that transition to electric fleets can bolster their brand image by committing to reducing their carbon footprint. This can be a powerful marketing tool, particularly as many consumers and an ever-growing number of clients increasingly prefer to do business with environmentally responsible companies.
Yet looping back to the top-line benefit of reducing the fleet’s running costs, having on-site chargers at your HQ or operations centres can open up new revenue streams and better engage with the local community. For example, offering commercial charging from on-site chargers with MID meters can earn money while positioning your business as a community hub for EV drivers, strengthening local engagement and enhancing your brand’s reputation.
Navigating the roadblocks
Despite the many benefits, the transition to an electric fleet is not without its genuine challenges. From up-front purchase costs to the (currently) lower residuals and from employee buy-in to setting up your charging infrastructure, fleet managers must address several logistical and financial hurdles to ensure a smooth transition.
Installing the necessary charging infrastructure is one of the most significant challenges. This includes ensuring your business premises have an adequate power supply and installing enough charging points to meet your fleet’s needs. For companies with a large fleet, this could involve substantial initial investment and planning.
Energy suppliers do often have local capacity to up a business’s supply thanks to reduced local demand due to other widespread energy-saving measures such as LED lighting and energy-efficient commercial HVAC systems. For vehicles likely to remain on site overnight or for long periods of the day, 7kw/22kW chargers are adequate and relatively affordable, meaning installing as many charge points as company cars is financially viable. Chargers with MID meters and credit card payment or RFID can also be used to offer commercial charging locally when employees are not present. The average commercial charging rate can net up to 40-50p/kWh profit or around £ 10 per hour per charger for 22kW models.
With larger commercial vehicles or looking for faster vehicle/employee turnaround time, we must look at rapid (50kW+) or ultra-rapid (100-300kW) chargers. While the purchase price, installation and supply upgrade will all add significant up-front costs to get past the CFO, the fuel cost reduction and time-saving benefits will impact long into the future.
If your employees take vehicles home, providing at-home charging solutions is another consideration. This may require negotiating with employees about installation and reimbursement policies or partnering with providers to offer subsidised home chargers. Yet only around 20% of UK homes have a private driveway where a charger can be easily installed, so this solution is unlikely to be a panacea to fleet EV charging.
These considerations, plus the higher initial costs of EVs, can be a barrier, especially when managing a large fleet. Additionally, concerns about lower residual values than traditional vehicles might make fleet managers hesitant. However, as the market matures and demand for used EVs increases, residual values are expected to improve dramatically.
Given past and present government’s commitment to greener UK transport, navigating the ever-evolving regulatory landscape is a challenge, albeit one that favours a transition to electric. This includes understanding the implications of Clean Air Zones (CAZs), London’s Ultra Low Emission Zone (ULEZ), and future legislation that may impact fleet operations. Given the prevailing political will to reduce emissions in the UK and across Europe, those changes will only favour EVs over ICE vehicles.
Easing the (EV) pain
Achieving buy-in from key stakeholders for the business to go electric, including the CFO and employees, is crucial. Given the mixed media sentiment towards EVs in the UK, it’s essential to present a clear, data-driven case that outlines the financial, operational, and environmental benefits of transitioning to an electric fleet.
To ease the transition, fleet managers should consider flexible leasing deals that allow them to trial EVs without committing to full ownership. Leasing can mitigate the risks associated with vehicle depreciation and provide a manageable way to integrate EVs into the fleet. Leasing EV costs have risen recently to amortise the poor residuals, but again, this will change as more and more EVs trickle down into the used sector. Either way, like ICE before EV, there is always a leasing deal to be had from suppliers with stock on their books.
Strategic planning is also essential. Start by identifying which parts of your fleet could be transitioned first—perhaps those operating in urban areas where EVs are most efficient and charge points readily available — and gradually scale up. Looking at apps like ZapMap, it is tricky to be anywhere in England more than 10 miles from a public EV charge point, albeit less dense in the rest of the UK now. ZapMap’s own figures suggest that as of July 2024, there were approximately 66,779 public charging points across 34,570 locations in the UK. This represents a 46% year-on-year increase, with over 21,000 new charging devices installed since July 2023.
Electrifying conclusion
While the transition to an electric vehicle fleet is undoubtedly complex, the benefits of making the switch early are clear. From significant long-term cost savings and tax incentives to enhanced employee engagement and a stronger brand image, the rewards are substantial.
The challenges, though real, are manageable with careful planning and strategic investment. By acting now, fleet managers can not only stay ahead of the legislative curve but also position their companies as leaders in sustainability – a critical advantage in today’s competitive business landscape.
