‘Dangerous gap’ opens between UK car and van EV adoption
Tax incentives boost fleet uptake, but commercial vehicles remain challenged
The gulf is widening between then UK’s car, in particular company car, and commercial vehicle electrification progress. Industry experts are concerned, with trade group the British Vehicle Rental and Leasing Association (BVRLA) labelling it a “dangerous gap”.
Sales of new BEV cars are up by 35.8pc year-to-date and now have a 16.4pc market share, according to the latest September figures from industry lobby the Society of Motor Manufacturers and Traders (SMMT).
The fleet sector, which makes up about half of the new car market, is leading the way. Around 50pc of all new company cars and more than 90pc of new salary sacrifice vehicles — whereby an employee ‘gives up’ a portion of their salary in return for a new low or zero emission car — now fully electric, according to the BVRLA.
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It is a different story for BEV vans. Although registrations are up 25.9pc year-to-date, diesel still makes up 92pc of the new van market. It is unlikely that fully-electric vans will reach their 7pc market share target by the end of 2023.
It is no surprise then the BVRLA’s Road to Zero Report Card 2023, which uses a traffic light rating system to measure the UK’s electrification progress, considers both demand for and supply of electric cars to be ‘green, cruising’, while for vans it is ‘amber, brakes on’ for demand and ‘amber, accelerating’ for supply.
HGVs — outside the scope of this article — are rated ‘red, parked’ for both supply and demand. Overall, the 2023 report rates the UK’s progress ‘amber, accelerating’.
Although the BVRLA’s research was carried out before UK prime Minister Rishi Sunak pushed back the cliff-edge for new ICE cars and van sales from 2030 to 2035, and clarity was given by the zero emission vehicle (ZEV) mandate, the report raises relevant points, not least because new electric van sales still need to accelerate to 10pc in 2024.
“The decarbonisation divide is growing,” warns BVRLA CEO Gerry Keaney. “The company-provided car sector is well on its way and will be fully ZEV ahead of official targets. Others face much harder transitions.
“Vehicle rental, the retail market, and commercial vehicles have a mountain to climb if they are to adopt zero-emission vehicles in the volumes required.”
Why is there such an imbalance between the company cars and van electrification and what can be done to address it? The main driver behind the strong EV uptake in the company car and salary sacrifice market has been low benefit-in-kind (BIK) tax. The current rate of 2pc is in place until 2025/26 when it rises to 3pc, followed by 4pc in 2026/27 and 5pc in 2027/28.
While the low rates are attractive to company car drivers, the ability to forward-plan is equally important to businesses as they typically run cars for three-four years (and vans five-six years or more).
“That certainty allows people to plan when they want to move [to EV],” says Lakshmi Moorthy, managing director of Arval, one of the UK’s largest leasing companies.
In contrast, van operators do not currently have long-term financial incentives. The main ‘carrot’ available to them is the plug-in van grant, which gives a maximum discount of £2,500 for small vans and £5,000 for large vans. Fleets only have access to this until 2024/25 and the BVRLA wants to see it extended.
A second hurdle van fleet operators face is the lack of models that meet their needs. “Commercial vehicle operators carrying small loads over short ranges have many zero emission choices, [but] those looking for solutions that can carry large loads over long distances are scratching their heads,” says the BVRLA.
It points out that only 18pc of electric vans have a WLTP range greater than 200 miles. And real-world driving ranges are typically much lower than quoted WLTPs due to factors such as heavier operational payloads and weather conditions.
Unlike cars, there are also few van models that can support fast charging (i.e. a rate equivalent to 200 miles in 30 minutes).
“While manufacturers are innovating, the choice of capable electric 4x4s, vans with 200+ miles range or with ample towing payload allowance, just is not readily available yet – that is a barrier to the energy transition, which innovation must now break through,” says Ben Edwards, a consultant at Arval.
The ZEV Mandate is seen as an answer. In fact, Elizabeth Culwick, deputy head of the UK’s Office for Zero Emission Vehicles, describes it as “the single biggest measure in the net zero strategy to reduce our carbon emissions”.
While it should encourage manufacturers to produce more affordable and capable electric vans, the BVRLA believes the government needs to go further by introducing a review process to assess the market impact of the ZEV Mandate with a specific focus on supply of fit-for-purpose vans.
A third major challenge is EV charging infrastructure. Even for back-to-base van operators, installing chargers at a depot is not always straightforward, particularly if a building is leased and landlord consent is needed.
“Grid connections, the physical layout of depots, and an understanding of exactly when and how much power will be required and how charging can be scheduled are all key considerations that can be complex to analyse and solve,” says Maria Bengtsson, UK electric vehicle lead at consultancy EY.
Grid reinforcement costs have, in some cases, been so steep that a charging infrastructure project has not been feasible. Energy regulator Ofgem has addressed this with its Access and Forward-Looking Charges Significant Code Review, which means that distribution network operators (DNOs) now fund the reinforcement costs for customers who only take electricity from the grid for their own consumption.
Even so, the grid connection and upgrade process is not perfect. The BVRLA wants to see DNOs adopt standardised processes and timings.
Van fleet operators reliant on public charging face a challenge from rising prices, particularly if they need to use rapid chargers to minimise vehicle downtime. One brighter spot is that reliability of these devices will soon need to be 99pc on average, under new Public Charge Point Regulations.
What is needed is more charging hubs, ideally with dedicated bays for fleet operators — like the partnership between ride-hailing firm Uber and UK charging network BP Pulse — and/or the ability to book.
“We have the technology to introduce bookings but the challenge is what is the etiquette? What do we do with penalties? I think there needs to be more collaboration between charging networks and fleets to make this happen,” says, Ian Johnston, chair of ChargeUK, a UK charging infrastructure industry umbrella group.
Johnston expects pilot schemes to be launched in the next six months and for more charging hubs to be introduced.
Collaboration is an overriding theme. The BVRLA wants to see more local authorities considering fleets’ needs when installing chargers under the Local Electric Vehicle Infrastructure fund. Its research shows that despite 37pc of UK local authorities having an EV charging infrastructure strategy by the end of 2022, only 3pc of all local authorities have actively engaged with the fleet sector, and 40pc+ have not engaged with fleets at all.
Fleet operators also need to share their experiences with their peers. Moorthy says that facilitating this is “more valuable” than anything else Arval can do as a leasing company.