Why 2024 will be a tipping point for UK fleet electrification
By Mike Nakrani, CEO of VEV
It’s safe to say that the UK electric mobility industry is at an inflexion point. After achieving remarkable sales in the passenger and commercial vehicle sectors, we saw a slowing of growth in the second half of 2023, following the Government’s delay of the ICE sales ban from 2030 to 2035.
Potential supply chain issues with lithium-ion batteries have kept prices elevated, impacting the overall cost of electric vehicle (EV) manufacturing and according to BMI, a Fitch Solutions research unit, a global lithium-ion shortage could come as early as 2025.
Likewise, a lack of understanding about how to manage EV charging infrastructure is at the forefront of transition concerns. Although there has been some improvement, the installation of charging stations is still falling behind targets.
This raises concerns about the readiness for EVs to be adopted by the mainstream. The latest figures from the Department for Transport (DfT) show that there are less than 45,000 public charging points across the UK – far below the 300,000 target for 2030.
These factors are magnified for commercial fleet owners who tend to view the shift to electrification as a huge logistical and financial challenge. This is backed up by the fact that, there are currently only 50,000 electric vans in the UK, compared to 950,000 fully electric cars.
2024 – good news for fleet electrification
Despite the 2023 headwinds, I’m hearing from early adopting fleet owners that they’re starting to see a competitive advantage to having EVs for their own fleet use cases.
Electrification and its requirement for digitisation is not only saving energy and maintenance costs but also driving increased efficiency in fleet operations. This leads to lower costs and higher margins versus today’s diesel fleets. Fleet owners recognise this and are now looking to accelerate this advantage over the next two years, potentially providing a useful edge over their competitors.
ZEV mandate on car and van sales
As a result of the ZEV mandate coming into effect on January 1st, 2024 with a minimum quota in force, e-LCV makers are now compelled to sell more electric vans or potentially face fines. This should cause e-van sales to significantly grow in 2024 and accelerate year-on-year as the ZEV mandate really bites towards the end of the decade. (The target trajectory for new van sales begins at 10% in 2024 and reaches 70% in 2030 on the way to 100% in 2035.)
Technology supporting EV transformation
Technology is a major factor in accelerating and optimising fleet electrification. I’m seeing an increasing number of fleet managers now embracing new platforms and technologies that help ease their EV transitions with real-time data insights from telematics, energy usage and operational patterns.
In analysing operational routes, mileage, and vehicle diagnostics, operators make more informed decisions about which vehicles to transition first. Phasing the EV transition can mean spreading costs over a longer period and provides learning opportunities for future phasing.
The bottom line
The other change is the interest we’re getting from fleet owners in electrification-as-a-service to manage the upfront financial burden. It’s a model that moves the EV investment from CapEx to OpEx through a managed service rather than purchasing the entire fleet and infrastructure. As ever, the bottom line is the bottom line.
National infrastructure
Governments and regulatory bodies need to continue their efforts to ensure all EVs, including heavy-duty commercial vehicles, have the charging infrastructure that’s required to support electrification en masse.
A robust energy supply is essential to ensuring that power demands from scaling charging infrastructure can be met. For example, solar energy and battery storage can help reduce grid demand and provide a more stable supply.
Local authorities leading the way
More local authorities are embracing fleet electrification. Many have declared climate emergencies in recent years, reinforcing the urgency for electrifying carbon-intensive fleets.
With recently closed funding rounds for Zebra2 and ScotZeb2, we’ll see significantly more electric buses in operation across the UK as well as continued growth across van and truck fleets.
When we consider that fleet emissions contribute 10% of the UK’s total carbon emissions, it’s clear that electrification needs to be a top priority for local authorities.
Energy management and cost control
For fleets making the shift to EVs, this year will be all about effective energy management and cost control. To run an efficient electric fleet, managers need to monitor energy sources, calculate charging schedules, and train drivers to drive cost-effectively.
It’s important for operators to realise that every fleet needs bespoke configuration. Each fleet must be right-sized to ensure the economics stack up, and avoid over-spend. We often see new EV fleets being over-specified – which can lead to an overspend of up to 20%.
Analysing telematics and energy supply data along with fleet operating patterns enables fleets to accurately calculate the infrastructure upgrades they will need. This will reduce the investment and maximise cost-efficiency and ROI.
For more detail on this, take a look at our eBook which gives practical ways to navigate the radical changes that come with fleet electrification.
Evolution of the fleet manager role
Fleet job roles, and the tools associated with them, are undergoing radical change. It will become more about managing and optimising a micro-grid and less like traditional fleet management as we know it today.
With this, comes an emphasis on having a robust data platform from which to monitor, analyse and optimise fleet operations.
These data analysis skills are in high demand and will become even more so as additional operators start to scale their electric fleets. Fleet owners that support their teams and provide upskilling opportunities will inevitably set themselves up for success in 2024 and beyond.
How VEV can help you navigate your own EV transition in 2024
With the UK government’s plan for all vehicles to be zero emission by 2035, organisations have just over a decade to implement their transitions.
The complexity of building, operating and optimising vehicles, charging infrastructure and energy at scale is exponentially more than running a single trial. It’s about delivering complex electrification programmes.
So bringing in expertise to anticipate and resolve the inevitable challenges will prove to be a good investment now, and in the future. At VEV, we provide a transition roadmap from strategy to planning, delivery and operations, with a comprehensive suite of tools and resources to support every phase of the transformation.
Get in touch with one of our expert team members today and find out how VEV can help you navigate your EV transition in 2024.