Why fleet managers are the stormtroopers in the battle to save the planet
Fiona Howarth, CEO of Octopus Electric Vehicles, comments on the big benefits electric vehicles could bring to fleet managers, as well as the overall energy system.
On 27 June 2019, the UK became the first major economy to set a legally binding target of hitting net zero emissions by 2050. With renewed focus on tackling carbon emissions, electric vehicles (EVs) are once again in the spotlight as a critical part of delivering this. But why is this relevant for fleet managers?
Let’s first look at the bigger picture. In the UK, transport emissions account for one-third of the country’s total carbon output and this has remained stubbornly high since the nineties. EV battery cars have a markedly lower environmental impact than fuel-powered cars. Indeed, the European Environment Agency estimates that EVs are, on average, 30% ‘greener’ than petrol or diesel vehicles and the lifecycle emissions of a typical EV could be cut by at least 73% by 2050. EVs are therefore a core part of the UK’s commitment to going green.
So how can this help with your fleet?
To this end, the Government is committed to accelerating this transition and offers grants of £3,500 towards the purchase of a range of new pure battery electric vehicles (and up to £8,000 for electric vans), plus a grant of up to £500 towards home and workplace charging point installations. In addition, new electric vehicles priced at less than £40,000 will pay no road tax. The Government is also proposing to make the installation of charging points at every new home mandatory, and is drawing up plans for the rollout of a robust rapid charging network across the whole country to facilitate longer journeys.
Local authorities nationwide are getting behind the transition too. For example: in London, electric vehicles are exempt from the London Congestion Charge and the Ultra Low Emission Zone (ULEZ) charge – a combined cost saving of £24 per day. Further north, our partners, Transport for Greater Manchester, are managing a large investment into a free public charging network – the Greater Manchester EV (GMEV) network – which eliminates your spend on fuel. Other authorities are providing preferential rates on parking, facilitating the installation of charging infrastructure across their estate, or holding educational events to help locals discover what it might be like to enjoy electric driving.
However, the big announcement that has really changed the market for businesses and employees is the recent confirmation of extremely low Benefit-in-Kind (BiK) rates for electric cars through to at least 2023. The new arrangements mean that there will be 0% BiK tax on pure battery electric vehicles from April 2020, 1% from April 2021 and 2% from April 2022.
The new BiK rates are even better news for employers who offer salary sacrifice schemes, and the employees who make use of them. For example, on Octopus EVs Energised Staff Scheme, employees can save up to 50% on the monthly cost of their car.
The employer will enjoy offering a benefit of significant financial value to their employees and themselves, while at the same time making a highly visible commitment to tackling climate change and local air pollution – at no implementation cost, and with all bases covered should the employee leave during the lease period.
Are electric cars really that good?
Grants, exemptions from charges, preferential tax rates, are all further advantages on top of the fact that electric cars are, at their core, cleaner and more efficient, with a smoother and quieter driving experience.
When EVs are run on low-cost, green electricity, they offer huge savings on fuel and carbon emissions. Many models offer a 2p per mile efficiency, and can reduce fuel bills by over 90%. With this in mind, Octopus Energy has created a specific energy tariff for businesses running EVs, called Electric Juice, which unlocks access to low, off-peak prices based on that business’ specific energy consumption profile in order to fill up their vehicles.
In addition, as EVs only have around 20 moving parts, compared to 2,000 in a standard petrol or diesel vehicle, there is a much lower risk of things going wrong, so servicing and maintenance costs can come down by an estimated 70%.
Electric vehicles today are top-spec, no longer a car for a niche market segment, but a vehicle that people truly want to own and experience. For instance, the Tesla Model 3 has a range of up to 330 miles, and with its Supercharger V3 system it can provide 100 miles worth of charge in under eight minutes. Jaguar, Kia and Hyundai (to name but a few) have also launched cars which can travel more than 200 miles on a single charge. A number of models have also embraced rapid and super-charging capabilities that can top up a significant proportion of an EV’s battery in under half an hour. Additionally, most new EVs have the capability to automatically plan routes that take you past charging points in order to facilitate those longer journeys, removing traditional range anxiety concerns.
With a great range of vehicles now available, and so many financial benefits, it’s an ideal time to consider making the switch. Leasing offers a future-proofed and cost-effective way to switch to this new technology. We have found that in a market where residual values are still uncertain and battery technology continues to evolve, leasing can eliminate that risk, since it allows owners to keep up with the latest models without having to worry about reselling the vehicle.
Through working with various businesses, we have created Octopus EV’s Electric Fleet solution, enabling businesses to unlock a number of benefits through a pick-and-mix selection. Specifically, customers can choose from: a range of vehicles and leasing options, various charging solutions dependant on their needs and budget, green energy tariffs specifically designed for electric vehicles, and training and education events for drivers and businesses, if desired.
What about the energy system?
Approximately 11 million EVs are forecast to be on UK roads by 2030, which will, in turn, place increased demand on the UK energy system. However, studies like National Grid’s Future Energy Scenarios predict that this will be a manageable increase, and that if the transition to electric vehicles is done in the right way, then EV owners don’t need to worry.
In fact, electric vehicles are a great tool to help us decarbonise and regulate demand in the UK grid. For example, it enables us to increase our energy generation from renewable sources, by consuming energy during different times of the day (namely, when the wind is blowing and the sun is shining), storing this green electricity, and then using it at times of the day when demand for energy is at a peak (such as weekday evenings). Ultimately, EVs will mean that there are millions of mobile battery storage devices around the UK.
Infrastructure upgrades can be mitigated by using the existing system in a smart and optimised way, harnessing the flexibility that already exists in it (for instance, charging and discharging at the right times, incentivising consumers to change their current energy consumption habits through time-of-use tariffs and more). Read about how this could happen here.
Octopus is at the forefront of helping to enable this smart energy system by running innovation projects like Powerloop. This is a Vehicle-to-Grid (V2G) project, whereby we incentivise customers to charge and discharge their car’s battery at certain times of the day in order to help manage load on the grid. Under the scheme, Octopus EV will lease a Nissan Leaf to customers, install a V2G charger at their home, and then offer them a £30 monthly rebate off their energy bill if they act in a certain way. Trials like this allow us to analyse patterns in consumer behaviour, and also trade with energy in a smarter way for the benefit of both consumer and energy system.
Over the next few years, smart technology (be it EVs, charging devices, solar panels, static batteries, or home energy systems) will decarbonise the grid and help create a more efficient energy system. Consumers will be incentivised to change their habits through different methods, such as time-of-use tariffs like Agile Octopus and OctopusGo from Octopus Energy, helping them to reduce their bills whilst contributing to a cleaner grid. It’s worth noting, however, that electrification of fleets doesn’t only represent a huge opportunity for companies to reduce their carbon footprint, vehicle running costs and fuel bills (and in the future even make money by optimising when they charge and discharge), but to contribute to a sustainable environment and a healthier lifestyle for their employees.
The road ahead is electric – and exciting.