Electric Fleets By 2040? The Impact on Fleet Management

Last month, the government announced that it intended to phase out production of conventional petrol and diesel-fuelled cars by 2040. It is worth noting that this applies only to those vehicles solely fuelled by either petrol or diesel – hybrid vehicles will not be included in the ban once it’s implemented. However, it’s fair to say that for this to be a realistic proposition, electric vehicles will have to pick up much of the slack.

The news came after French president Emmanuel Macron announced that sales of diesel and petrol cars there would also be ended in 2040. German chancellor Angela Merkel has also indicated that a ban on diesel vehicle sales could be in the offing, although she has so far declined to set a date for it.

But the proposal soon came under criticism from both drivers and environmental campaigners. The AA expressed concern about whether the National Grid would be able to cope with the increased demand for electricity at rush hour, while Greenpeace UK warned that more urgent action was needed on air pollution. Former Labour leader Ed Miliband, meanwhile, noted that air pollution has been linked to 40,000 premature deaths per year in the UK.

The outlook for fleets

For an expert view on whether this target was realistic – and the impact it might have on fleet management going forward – we caught up with Teletrac Navman UK’s executive director Stuart Berman. He observed that while phasing out conventional petrol and diesel cars by 2040 should be an achievable aim, it won’t be today’s generation of politicians who have to take ultimate responsibility for doing so.

“I think this is a reasonable target date but easy to say as no one in power today will be held accountable for a target so far in the distance,” he explained, adding: “We have to get over the range problem, the charge time problem, the weight problem, the power problem and the cost of EVs but it is not ridiculous to expect these will be resolved in a 23-year time period. The government does tend to set targets in this space that get rolled forward. A good example is Ecall which has been rolled forward several times.”

Another factor which needs consideration is the potential impact on public service, and how fleets could be updated with new electric or hybrid vehicles without having a detrimental effect on the quality of service offered. This is also likely to have an impact on public sector organisations – particularly remote, rural local authorities such as Shetland. Running fleets in these areas is already challenging enough.

Stuart also noted that while the stated rationale behind phasing out petrol and diesel cars was to curb carbon emissions and air pollution, this risked being somewhat ineffective if action wasn’t also taken elsewhere.

“Another key factor is the UK’s ability to produce enough electricity from renewable sources. There is little point in changing the fleet if we are going to burn fossil fuels to produce the electricity to charge electric vehicles,” he said.

Challenges to address

The transition away from petrol and diesel also poses serious questions for fleet operators. Stuart pointed out that while we can’t be sure of the exact impact the change will have on fleets – it is, after all, still nearly a quarter of a century away – fleet operators should be in a position to make that transition effectively, when the time eventually comes.

There are financial and other factors to consider in relation to making that switch to electric and hybrid vehicles. It may, for instance, have a detrimental impact on vehicle residuals – and then there’s the question of whether it’s more cost-effective to purchase or lease. There’s also the cost of trialling new vehicles, integrating the new technology and educating the workforce on how to use it, as well as the possible impact on future state planning. It’s certainly a lot to get to grips with.

Noting that OEMs (original equipment manufacturers) would be crucial to helping fleet operators manage this change successfully, Stuart said: “If equivalent electric vehicles with comparable ranges and fast charging are made available, I do not think fleet operators will have a problem meeting these requirements.”

Preparing for rising costs

Stuart also added that fleet operators should be aware that costs are likely to rise elsewhere in the run-up to 2040, as the government looks to incentivise both businesses and individual motorists to make the switch away from conventional petrol and diesel vehicles.

“I think we should expect to see fuel tax on carbon based fuel increasing towards the deadline to ensure the zero-based emission transportation costs of electric trucks are not above that of conventional vehicles,” he said. “I would expect the production costs of EVs in volume to be much reduced by 2040. Companies will also need to put charging stations wherever their vehicles are stored overnight.”

Stuart added: “In the longer term fleet operators need to be piloting with some EVs to understand the differences in operation and getting used to charge time and range limitations if these still exist. They also need to install charging stations in their depots and overnight storage areas.”

One thing that is clear is that managing the transition successfully will require central government to play an active role through the provision of subsidies, grants and other appropriate incentives. Given the overheads fleets already incur – not least fuel tax – it seems unfair to expect businesses (as well as local government) to shoulder that burden alone. Therefore, if central government wants this change to happen, it’s going to have to help make it happen.

It's also not beyond the realms of possibility that a future government could bring this transition date forward from 2040. Already, the Liberal Democrats have called for sales of diesel vehicles to end by 2025. They also want to see a scrappage scheme introduced to help make the switch to eco-friendlier vehicles easier. This makes it all the more pressing, therefore, for fleet operators to take steps to prepare themselves for a change that might well come sooner than we all think.