Fleets are the critical first step in catalysing vehicle electrification around the world.
Transitioning to low-carbon road transport is essential if we are to meet national and global climate targets and improve the health and wellbeing of communities.
But it’s a hard ask for the general public to get the capital together to make the switch. Not only is the upfront vehicle cost still considerably more expensive, but the transition also often requires investment in personal charging infrastructure. EV uptake in the general public is therefore typically constrained to those with more means, or else incentivised by policy and regulation.
50% of vehicles on the road are registered to corporates
LeasePlan
Fleets are different
The case for EV adoption is more compelling for fleets. As the total cost of ownership of EVs continues to fall relative to that of traditional combustion vehicles, fleets are realising they have several characteristics which make them well suited for electrification.
They typically travel known routes, meaning the battery cost/performance trade off can be more easily navigated
They are adopted on scale, meaning investment in tailored and dedicated charging infrastructure is spread across more vehicles
They have higher utilisation rates, meaning that upfront costs are more quickly recouped by the lower costs of operation
Fleet electrification also represents a quick win for the corporate sustainability objectives, with record numbers of companies now declaring carbon targets and reporting on their emissions.
Some fleet operators are already seizing the opportunity to electrify. EV100 is a global initiative bringing together companies committed to accelerating the transition to electric vehicles. 89 companies have signed the pledge to date, representing more than 2 million vehicles.
The scale and steady usage case of EV fleets presents another advantage – increased attractiveness for investment. Fleets looking to make the switch are able to pursue more attractive financing schemes and innovative business models, meaning that they can benefit from the operational efficiencies without tying up large amounts of capital in vehicles and batteries. More on this in future updates.
McKinsey estimates suggest that fleet EVs already present Total Cost of Ownership (TCO) parity with equivalent ICE vehicles, and could be 15-25% less expensive by 2030.
Fleet electrification will catalyse a global shift
The impact potential is immense. As fleets pursue this attractive business proposition, the effect will be to accelerate learning and development, paving the way for widespread adoption of EVs globally. This will help to make our cities and economies more sustainable, and improve the health of both people and planet.
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