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#13 Ramping Up: What's Putting the Brakes on Fleet Electrification in the UK?
38 Plays3 months ago
With the Zero Emission Vehicle (ZEV) Mandate propelling rapid growth in the UK's EV parc, this pivotal moment brings both exciting prospects and significant hurdles for fleet electrification.
In this episode, part of our Ramping Up series charting the inflexion point in the demand for EVs across Europe, we spoke to Toby Poston, CEO of the British Vehicle Rental and Leasing Association (BVRLA), to address the critical challenges and opportunities in the UK's EV landscape.
The session provides valuable insights and practical guidance for industry stakeholders, policymakers, and businesses navigating the evolving EV ecosystem.
Key takeaways
- Stabilising the used EV market: What strategies can bolster demand and stabilize prices in the used EV sector, ensuring a sustainable transition to zero-emission vehicles.
- Navigating regulatory changes for electric vans: Can we anticipate constructive change from the UK’s public consultation on the ZEV Mandate, including policy and fiscal support for commercial fleet electrification?
- Enhancing fleet charging infrastructure: We discussed the importance of developing fleet-focused public charging solutions and the role of local authorities in attracting private investment.
- Recent policy developments: What does the Government’s extension of the plug-in van grant and increased grant for wheelchair accessible electric vehicles mean for drivers and the market?
Guest(s)
- Toby Poston, CEO, British Vehicle Rental and Leasing Association (BVRLA)
Host(s)
- Elaine Meshki, Principal Consultant, Steer
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Transcript
Introduction to the Podcast
00:00:08
Speaker
Hello and welcome to Voices of the Industry, ah podcast series bringing you leading industry voices who challenge thinking across transportation, infrastructure and cities.
Live Conversation with Toby Poston
00:00:28
Speaker
Good morning and welcome to our event today, a live coffee break conversation with Toby Poston, CEO of the British Vehicle Rental and Leasing Association, the BBRLA.
Navigating EV Charging in Europe
00:00:38
Speaker
I'm Elaine Meske, a Principal Consultant and EV Infrastructure Specialist at DAIR.
00:00:43
Speaker
We're delighted to have Toby with us today at the first event in our Ramping Up series, which aims to help investors and charge point operators, CPOs, amongst other organizations to navigate the inflection point in Europe's demand for EV charging.
ZEV Mandate: First Year Review
00:00:59
Speaker
If you haven't already been following our Insight articles in this series, please don't forget to sign up. The UK has recently completed its first full year under the ZEV mandate.
00:01:10
Speaker
We are at a critical point in the country's transition to an electric vehicle paradigm. In late February, government closed its public consultation on this legislation, which it gathered evidence from automotive manufacturers and retailers.
00:01:24
Speaker
the energy sector, government and other key stakeholders. Today, as we look forward to outcomes from the consultation, we felt it was a good opportunity to take stock of our progress in adopting electric cars and bans while anticipating what government response may be to the market observations.
00:01:41
Speaker
In his role as Chief Executive at the BVRLA, Toby represents the interests of a thousand member organisations. He maintains deep insight into the relationship between government and our nation's road transport sector.
Government Support for ZEV Mandate
00:01:53
Speaker
So welcome, Toby. Thank having me. Our first question is, just looking back, how has the UK done in its first full year under the ZEV mandate? So I think the first thing to say is we, I mean, depending on what news you read or or what mood you're in, I think most people would say we scraped there with the with the car target or we you know narrowly missed it, but um in a way that didn't sort of damage ah massively the confidence of OEMs in particular. There were huge fines um handed out.
00:02:23
Speaker
I think the the car trajectory... Yeah.
00:02:28
Speaker
market in terms it was all coming from from one area but you know i think it's a in terms of a massively ambitious piece of legislation the government can definitely say it didn't break the system it didn't break the industry we got there or thereabouts i think overallval they could be pretty please with themselves I think if you look at the van target, then you know that's there's no way of sugarcoating that. That was a big sort red flag fail. We didn't get anywhere near the ah target that needed. In fact, there's there's clear evidence that the van market has stalled.
00:02:59
Speaker
So it's a bit of a
Economic and Geopolitical Impacts on ZEV
00:03:00
Speaker
mixed bag. But I think overall, I think with a massively ambitious bit of legislation that that's unique across the world, I think government has to be pretty, and industry indeed, has have to be pass themselves on the back a bit that we've we've got this far relatively unscathed.
00:03:14
Speaker
And what do you think government needs to respond to support the enactment of the ZEV mandate in this coming year? What can help accelerate particularly the electric van uptake amongst commercial fleets?
00:03:26
Speaker
So I think government really is, they they inherited the ZEV mandate, right? So Labour, they make this point a lot of the time that they did not design this mandate, they've inherited it from the previous government.
00:03:36
Speaker
But they agree with the overall fact that, and industry agrees as well, that we need a target And we need some certainty about how we're going to get there. The situation we're in is that obviously the world has changed in the meantime. You know, you you go back and you set targets three or four years ago when the mandate was being designed.
00:03:53
Speaker
And then, you know, stuff gets in the way geopolitically, technologically, economically, politically. and things have changed, and there's certain more pressures on the market now.
Industry Consultations and Mandate Adjustments
00:04:03
Speaker
There's rivalries from China, there's price price issues. So I think the government has to show, and this is what industry is looking for, that they can, within the constraints of that you know quite rigid legislative framework that it's got with the mandate, that it can tweak things to help smooth the process. And that's really where government is at the moment. That was what the consultation was about, was to find out where people are across the industry, whether you're an OEM,
00:04:29
Speaker
a fleet operator, a vehicle owner, or or a charging company to understand where their pain points are, how confident they're feeling. And government then, within its own constraints of financial, regulatory time, legislative time, has to come up with a bit of a plan. And and I think they do need a plan. I think there is a general consensus across the industry, all all these industries, that something, not that the mandate needs to change, i think there's remarkable consensus on that. That probably is our best bet.
00:04:56
Speaker
but that they need to do some tweaking around around the edges. And whether that is fiscally, which obviously involves money, or whether it is on the regulatory side, which which could be a lot cheaper, that's really where government needs to respond.
Incentives for EV Market Growth
00:05:08
Speaker
and And within that, have a bit of a narrative to show that it understands what's going on and and and and is listening. And we've had obviously the plug-in grant extended, which applies for new vehicles. There's the changes in the derogations.
00:05:21
Speaker
Do you think they will be enough? Do you think anything else is required around those mechanisms and yeah any further kind of innovations maybe industry can bring as well? Yes, so if if you look at the sort of two, the two main areas that I think government is looking at, the first one is is the the shape of demand in the sector. If you look at the ZEV mandate, it is a is a supply side piece of legislation that is pushing supply into the market via these these targets for OEMs.
00:05:49
Speaker
And although we, you know, like we we mentioned that we either sort of met them or or nearly met them, The picture that is is is the scary one is is how they were met if you look at the where the demand is coming from. And the demand in the UK is overwhelmingly coming from the the fleet and business sector. It's about half of all car registrations and the and the majority of van registrations.
00:06:08
Speaker
It's coming from and businesses that are using ah some really powerful incentives ah on the car side, mainly the the benefit and kind incentives. And if you look away from that that market,
00:06:19
Speaker
we're nowhere near the mandate target of 22% for last year. you know Retail demand is more down in sort of the high i height to mid teens in terms of demand. So both on the new market and on the used market, that demand is just not where it needs to be.
Addressing Charging Cost Disparities
00:06:35
Speaker
And if you want to continue on that growth trajectory and keep setting higher and higher targets, and even supporting the BEVs, the the million and a bit electric cars that are on the road at the moment,
00:06:46
Speaker
you need to start firming out that demand because you if you're like, you're building up a Jenga tower just with with using one type of one type of brick and it's just really going to totter unless you strengthen it. So that really is where we're looking for support. I would say our industry that owns you know nearly half a million battery electric vehicles is particularly worried about the used vehicle market where there are no incentives for a used buyer to go and buy a used electric vehicle.
00:07:12
Speaker
Quite often these vehicles are but they are depreciating costs really rapidly. that's very expensive. And really, we need government support here to sort of strengthen that market. And that market is how the whole electric car ecosystem grows from that, really.
00:07:25
Speaker
Most people finance a car. ah They take a car on a lease or a PCP arrangement, and really they are paying for the cost of that vehicle over three years. If that vehicle starts depreciating rapidly because there's no buyer for it at three or four years, then that new car becomes more expensive. So that that's a real area that government really does and needs to get tickets with.
00:07:44
Speaker
And then the other side is is obviously with charging infrastructure, where we have a, really for a Labour government, a massively sort of glaring unfairness at the heart of the of the transition, where someone who is charging their vehicle at home has access to a private charge point and about 800,000, 900,000 of those across the UK is benefiting from the cheapest fuel you can imagine, probably paying, I don't know, 3, 4p a mile, compared to someone who is having to charge the electric vehicle on the road is paying quite often for using a rapid charge point, a fast charge point, more than they would to put diesel or petrol into their vehicle. And that's just unfair.
00:08:21
Speaker
So that's like that's a glaring anomaly that government, you know, really from a PR, from an economics, from a fairness point of view, needs to get to grips with.
Aligning Goals: Charging Companies and OEMs
00:08:30
Speaker
In terms of EV infrastructure, the investors that are developing the infrastructure, they're focused on predictable growth in the EV park, which drives demand for their charging services.
00:08:40
Speaker
What outcomes should they be anticipating in the ZEV mandate from the government's public consultation? Yeah, so again, this is this is one of the the yeah the benefits we've got in the sector is that really our our goals are all aligned, right? So whether you're a charge point company um that is investing billions in in infrastructure ahead of demand or or an OEM car manufacturer, vehicle manufacturer, investing billions in upgrading your plant, your your factories and your production, you know,
00:09:08
Speaker
That's where the mandate certainty gives you a real real real value. So charging companies are looking for the same things, but they've got little tweaks that they need that they can already spot that that would improve things. I mentioned the first one.
00:09:20
Speaker
First thing government could do is is address that unfairness piece. And one of the most obvious ways of doing that is just to cut the VAT rate. So there's a massive, one of the reasons for that differential between the cost of public charging and private charging is public charging has got a much higher VAT rate. So government could equalize that relatively simply.
00:09:41
Speaker
There'd be a cost to it, but I think it'd be a hugely popular and a very, very powerful message to get out to the industry. There's also a couple of other things they could do. There is a scheme called the ah RTFO scheme that currently gives ah fuel providers subsidies to put biofuel in their petrol.
00:09:57
Speaker
Government could extend that same scheme to energy companies. It's done and in the content. It's why you see a lot of energy companies having big charge port networks across France and other
Legislative Changes for Better Infrastructure
00:10:07
Speaker
countries.
00:10:07
Speaker
They could do the same in the UK and hopefully we get a similar result. And then some really, not all the issues the government needs to do are really sort of expensive, time-consuming things. There are some really quite simple things. I mean, I was amazed to learn that public charging cannot be signposted on the on on the road network. that yeah There are rules saying that you can't signpost people your local EV charging station. You can do it if you're a service station, but otherwise there's, there's, there's quite ridiculous rules to say you can't, that would be an easy one that you could change, you know, it, it,
00:10:36
Speaker
with With a simple piece of legislation, hopefully. And then there's some other minor ones around, not minor ones, but more detailed ones about just, you know, improving the signage on charge points so people understand what price they're going to pay and really what is the real world speed of charging they're going to get.
00:10:51
Speaker
Maybe enabling people to, down the line, be able book charge points or have better access to information about what size that charge point is so they know if they can fit their larger vehicle, a van or a minibus
Fleet Operators' Infrastructure Challenges
00:11:03
Speaker
into it. So there are a mixture of things. There's some big ticket, expensive things, but there's also some and sort of ah just really housework that needs to be done sort of address some of those minor legal things that maybe were forgotten down the line.
00:11:17
Speaker
Yeah, and and that accessibility on those charge points, that will help not only van drivers and commercial drivers, but ah those with disabled knee ah dis disabled users and their needs. it's Absolutely, absolutely.
00:11:29
Speaker
Yeah, that's crucial. In terms of numbers, we seem to be dick doing all right with the public charging infrastructure rollout, but it's that accessibility piece that... I don't know what the latest figure. I mean, and they they're going in at pace, right? But I think I heard someone say the other day, and it must be around that, i think Charge UK have got figures as well.
00:11:46
Speaker
we're We're probably at or over ah million charge points now, public and private. Which is not far off, you know, the number of electric vehicles we have on the road. So, you know, i you often get this debate between, you know, do we need to set targets for charge points or do we just need to work really hard ensuring that um we have the right charge points in the right locations and they are accessible and user friendly? And I tend to be in that later camp.
00:12:10
Speaker
And is it something your members report on, maybe the ones that have already transitioned or newly transitioned to zero emission vehicles? What do they report as their pain points in the early days of driving As I said, we we have ah a really diverse membership. We've got half a million vehicles on the road, but the vast majority of those vehicles are being run and off operated locally.
00:12:30
Speaker
via company-provided vehicle schemes. So they are more often than not taken home by an individual and either charged on a drive or at their their workplace.
Grid Infrastructure Upgrades and Coordination
00:12:39
Speaker
I think the ones, the the members of ours that are at the at the ah real sort of pain point area ah of dealing with with charging infrastructure troubles are either the The fleets that have vans in particular that need to be taken home where the drivers don't have off-street charging, or they are sites, quite often rental sites, where you have swift turnaround of vehicles and you need rapid charging to be able to either bring in ah a van or a car and quickly
00:13:08
Speaker
charge it up and turn it out and get it on its with its next customer or on its next next job. but And that really is ah is it is probably one of the hardest issues that the sector needs to get to, and is one that is going to take years, is around grid infrastructure and the ability to both upgrade that, but also even get access to the ability to upgrade it.
00:13:29
Speaker
you know We have a variety of network operators in the UK that operate to different schemes and different processes for... updating or upgrading your your network. And it and it's ah quite often in in a different language, it seems, in in terms of how you you speak to these organizations.
00:13:46
Speaker
Some have costs involved, some don't, depending on um what the state of the local infrastructure is or where you are. Sometimes you pay more than you would in another environment. So we we just do a lot to to sort of smooth that process, make it more predictable, make it faster and sort of, ah again, give people confidence that they, you know, the confidence to go electric is about confidence in the vehicle and the infrastructure and you need those to be, to coincide.
Salary Sacrifice and EV Adoption
00:14:11
Speaker
Yeah, and the n energy industry is undergoing massive changes and they've tried to they reduce the cost of the connection, but then that's been passed through to capacity and standing charges, which obviously impacts the the CPO and business case as well.
00:14:25
Speaker
You mentioned there's salary sacrifice vehicles, essentially. What are the trends there? And have you seen any, I guess ah it will be soon to come, the impacts of the announcements in the budget on, for example, national insurance? How might that play out in the salary sacrifice sector?
00:14:41
Speaker
Is that something Yeah, so salary sacrifice has been the outstanding growth area for electric vehicles probably since the start the decade. Really, it's been the key business model that has democratized access to to electric vehicles. We think the market is probably getting towards you know over $150,000 now.
00:15:01
Speaker
It is a hugely popular employee benefit. And our and our analysis shows that actually, to that point about democratization, it is over 50% of these vehicles are going to people on ah the the lower rate of paying lower rate of tax.
00:15:15
Speaker
Over 50%, our data suggests, are female So it's a really, really good success story. And I think government is really liking that fact that for a long time there were stories that the people that are benefiting, the the traditional view of company-provided vehicles is as it's going to middle-aged white-collar workers who are just getting it as a perp.
00:15:35
Speaker
Whereas in truth, a lot of these vehicles are either doing essential jobs or actually now via seller sacrifice. They are going through to people who otherwise wouldn't be able to afford a new electric vehicle even a new car at all.
00:15:48
Speaker
So massively, massively important. And I think government recognizes that as well, that it is ah is a key sort of benefit going forward. I think, again, with the national insurance, that could also be ah a benefit. Obviously, with ah with a salary sacrifice arrangement, you have to think carefully about someone's pre- and post-tax pay. But again, we've got that wrapper that it's deliberately an employer with the with the expertise of the the of the leasing company.
00:16:10
Speaker
And youre often you have all that sort of bundled support in terms of maintenance and insurance, and that's what
Government's Anticipated Responses
00:16:16
Speaker
comes with it. so again, for a certain people wanting to go electric, but maybe lacking that confidence, it's an ideal ideal solution for them.
00:16:23
Speaker
it great news. Coming back now to that ZEV mandate and the government consultation, when and how should we anticipate the government's response? Yeah, this is the $100 million dollar question, right, where I think there's a lot of impatience out there.
00:16:38
Speaker
You know, I've been at meetings and I've seen in the press where, you know, on the one side OEMs are saying, look, if you want to save the UK automotive industry, save jobs, save, you know, that industrial manufacturing footprint in the UK, you've got weeks or months to act. You know, you haven't got years.
00:16:53
Speaker
And also we see, you know, vehicle called fleets and owners saying literally, you know, the the costs of associated with owning these vehicles is going up so fast. We can't persuade people to to come into electorate because the costs are going up. So there's a lot of pressure on the government to sort of act and both restore confidence and also secure jobs. I think we're going to see two types of lens that the government's going to be looking through when it responds. One is going to be that...
00:17:18
Speaker
immediate requirement to sustain the you know the flagship manufacturing base in the UK you know to keep Nissan to keep BMW to keep Stellantis Toyota you know building manufacturing with with that base in the UK so I think the most likely outcome I'm not sure to come as soon as this week in the in the spring statement and forecast but the most likely outcome is there will be some sort of not tweaking of thee of the mandate targets because that would be, A, would send the wrong message, but also be it be a hugely onerous undertaking in the courts.
00:17:50
Speaker
But there is potential for them to tweak the flexibilities. And this is this is the reason that we didn't hit the target on cars last year And yet no OEM would have paid a fine. There are flexibilities in there to either to sort of borrow future credits from future years or lend them to other people or to maybe swap ban credits with car credits.
00:18:09
Speaker
I'm not an expert on the area. where We haven't lobbied intensively on that the B-BLA because it's for OEMs to do it. But that that is, if you like, the safety valve. that the government can can use to maintain the targets but ensure that we maybe get there a bit ah bit slower between now and
Incentives and Regulatory Changes
00:18:25
Speaker
2030. And, you know, that to me seems sensible considering how that' sort of the world has changed, how costs have changed, economic situation has changed, the the um the global industry has changed.
00:18:36
Speaker
So that, you know, that they'll be the experts of doing that. I'm sure they're talking to OEMs and doing all sorts of analysis about how they can change that. Then obviously you get to more, if you like, the government then is ah is minded. but That's the minimum I think they will have to do.
00:18:51
Speaker
But if the government is minded to sort of double down on the targets and say, no, we we you know we we just scraped this year, we didn't hit them, we want to smash them, then it's going to cost. you know its The only real other way to get there to meet that forced supply is to force demand because, you know,
00:19:10
Speaker
markets are organic people tend to move into a new technology when it either makes cost sense or it makes usability sense and you know we are not there at enough scale at the moment with the electric vehicle market yes if your company provided vehicle driver it makes sense but if your retail customers are said That equation, either cost-wise or you know public charging-wise, or if you're van driver, you know productivity-wise, range-wise, it's not there. So to encourage people to jump then, you're going to have to dangle carrots, financial carrots.
00:19:41
Speaker
And that is where things like grants or incentives come in. And that's that's expensive to shift the market on this scale. You are talking tens, hundreds, millions, maybe even billions over multiple-year period of time.
00:19:54
Speaker
that the government would need to invest to do massive change. There's this smaller thing. So I don't think they're going to do that, right? They haven't got the money to do that. I'd be amazed if they're going to do that. on the on the on ah On the lesser scale, there were probably a few sort of totemic minor tweaks that would cost, still cost millions, but would be more palatable to Rachel Reeves's budget.
00:20:14
Speaker
And that would be things like maybe the impending changes to VED where you've got the expensive car supplement and charge coming in, VED rates coming in full stock for electric vehicles. And that that is, a again, a big clear and present coming in the next week, week or two, cost that they could get rid of. So they could say, going forward, we're not going to charge that expensive car extra VD costs for EVs at all, or we're going to move that threshold because the the threshold for that charge is at £40,000. And today that's a cheap electric vehicle, right?
00:20:47
Speaker
um So that is not an expensive electric vehicle. So i could they could heighten it maybe towards something like £60,000. And that would be ah that would be ah a big PR move. That would be a big positive communication to to the industry that would, again, I think boost registration and not not cost a massive amount. It still cost a lot, there it would not cost a huge amount.
Enhancing Electric Van Registrations
00:21:07
Speaker
So I think those are the sort of areas. And that and there's a couple of other ones. um I mentioned the flexibilities. Another one that's worth mentioning on the van market. is it's probably the number one issue that van fleets tell us is holding them back. And that's the ah regulatory burden. So government made a really sensible move early on when it said that um we recognize that electric vans need to have a special derogation to be able to run up 4.25 tons instead of three and a half tons because the battery has a lot of weight. And they did that.
00:21:37
Speaker
What they didn't do is change the regulation around operating a vehicle over three and a half tons. So you end up with this crazy situation where a van driver who's driving a heavier electric van is treated like a truck driver in terms of their their license, in terms of their annual test of that vehicle, in terms of the mileage they're allowed to do.
00:21:56
Speaker
And Van Fleet's told us that is a major, huge blocker to registrations. And when we even did a bit of research That suggested that if the government changed those bits of regulation, you could probably lead to over 100,000 new electric band registrations over the next couple of years.
00:22:12
Speaker
And if you think we had 20,000 registrations last year, you would hit the mandate targets for 25, 26. if you did that, according to our um research. So that to me is an amazing prize that the government has shown they're looking at because they consulted at the start this year.
00:22:26
Speaker
That could be a really good piece of news. So I think there are two free bits there, right? The van regulation and they the flexibilities wouldn't cost the government anything apart from a bit of time and a bit of effort to do some regulatory change.
00:22:40
Speaker
Could be really good wins. And then we can maybe hope for some other tax and grant and incentive moves as well. That's great, Toby. Thank you so much. You've really shown the lay of the land and what opportunities there are at low cost to make a real big difference in the EV and EV infrastructure business and and to help us transition to zero emission.
00:23:00
Speaker
Coming up to time now, so I just want say thank you again for your insights. Thank you to the audience for joining us. Thank you very much and goodbye. Have a great day.