Tony Murtagh is one of the UK's leading experts in the transition to Green Fleet. In this short article, he explains how fleets can achieve this TODAY.
Reading time: 3.5 mins
Changing your fleet vehicles to plug-in models – however many you have – is possible right now. It’s true that certain vehicles may need to remain as diesel or petrol, because of their use – but for most companies, most of the time – moving to plug-in vehicles – be that PLUG IN HYBRIDS OR FULLY ELECTRIC, is possible. And what’s more, it’s possible at no extra cost.
We know this because we already have clients in these programmes now. This has been made possible because of our insights and experience. And therefore, my message is that you can move to low carbon and you can do it without costing the earth (yes, the pun is intended).
There are some critical business reasons to consider this move; in the following 3 areas:
LEGISLATION is changing rapidly, although it’s not always that noticeable. Those responsible for fleets generally have other tasks too and it’s impossible to stay on top of everything that you may need to know. The fact is that the UK Govt has committed to NET ZERO CARBON BY 2050. One policy that is linked to this commitment is the introduction of CLEAN AIR ZONES in 5 cities and 23 local authorities in the next 12 months. Non-compliant vehicles will face charges and that means many of our Internal combustion engine fleets will come with increased costs when this happens
SOCIAL & COMMUNITY IMPACTS are an issue by affecting our local air quality in our own communities. As all of our company cars and vans set-off each morning, they’re pumping out carbon and particulates outside our homes, our schools and our public places and this is where we can have most impact on our own environments, by switching to low or zero carbon vehicles.
THE COMMERCIAL BENEFITS are racing up the boardroom agenda. The latest updates on company carbon reporting requirements means the net is widening and catching companies of all sizes. It could easily be anyone reading this that has a requirement to report Green House Gas emissions (GHG) and the company plan to reduce these in the coming years through the new Streamlined Energy and Carbon Reporting rules (known as SECR). Low carbon vehicles will be critical to this. Importantly – supply chains will be mandated to report on carbon emissions and so bids and tenders will include mandatory criteria for this stuff, which will have a negative impact on revenues for those organisations that don’t tackle this issue. Poor emission levels and a lack of plans to reduce these will impact on sales performance.
Logical and Car Lease Supermarket have a 3-step programme to help clients move to Green Fleets. THE STARTING POINT is the baseline costs of the 4 components of Lease costs, Service, Maintenance & Repair, business fuel cost and business taxation.
STEP 1 is to make cost-savings against the baseline. Typically, most fleets can find 10% savings by going to the market for the best lease deal on each vehicle and then considering a Pay As You Go for vehicle servicing. We can advise further on how to achieve this – if this interests you.
STEP 2 which is to construct the same cost components for PHEVs. Here we can see the changing cost profiles. This can be summarised by saying that lease costs increase and Taxation comes down. SMR can be reduced, though this is a feature of moving to PAYGO and not just because they’re PHEVs. Fuel costs are broadly the same, as savings on running on electricity, are offset by real-world performance on a petrol engine. Beware of PHEV MPGs, in our work - we reduce OEM figures by 40%
STEP 3 is probably the most interesting part of these projects. EVs cost more to lease – even more than a PHEV, BUT the SMR should be lower – don’t trust the Lease company pricing on EVs. Fuel drops significantly because it costs around 1/3 of the cost of diesel for each mile traveled in an EV. And you will notice that for this next Tax Year, taxation is zero. What about the future of tax? Is a question many ask – well, the next 3yr average taxation is only 1% and this represents a typical replacement cycle, so we’re set fair for low costs for our next vehicles, broadly speaking.
STEPS 2 & 3 ARE BASED ON LOWEST-PRICED LEASE DEALS AND MAY NOT BE REFLECTED BY WORKING WITH A SINGLE PROVIDER
SOMETHING TO CONSIDER is the driver benefit. The average driver is paying between £250-£350 per month in BiK Tax (which isn’t a consideration in these figures) and from April 2020, an EV driver will pay zero for the next 12 months. A £3k-£4k saving will pay for a family holiday for most people, to put this into context. A significant benefit.
Once the numbers are crunched, the ACTIONS NECESSARY for moving the fleet to low carbon, plug-in vehicles are
Finally - 2 interesting stats that come from our work with multiple clients over the last 12 months
9th of April 2020