Incentivising electric fleets: is enough being done?

Environmental issues are becoming an ever more pressing concern. Governments, businesses and households alike are increasingly expected to do their bit to help reduce their impact on the environment and secure a sustainable long-term future. One method by which firms and consumers are being encouraged to reduce carbon emissions is by investing in electric vehicles. Governments have introduced a range of incentives to help increase the take-up of electric vehicles among both households and business fleets.

These incentives are by no means insubstantial and can produce savings for fleets amounting to thousands of pounds every year. What’s more, given the size of the fleet sector and the sheer number of vehicles it operates, schemes that succeed in curbing its combined carbon output could have a big environmental impact. But are the existing measures sufficient to encourage more firms to make the switch from petrol and diesel to electric? 

There are three main schemes aimed to entice more businesses to switch to electric fleets. These are:

1. The plug-in vehicle grant, which provides fleets with a discount of up to £8,000 of the cost of an electric van. According to government-backed organisation Go Ultra Low, more than 120,000 electric vans and cars have been purchased in the UK since the scheme was introduced in 2011.
2. The workplace charging scheme, which provides businesses, charities and public-sector organisations with grants towards purchasing and installing electric vehicle charging points. The scheme is also open to company car drivers.
3. Firms investing in zero-emission vans can also take advantage of increased capital allowances; 100 per cent of the vehicles’ value is eligible for writing down in the first year of ownership. Recharging infrastructure for these vehicles is also covered by this measure.

In addition, there are other perks and advantages to choosing electric vehicles, such as free parking and free charging in some areas. This is, again, not to be sniffed at and it can make a real difference. But in addition to tax exemptions and grants, we also need to think about investing in the infrastructure required to make electric vehicles a mainstream, everyday reality for individual motorists and businesses.

A 2017 survey carried out by the Society for Motor Manufacturers and Traders (SMMT) indicated many drivers were concerned that adopting electric vehicles might be impractical – for example, 48 per cent of the 2,100 respondents surveyed said they were less likely to consider buying one because they were concerned they wouldn’t be able to find a charging point when they needed one. There is also the question of whether Britain’s national grid is equipped to handle a large-scale transition to electric vehicles while also transitioning towards more renewable forms of energy. These are challenges which the government will need to address in the coming years.

It is also worth noting that the market for electric vehicles is, to a very large extent, reliant on whatever measures the government takes to encourage their adoption. It was reported last year that sales of electric vehicles in Denmark had slumped by 60 per cent year-on-year in the first quarter of 2017 – making Denmark the only EU country to report a drop in electric vehicle sales. This followed the phasing out of incentives to encourage the purchase of electric cars and hybrids.

There are, it should be noted, technologies that are already helping to reduce the carbon footprint of the fleet industry. Fleet management software and telematics systems, in particular, are allowing fleets to make more efficient use of their resources by providing them with previously unprecedented insights into the way they operate – ensuring that firms can boost productivity and profitability while also bringing fuel consumption and CO2 emissions down. Other technological advances include intelligent tyres designed to improve safety and cut vehicle carbon emissions, and hydrogen additives.

Last year, the government signalled its intention to outlaw the sale of petrol and diesel vehicles by 2040. Meeting this target (assuming it remains unchanged) doesn’t necessarily require a full transition to electric vehicles, as hybrid cars and vans would be exempt from the ban in any case. But the scale of the challenge is nevertheless immense. It will take ongoing intervention from government to ensure that individuals and businesses feel confident enough and have the support they need to switch to electric cars and vans. There is little time to waste.