Electric vehicles: Positives start to outstrip negatives

After years of small pilot programmes – accompanied by a large amount of hype – electric and plug-in hybrid vehicles are finally entering company fleets.

Vehicle manufacturers see fleet operators, which tend to lodge larger orders and take a longer view on running costs than retail buyers, as core customers for their new-generation battery-powered vehicles.

Many fleet managers, in turn, want plug-in cars and vans in their line-up – whether to test the new technology, cut costs and carbon dioxide, or just feature pictures of them in their corporate sustainability reports.

Regulators around the world are easing the path of electronic vehicles (EVs) to market by offering a range of subsidies to early adopters, such as the UK’s £5,000 ($7,900) plug-in car grant or France’s top €5,000 ($6,900) bonus.

Companies are anticipating a further boost to vehicle electrification from city governments implementing low-emission zones.

But fleet managers are tough customers, not least during an economic downturn. So automakers are fine-tuning their pitches, increasingly touting EVs as value propositions, not just showpieces for corporate window-dressing.

“Until now, lots of people bought electric vehicles for presentational reasons, and made a big song and dance about them,” says Andy Heiron, head of Renault’s EV programme in the UK. “Now, we are getting very business-oriented questions about payloads or fitting them out with racking, motivated by a genuine desire to get them into fleets.”

Renault has moved aggressively into EVs, along with its partner Nissan. In mid-October, Renault began taking orders in the UK for a battery-powered version of its Kangoo small delivery van.

The French manufacturer plans to sell the van in three versions, ranging from about £17,000 to just under £19,000, excluding VAT, a price in line with comparable diesel vehicles, it says. To cut the van’s cost, Renault will lease its battery to customers, beginning at a starting price based on a four-year contract of £60 a month.

Renault says it has signed letters of intent with potential customers including Transport for London, the leisure group Center Parcs, and Morrison Construction, a civil engineering group.

Steve Farmer, manager of the fleet division at Balfour Beatty, the construction and engineering group, describes the vehicle as a “great van” which, in addition to zero tailpipe emissions, has a 600kg payload.

“Our customer base is very sophisticated and very sensitive around what its contractors and supply chain are doing to protect the environment,” says Mr Farmer. “The ultimate ambition is to get as close to zero [emissions] across the fleet by 2020 as we can.”

Ford Motor is marketing an electric version of its similar-sized Transit Connect van. Azure Dynamics, Ford’s partner, which fits the vans with motors, batteries and electronics, is selling it for just under £40,000, batteries included.

While the price is steep for a vehicle of its size, Azure Dynamics is touting its low running costs. “This vehicle will cost £2 a night to charge”, says Gary Whittam, the company’s sales and marketing director for Europe.

Mr Whittam divides buyers of the van into three groups: “The first customers are those who have a ‘green’ ethos from the managing director down, with a commitment to reduce their carbon impact,” he says.

A second group, he says, is concerned about rising fuel prices. “A third group of people don’t have a green bone in their body,” he says, but if they want to operate the vehicle in the centre of Rome or Oslo a green vehicle will be better. About 300 electric Transit Connects have been sold around Europe, he says.

General Motors, which will launch the Opel/Vauxhall electric Ampera car next year – a Europeanised version of its US Chevrolet Volt – is counting on fleet customers, including the public sector, to outnumber retail buyers three to one.

“It’s almost like a new segment,” says Ian Allen, launch manager for the car. He expects about 3,000 to 3,500 units of the US-built car to hit the UK in 2012, rising to 5,000 in subsequent years.

The utility companies – which are also moving into EV recharging – will be among the biggest early customers for the cars. EDF, the France-headquartered power group, has tested plug-in cars made by Renault, Toyota, PSA Peugeot Citroën and BMW, and plans to buy 2,500 cars for its fleet by 2014-15 under a mass 50,000-vehicle tender led by the French post office. “We have a role to play in the electric mobility business,” says Igor Czerny, head of EDF’s electric mobility division. “We think the trend is irreversible – that’s why it’s a corporate project.”

However, sceptics say the numbers on electric cars still do not add up.

“If you look at the running cost compared with an efficient diesel, even with the government grant over three years, the cost-benefit case isn’t there yet,” says David Brennan, UK managing director of LeasePlan, the vehicle and fleet management provider.

Some analysts say early adopters are using electric vehicles more for image reasons. “There are companies who know they are running EVs at a far higher cost than conventional ones, but the fact that they put their logos on the side of the cars makes it clear what they are doing it for,” says Gareth Hession, vice-president for research with Jato Dynamics, the automotive research group.

But Balfour Beatty’s Mr Farmer, for one, insists that his choice is pragmatic. He points out that EVs, being mechanically simpler than conventional ones, will be cheaper to maintain. “There isn’t a whole lot that can go wrong,” he says.

Mr Czerny says total cost of ownership of an EV and a conventional vehicle are the same, and points to other factors that could fuel a growing willingness to choose an EV.

“It’s quiet and it’s easy to use,” he says. “When you have started with this kind of vehicle, you don’t want to go back.”