Mobility in a time of crisis: an opportunity to get efficient
Who wants to own a car? If you are lucky enough to get the make and model you want, the price is eye-watering. There are increasingly strict environmental regulations, rising taxes and congestion charges to pay, while fuel prices are through the roof. Meanwhile, your friends and, probably, your children criticise you for owning one at all.
What is true for individuals applies even more to corporations, both large and small. The supply chain disruptions of the past two years mean new vehicle deliveries have been badly disrupted. Even where there is availability, soaring inflation is wreaking havoc with budgets. And these short-term challenges are only making it harder for companies to electrify their fleet and put their approach to mobility on a sustainable footing – something that shareholders and, in fact, all stakeholders are demanding.
A cost curve in favour of electrification
There is, however, an opportunity here for those willing to think longer term, says John Saffrett, Deputy Chief Executive Officer of ALD Automotive, the mobility and fleet management arm of Societe Generale: a switch to full-service leasing allows a company to gain flexibility, accelerate electrification and even – through upfront analysis and subsequent reporting – to realise cost savings that can mitigate the recent cost increases of operating a vehicle fleet.
ALD Automotive starts by analysing a firm’s existing needs, mix of car models and – critically – its drivers. Often, there are easy gains to be made in efficiency and costs by changing basic behaviours, such as how fast people drive and how and where they refuel. Such analysis also reveals which drivers can be switched to an electric vehicle (EV) most easily.
It is a fact that one of the simplest and quickest ways for most companies to reduce their carbon footprint is to electrify their fleet. But employee concerns, for example about the range of EVs or the safety of batteries, often discourage in-house fleet managers from taking early action. “A partner such as ALD Automotive, with its sophisticated connected car technology and experience, can help educate their colleagues (“the data shows you rarely drive more than 200 kilometres in one trip”) and design a multi-year transition plan that converts drivers to EVs in phases, once they are ready”, adds John Saffrett.
What is helping on this front are rapidly expanding options: it is no longer the case of having to choose between a sophisticated Tesla and a boxy Prius. Nowadays, there is an abundance of plug-in hybrids, battery EVs and – soon – fuel cell vehicles, available from virtually every major car brand. While the sticker price is often still higher, total cost of ownership (TCO) is already equalising and with the rising cost of petrol and higher taxes imposed by national and local governments, the cost curve is bending in favour of electrification.
Charging infrastructure is also improving, with an 80% charge already possible in 30 minutes and soon in 10. Charge points are also becoming more widely available. Mr Saffrett says that if you offer a driver the ability to charge his car at home and at the office, that roughly covers 75-80% of charging requirements and reassures drivers to make the switch to an EV, even if currently there are limited public charging points available.
The transition to full-service leasing – whilst above 50% in some mature countries and accelerating in others - is a big decision and one that some companies, understandably, are reluctant to make during such uncertain times.
Mobility-as-a-service is the new sustainability?
For corporate pioneers, meanwhile, a more interesting option is emerging: mobility-as-a-service. Under such a plan, a company assigns a mobility budget to an employee, who is free to use it through a dedicated App for leasing a vehicle, renting an e-bike, car sharing or public transport. The advantage for the employer is predictable cost and consistent reporting that allow it to adapt its policy, while employees gain real flexibility and insight into their travel behaviour. Both sides should see their carbon emissions decline rapidly as they gravitate to the most efficient type of transportation. All in all, mobility budgets will likely be extended from current ‘drivers’ to all employees, and start to cover commutes as companies work to place all staff movements onto a more sustainable basis. In response, some players like ALD Automotive are beefing up to deal with rising new business enquiries from large and small corporations.
With a direct presence in 43 countries, ALD Automotive already has the largest international footprint of any major leasing company. But its proposed acquisition of bigger competitor LeasePlan for EUR4.9 billion, is a step-change, creating a leading player in global mobility with a fleet of more than 3.5m vehicles; a strong balance sheet backed by Societe Generale; and strategic relationships with the major car manufacturers. And all, as Mr Saffrett says, in the quest of helping its customers move from A to B in the most sustainable way.