20. Charging Ahead: The Electric Fleet Revolution

In this riveting episode of "Insider's Guide to Energy EV Series," hosts Chris Sass and Niall Riddell are joined by David Watts from Volkswagen Financial Services, a trailblazer in electric vehicle (EV) fleet management. The discussion, titled "Charging Ahead: The Electric Fleet Revolution," dives deep into the transformative journey of electrifying corporate fleets. David, with his extensive experience, elucidates the nuances of transitioning to EVs in a corporate environment. He talks about the classifications of company fleets, the unique challenges in electrifying commercial vehicles, and the impact of taxation and total cost of ownership on these decisions. 

The conversation explores strategies for managing fleet electrification, emphasizing the importance of starting small and focusing on feasible segments. David discusses the motivations driving businesses towards EV adoption, such as sustainability, economic factors, and government mandates. He also reflects on how his role has evolved with the increasing availability of EVs and looks forward to significant advancements in battery technology. 

The episode wraps up with insights on the role of subsidies and tax incentives in facilitating the EV transition. David's expertise provides a comprehensive view of the future of fleet electrification. For more enlightening discussions, follow "Insider's Guide to Energy" and catch their latest episodes on YouTube. 

https://www.linkedin.com/in/david-watts-9812894/ 

Transcript

Transcript 

00:00:02 Speaker 1 

Broadcasting from Washington, DC, This is insiders guide to energy. 

00:00:12 Speaker 2 

This episode of Insiders Guide to Energy EV Miniseries is powered by Paua. Paua helps your business transition to electric vehicles by simplifying charging, managing payments, and optimizing your charging data. 

00:00:25 Speaker 2 

Welcome to insiders guide to Energy EV series. I'm your host Chris Sass and with me is my co-host Niall Riddell. Neil, what are we gonna be talking about today? 

00:00:33 Speaker 4 

Today we have a guest who has started trying to sell electric cars before there were electric cars to sell and he sells them to businesses and we're going to dive into the world of David Watts and what he's been up to. Hey, David. Welcome to the show. 

00:00:49 Speaker 3 

Hi, Niall. Hi Chris. Great to be here. 

00:00:52 Speaker 4 

So the very simple, straightforward question to get us rolling is David, what do you do and who? 

00:00:56 Speaker 3 

Do you sell it to? Well, what I do right now is I'm the fleet profit manager for electric vehicles, for Volkswagen Financial Services fleet. 

00:01:07 Speaker 3 

Very quickly. So I interact with corporate businesses on their transition to electrification. 

00:01:14 Speaker 4 

And can we have a definition of fleet? I make a lot of time with my customers and my stakeholders to go listen. Fleets are a bit ambiguous, you know, it's got multiple different definitions. What do you define the fleet as? 

00:01:25 Speaker 3 

Sure. So and and and this is one of my sort of soapboxes that I get on a bit about about our industry and and and the media and and because we we generically use the word fleet in in many contexts and and and no one ever actually knows what you're talking about. And so in my world fleet is company cars and company vans as opposed to. 

00:01:45 Speaker 3 

Buses and trucks and that's that's the world I've been in for sort of 27 years. 

00:01:50 Speaker 3 

In that sense. So yes, so company cars and vans with vehicles that are provided to to employees. 

00:01:55 Speaker 4 

And and I know from having spoken to you about this before that we like to classify company cars a couple of different ways. Do you wanna break down? 

00:02:02 Speaker 4 

Company car fleets. 

00:02:03 Speaker 3 

Yeah, sure. So there are essentially two types of company cars. There's those that that are provided as part of a benefits policy where the where typically the driver has a choice of vehicle and that that might be two vehicles or might be 200 vehicles, but. 

00:02:18 Speaker 3 

They they they get a degree of. 

00:02:20 Speaker 3 

And then there's operational cars, where the driver gets no choice and they're typically sort of engineers, technicians, that type of thing, and they're all given the exact same car, a silver estate car with some branding on maybe. And that is a population. Whilst the vehicles are. 

00:02:40 Speaker 3 

That they're more capable from an electrification perspective, the the transition process to Evie is much more like a van. 

00:02:48 Speaker 3 

Fleet than it is a sort of choice based company car. 

00:02:53 Speaker 2 

Now I recently lived in Europe for a number of years and I looked to buy a used automobile and went to the auto build build dealerships and you could see the different cars you just described in the used market. Is there something happening with EV's and tipping point in your calculations? That is a certain point, an internal combustion engine car is going to be. 

00:03:14 Speaker 2 

Less valuable in the market and is that starting to weigh into the buy decision because of legislation in number of countries in Europe when internal combustion engines go away? 

00:03:24 Speaker 3 

At the moment everything is being driven by total cost of ownership or a whole life cost sort of methodology whereby they're taken into account a number of factors from from the purchase depreciation, financing along with then servicing and the running costs of the vehicle around sort of business mileage. 

00:03:44 Speaker 3 

Cost. So at the moment there's a sort of balance fees, there's, there's an obsession with will EV save you money and that really doesn't matter. It's actually will will leave these cost you the same as what you're currently driving. So at at the moment it's it's a very balanced piece as to whether an EV is more cost effective or less. 

00:04:04 Speaker 3 

Cost effective than the equivalent vehicle. Some of that is driven by taxation because of it's in the UK, there's extremely favorable company car taxation, which has a corporate tax element to it as well. And that's really the big piece that is making. 

00:04:24 Speaker 3 

Electric cars very cost effective against their. 

00:04:28 Speaker 3 

Petrol or diesel equivalents and and certainly the UK, we've lost sort of the the grant scheme that that is which still is is around in other other countries but certainly at the moment we've we've lost that that that sort of ceased to be. 

00:04:42 Speaker 3 

So, so the cost benefits are a lot harder to find. 

00:04:46 Speaker 2 

Got it. 

00:04:47 Speaker 2 

And now you you're working with a financial services for fleets or fleets. So when you're negotiating or working with your customers, is it done per the fleet that you're looking at? So the like the the class of vehicle or are you funding just like when an individual buys a car, each individual? 

00:05:09 Speaker 3 

So as a business, we do everything from a personal contract hire, you know, personal lease agreement right through to international corporate leasing. So my role is specifically focusing on larger fleets and the. 

00:05:24 Speaker 3 

And and and the relevant people within that and that could be company conflicts and and and and and both. 

00:05:30 Speaker 3 

So it's it's a whole mix of things, right? 

00:05:35 Speaker 4 

And you're obviously speaking to a lot of businesses at the moment we've been through and we still are going through a relatively tight economic period. What's the general attitude towards the electrification of these vehicles? Is it positive? Have we see got some good signs or is it a challenging environment in which to talk to business customers? 

00:05:52 Speaker 3 

It's both still it it's better than it used to be. Having been doing this for a very long time. The from a a car perspective from a company car perspective, it's a lot easier because of the tax benefits available to the drivers and and and equally to the to the company for it. 

00:06:10 Speaker 3 

It's it's a much more positive conversation than it used to be. That being said, there are plenty of businesses that are still yet to even dip their toe in the water from a commercial vehicle perspective, vans, it's a lot harder because they're a lot more complex in terms of that transition process. So we're seeing some that are. 

00:06:29 Speaker 3 

Well ahead of the game and others that are really struggling with the concept and another moment just sort of putting the brakes. 

00:06:38 Speaker 4 

So so you describe it as complex for a commercial vehicles, could you give us a bit more detail as what some of those complexities look like? Why is it hard? 

00:06:46 Speaker 3 

So it's primarily because the the the, the business has to essentially address all the difficulties that come with with taking electric vehicle where and and how to address that for the driver, whereas when a driver makes their own personal choice to take an electric vehicle they've they've covered those issues off themselves. 

00:07:07 Speaker 3 

Commercial vehicles also then have the sort of the slight downside of being, should we say, less capable from an electrification perspective in terms of the very basic piece of range, they have significantly less range than than the average car and that makes life that bit more complicated in terms of how and where you're going to charge these vehicles. A lot of commercial vehicles. 

00:07:28 Speaker 3 

Go home with the driver every night, but they don't necessarily sit on somebody's driveway, and so therefore you do have to. They will have to. And even if they did sit on somebody's driveway, you can't make the assumption that that, that employee is going. 

00:07:41 Speaker 3 

To be able. 

00:07:42 Speaker 3 

To charge your vehicle for them for a variety of reasons. 

00:07:45 Speaker 3 

So figuring out the charging. 

00:07:50 Speaker 3 

Process to enable to ensure your vehicles do the job because anytime that the vehicle is. 

00:07:57 Speaker 3 

Not running, shall we say it's it's the effectively costing the business money. If it's not being operational. 

00:08:04 Speaker 4 

So on those difficulties that you kind of skirted over, I can hear charging as clearly sat amongst them, you know, what are the other things that companies come to you and say, listen, this is too hard because. 

00:08:16 Speaker 3 

UMI mean from a from a commercial vehicle perspective, it's it's uh depending on the type of vehicle they're looking at. Payload is a big issue, particularly in the larger van segment. In the smaller and medium van segments is less so once you're starting to get into large fans and we're talking sort of three and a half ton vehicles, payload becomes a real problem. Large vans aren't particularly energy efficient whether. 

00:08:38 Speaker 3 

Electric or diesel and so therefore they need bigger batteries in order to be able to achieve the same sort of capability as a smaller van. But of course a bigger battery then have this essentially 3 way. 

00:08:51 Speaker 3 

UM. 

00:08:52 Speaker 3 

Problem of the gross vehicle weight of the vehicle, the range, the vehicle you. 

00:08:57 Speaker 3 

Want the vehicles? 

00:08:58 Speaker 3 

We have to achieve and then the the, the, the weight and the battery. 

00:09:01 Speaker 3 

And the payload that. 

00:09:02 Speaker 3 

That's implicated in there. So if you're putting more batteries in, you're getting a heavier gross vehicle weight and therefore your payload starts to drop. So and and in that large fan segment, people typically. 

00:09:12 Speaker 3 

Want a sort of at least a tonnes worth of payload, but if you've got a very large battery in there, you're really starting to sort of. 

00:09:20 Speaker 3 

A real hit on your potential payload. 

00:09:22 Speaker 2 

But I guess this conversation is making the assumption battery and as opposed to hydrogen or something else. So. So my understanding is that each segment there's probably a a proper tool for the job, right? So I don't know that you know lithium ion batteries maybe work in the biggest of lorries, right? So. 

00:09:42 Speaker 2 

Are you seeing that or is that still kind of experimental in hydrogen infrastructure or green hydrogen infrastructure not there yet? 

00:09:49 Speaker 3 

So hydrogen versus EV is a well, it's a whole podcast in. 

00:09:52 Speaker 3 

Itself, I think. 

00:09:53 Speaker 2 

No, but I was saying. 

00:09:55 Speaker 2 

Not not EV per say, for employees taking home at night, that probably makes sense to be an EV, in my humble opinion. But when you starting to talk bigger vans. 

00:10:05 Speaker 2 

Are you still considering electric electrification or electrification through maybe a hydrogen fuel cell? 

00:10:11 Speaker 3 

At the moment, we're still to some extent it's where is the money and and what are the what are the, what are the manufacturers doing and at the moment. 

00:10:20 Speaker 3 

They're really they're. 

00:10:22 Speaker 3 

Focusing on EV and there's some toying around the edges, so we say with some hydrogen products, but in but in principle we're not seeing any. 

00:10:31 Speaker 3 

Any scale production plans of hydrogen vehicles in in the van segment, so on that basis then we have to assume that that's where the plan is going. So therefore electrification is the way forward. 

00:10:45 Speaker 3 

But some of those problems and challenges that we have with electric vans get resolved as battery technology improves, because this is about an energy density in in, in in essence, if you can get more energy for the same weight of battery, then clearly those payload issues become less of a problem and you've then got extra range. 

00:11:05 Speaker 3 

Everything else so but also coupled with. If you look at. 

00:11:10 Speaker 3 

Pretty much most, if not all, of the vans that are available today, they're all essentially converted vans. They're all petrol and they're all diesel vans that have been turned into into electric. 

00:11:21 Speaker 3 

And that architecture of a van essentially limits how much battery you can put in anyway, just physically so. So on those larger vans. One of the reasons why they've got limited range, which and this doesn't solve the payload. 

00:11:32 Speaker 3 

These is because they they can only put so much battery in. If you look at those large vans, they're all typically around about 7075 kilowatts, and there's gotta be a reason for that. And and and one assumes this because they can't actually probe our anymore in the next generation of vans that we'll see coming over the next few years should hopefully therefore be vans designed. 

00:11:52 Speaker 3 

Designed as electric vehicles from the ground up, which gives you a better platform, put more batteries in. There's a rule in in a legislation change in the UK which actually means you can drive. 

00:12:07 Speaker 3 

4.25 ton van on a three and a half ton license, which makes life a lot easier, which therefore gives you an extra 750 kilos which suddenly puts you into the right payload space that you would be normally running on a on a diesel van. So when you sort of start to combine these things together. 

00:12:27 Speaker 3 

The future is looking better. 

00:12:29 Speaker 4 

So it's great to see that we're discussing some of the nuance of regulation and how it's impacting the transition. If we go back a little bit and look at things that have been successful so far and it will go forward around what you want to recommend. But if we look back, you touch very briefly on some of the subsidies. Could you tell us a bit more about what you know you've seen this transition? 

00:12:49 Speaker 4 

Happen. What is the role of subsidies? How can countries adapt subsidies to support early stages of the transition and when do? 

00:12:56 Speaker 4 

You remove them. 

00:12:58 Speaker 3 

So subsidies and incentives change behaviour. I think that's that's the basic piece. And so when you're talking about tax incentives, they they, they're extremely effective with changing behaviour. And we've seen that over the last 20 years in terms of getting people into into lower carbon vehicles and and ultimately into into electric. 

00:13:18 Speaker 3 

Grants in terms of purchase discounts, if you like, they. 

00:13:23 Speaker 3 

They are effective. 

00:13:24 Speaker 3 

Or perhaps less effective than tax. I think tax is a very strong measure. It's I mean certainly from a UK perspective, we've had right from the early days of of EV's, we had a we had a plug in vehicle grant, our plug in car grant, we've still got it on vans. 

00:13:44 Speaker 3 

There is a debate as to how much that grant should be and and in the early days, certainly on cars, it was quite significant. 

00:13:51 Speaker 3 

It gradually got UM, phased out over overtime and seen from UK perspective, we've now no longer got a a plug in car grant the question of when you remove it essentially comes down to government finances. I think in terms of who who is getting the benefit. 

00:14:11 Speaker 3 

From this, because you suddenly start. 

00:14:13 Speaker 3 

Not to it. It adds up very quickly when when the the growth in the market really starts to take off. So when we have the grant originally you were talking sort of 2050 thousand vehicles a year at the most. Now we're going to be touching 300,000 vehicles for quite easily breaking 300,000 cars this year. And so if you've got a grant, suddenly that. 

00:14:33 Speaker 3 

That that scales up quite significantly so. So the phasing out, I mean arguably having a grant forever is a great thing. 

00:14:42 Speaker 3 

But but the the. 

00:14:44 Speaker 3 

Removal of it is because, well, essentially is a balance between how much money you got to spend versus have you changed the behaviour and has the market already then shifted. 

00:14:54 Speaker 2 

And I I guess so you're talking about grants and another impact would be tax. So at least here in the US, I know our fuel taxes pay for things and energy for a fleet could be a bit tricky, right. And my my tariff at home might be different than the tariff at a a charging station versus what the company pays. 

00:15:14 Speaker 2 

So is there structure that goes into these fleets that? 

00:15:19 Speaker 2 

The government or regulation is keeping up with the technology on the the tax structure for for the infrastructure. 

00:15:27 Speaker 3 

Probably not. 

00:15:31 Speaker 3 

So as you say that the the problem we have is is essentially a price disparity or a price discrimination. 

00:15:38 Speaker 3 

Shall we say? 

00:15:39 Speaker 3 

So if you're lucky enough to be able to charge your vehicle up at home and and and even if the business is paying for that, they're then then getting the. 

00:15:45 Speaker 3 

That you can access off peak tariff rates overnight tariff rates, which are extremely cheap, which means you're still running your vehicle at around about three or four, maybe £0.05 per mile, which is extremely cheap compared to 1520 plus pence per mile in in a in a petrol. 

00:16:04 Speaker 3 

Or diesel vehicle. 

00:16:06 Speaker 3 

Even on a standard home tariff rate, and you're still looking at sort of eight or 9 pence per mile, but as soon as you then move into the public domain and public charges. 

00:16:17 Speaker 3 

Then you're seeing a significant increase in price, sort of 25 pence a kilowatt and perhaps up to 80 odd pence a kilowatt, which which then ramps up the prices significantly. 

00:16:33 Speaker 3 

One of the key things that we have in the UK is we don't really have VAT on home electricity, but we do have VAT on public tariffs, which is is is 20%, so that there is a campaign in the UK about trying to to to tackle that because that would be an easy mechanism from a from a a legislation. 

00:16:53 Speaker 3 

Point of view 2. 

00:16:55 Speaker 3 

Mitigate some of that pricing tariff discrimination because there is a population. I mean, even if you sort of remove yourself from the fleet sort of question, there is a pricing discrimination and sort of a a social discrimination around electrification in that sense because people, people who can't charge them at home. 

00:17:16 Speaker 3 

Are therefore more likely to be in a in a lower income. 

00:17:20 Speaker 3 

Brackets and therefore if they are being forced to charge up on the streets and therefore having to pay VAT, whereas arguably more wealthy people who can charge at home on their driveway. So there's all complicated piece which which actually if they tackle that V8 piece on public charging would start to. 

00:17:40 Speaker 3 

Alleviate wouldn't solve it, but it would alleviate a little bit. 

00:17:44 Speaker 4 

So we spend a lot of time here at power looking at tax and trying to help our customers with tax. We you know talk about things like total cost of charging when you use your public infrastructure, it's or the insurance, the hardware, the connection, it's all included. So you know there's there's some, there's some dynamic in this space around how you compare the pence per kWh rate from one place to. 

00:18:04 Speaker 4 

Another I think what's interesting is when you open up debates around, you know, the little bit of tax that you get on public charging versus home charging, we're trying to get into quite nuanced and subtle areas. It sounds to me like the easy thing for government is to slap a big fat grant on top of a vehicle to reduce the cost and make it easier to buy. But then as you become a more sophisticated, you know, step in your journey. 

00:18:24 Speaker 4 

You twiddle all these little edge edge incremental piece. 

00:18:27 Speaker 4 

You talked earlier about vans. You know, the costs, the challenges with battery size, etc. What can government do to incentivise more vans onto the streets? Because these are the guys that pollute the central cities. They clog up our roads and they're breathing the the diesel fumes of the van is not that pleasant. What can we do about vans? 

00:18:46 Speaker 3 

So. So vans still do have a grant, a reasonable sized grant on the purchase price, which, but the van market itself is, say, is struggling to electrify. And I think it's more about the fact that it's it's a complicated transition process. 

00:19:04 Speaker 3 

Rather than necessarily the price, so fleet operators are well used to the idea of of a total cost loan, total cost of ownership model and so so they're they're comfortable with that from a fan point of view. And the grant certainly helps that I think I think the barrier. 

00:19:24 Speaker 3 

Is not necessarily. 

00:19:26 Speaker 3 

Purely price driven in that market, it's it's more about how do I do it and to some extent and and and and when you look at a van fleet and you'll have a spectrum of vans that you could electrify relatively easily today through to vans that are. 

00:19:44 Speaker 3 

Either extremely hard. 

00:19:45 Speaker 3 

Or actually probably impossible if you're trying to do a like for like replacement in terms of their operational requirements. 

00:19:53 Speaker 3 

And and for me. 

00:19:54 Speaker 3 

There's a lot of fleets who. 

00:19:57 Speaker 3 

Are essentially focusing on the really hard stuff, or even the potentially impossible stuff, and getting distracted by that and then just sort of freezing and just sort of getting paralyzed by this scale of the sort of the scale of the problem they're looking at rather than going actually, you know, let's just break it down a bit. Yes, there is a part of my fleet and there might be a lot of their fleet that is really hard. 

00:20:18 Speaker 3 

Let's just ignore those for the time being. 

00:20:20 Speaker 3 

Let's look at. 

00:20:21 Speaker 3 

Where we can physically electrify, and that might even just be one vehicle today where they can actually just sort of make a positive change. 

00:20:28 Speaker 3 

Sort of get some learnings from it and then gradually sort of work their way through. But I think it's this whole sort of build this transition strategy that they're struggling with. They just fixate on the, the complications rather than going wrong. It's just break it all down, break it down into manageable chunks and let's work our way through it. 

00:20:48 Speaker 3 

And and not worry about the really hard stuff, we'll we'll get to them in a few years time, but let's focus on what we can change rather than what we can't change. 

00:20:58 Speaker 4 

So who do you see transitioning first? 

00:21:01 Speaker 3 

So I mean, we're seeing some big fleets who are making some really big changes and they're actually sort of in, in, in more sort of utility sector, arguably depot based fleets back to base vehicles are more suited to it. 

00:21:21 Speaker 3 

Just purely because they result. 

00:21:23 Speaker 3 

Solves one of the problems I how do you charge the vehicle? So on the assumption the vehicle can do its operational job on one charge or even if it's. If you can't do it on one charge, but actually you know if if if you're starting with the the the sort of the the easy ones, they're the vehicles that their daily profile is within the electric capability of their electric range capability of the van. 

00:21:44 Speaker 3 

If it's back to base, then you're in charge of the infrastructure. You haven't got to worry about public charging. You haven't got to worry about home charging. 

00:21:51 Speaker 3 

And whether the driver could actually physically charge him at home or anything like that, it's back to base. You can manage that piece. So it then becomes about the operational use of the vehicle. Now there is a bigger question of the electrifying the depot and and you know when we talk about complications, that's a big complication. 

00:22:11 Speaker 3 

Because you suddenly got to go right here. We've got X number of vehicles. You know that 10 vehicles on our site, they need. They need this amount of power to enable them to do their job. We need the power at this time of the day. 

00:22:23 Speaker 3 

How do we get that power into our sight? Have we got enough power to sort off with? And if we haven't, how do we? How do we get that power, and what's that going to cost to to do that sort of infrastructure upgrade? 

00:22:39 Speaker 2 

I I get the cost structure is is the desire to be there you you said earlier in the interview that it was an economic decision for most right it was basically they're looking at the total cost of ownership. It wasn't one or the other. I I think what I understood you say it was it was kind of do the economics allow us to make this choice. 

00:22:58 Speaker 2 

So what's driving the decision to even look at the choice or? Or is it sustainability that companies are looking at, or is there an economic decision that's saying we do it or it's legislation that's pushing them to do it? 

00:23:11 Speaker 2 

Why? If it's so complicated, are they going through brain damage? I mean, and I mean, obviously you can say carbon or or you know that. 

00:23:18 Speaker 2 

We've had the conversation, but they have shareholders in a business they're trying to run. So what's what's driving it for for your customers? 

00:23:26 Speaker 3 

So so I think it's all of the above to some extent. So I think the need to be seen to be. 

00:23:34 Speaker 3 

Doing something sustainable? Do I believe that the average corporate business is genuinely sustainably motivated, having been involved in this for best part of 20 years? I I struggle with that sometimes, but they need to be seen to be taking a sustainability route. So, so and that's that. 

00:23:54 Speaker 3 

That's increasingly important, and when you look at tenders for business, whatever that sort of whatever it is that you do, if you're tendering for business and trying to win business, you increasingly have to demonstrate your environmental credentials. There's a growing piece of actually showing your environmental credentials to your employees. 

00:24:14 Speaker 3 

And and demonstrating that you're an ethical and and and sustainable business. So I think sustainability is a lot more. 

00:24:25 Speaker 3 

Than it ever used to be, you know, compared to 510 years ago, it's a lot more. 

00:24:29 Speaker 3 

Important do they actually believe it? I'm. I'm. I don't know. But. But it is important for their business to be seen. To be pushing a sustainability agenda. The economics are really important because that's when you because. 

00:24:45 Speaker 3 

Fundamentally, you have to put a business case together, say right? We are going to do go down this road. So there are businesses who are willing to pay. 

00:24:54 Speaker 3 

To achieve something, there are others who will sit there and go well. It costs too much. Therefore there's a limit to what we can do at this point in the process. However, if we start to look a little bit further down the line. 

00:25:11 Speaker 3 

EVs are going to be the only. 

00:25:13 Speaker 3 

Things you can buy essentially now whether, whether in in the UK we had a an EV target for 20-30 in terms of manufacturing, in terms of vehicles being being sold, that's just being pushed back to 2035. It remains to be seen whether it gets brought forward again. 

00:25:31 Speaker 3 

Over the next, if we get another. 

00:25:33 Speaker 3 

But but either way, in the next 10 ish years, you're going to be really struggling to get a petrol or diesel vehicle because we have a mandate. If nothing else, that will drive the proportion of EVA's that are being sold in the country. So, so. 

00:25:52 Speaker 3 

It is being government focused in terms of government force. There is a sustainability element to it, but fundamentally it has to be cost effective for most. There are very few organisations who are willing. 

00:26:04 Speaker 3 

To pay for. 

00:26:04 Speaker 3 

The privilege of being able to be more sustainable, I think. 

00:26:09 Speaker 4 

So you can see that these businesses are making quite important decisions to bring what is effectively new vehicles into their fleet and in doing so, the ice goes out, the EV comes in. I recently got asked a question about how many of the new vehicles coming into the market were being taken by businesses. 

00:26:28 Speaker 4 

And I seem to remember the number was quite high. You know. How long do these businesses hold on to those vehicles? What does this mean for the market? What's the role of businesses in purchasing new electric vehicles? 

00:26:39 Speaker 3 

So typically business related new vehicle registration, so new car registrations is? 

00:26:46 Speaker 3 

It has always been around about sort of 50 to 60% of all new car registrations have been business related in some format or other and from a van point of view, it's more like 9599%. Virtually all vans are bought by businesses as opposed to sort of a retail purchase. So but then when we look at. 

00:27:05 Speaker 3 

EV, that portion is significantly higher and particularly this year with with the sort of cost of living situation we've had over the past 12 months or so, that's really. 

00:27:15 Speaker 3 

It's really slowed the retail market. The new car retail market for electric cars. So I don't know the exact number, but it's certainly a very high percentage of all the new EV's are are, are, are business related in terms of registrations from a car point of view, cars are typically kept for between 3:00 and 4:00. 

00:27:37 Speaker 3 

From a corporate perspective and a van is probably slightly longer, more like 4 to 5. 

00:27:45 Speaker 3 

So if you think about the fact that actually most EVs have only really sort of come to market since 2020. 

00:27:53 Speaker 3 

And therefore, we're at the back end of 2023, the volume of Eva's that are in the in the market for in the used car market are obviously going to be still relatively low, but they're now starting to ramp up as all those. 

00:28:04 Speaker 3 

First vehicles they came through in 2020 are now starting to sort of filter filter into the market from a van point of view though, there is a there is a sort of slight dilemma about or not dilemma really, but it's there's there's a question about how long do you keep a van for. So typically businesses will keep them for four to five years. 

00:28:25 Speaker 3 

80 to 100,000 miles. And then you get rid of them, and one of the reasons why you get rid of them is because. 

00:28:29 Speaker 3 

Once you hitting that. 

00:28:30 Speaker 3 

80,000 mile mark in a in a diesel vehicle, your maintenance costs really start to ramp up. 

00:28:39 Speaker 3 

That's not the case in principle for EV, is it. Arguably your maintenance costs are pretty much plateaued for the whole time you own it, with the exception of the the the sporadic times that you replace your tires. 

00:28:51 Speaker 3 

UM, and if you work on the base that actually the van, the van TCO, the van total cost of ownership is is a little bit more challenging and and and and to make it cost effective or just to balance it out. So there is an argument to say well actually if? 

00:29:06 Speaker 3 

If you haven't got the same maintenance issues on A6 or A7 year or an 8 year old van as you had on a diesel van and you're struggling to make the total cost of ownership balance again, it's not about saving money. It's just about balancing against your existing diesel vehicles. Well. If you run that electric vehicle for longer, then you're spreading that cost, and actually that's a way to get it to balance. 

00:29:27 Speaker 3 

Yeah. Now that will ultimately. So if that's where the market goes, then that has a knock on effect to the used van market because there is, there's still a large a very large used van market out there because all these vehicles are coming back after four or five years. So there is a risk there that you're second buyers. 

00:29:48 Speaker 3 

Probably your plumbers and your decorators. Your sort of single owner, businesses, independent sort of businesses, they will potentially struggle to access a vehicle if they're in that market in until until longer. So they will be running diesel vans for that that bit longer. 

00:30:05 Speaker 2 

So has this dramatically changed the way you do your job? You've been selling fleets for some period of time. You've been doing the business case for companies for a long time. You work in that industry. So what's different about your day-to-day job now that we're talking EV's? 

00:30:22 Speaker 3 

It's different. There are now some available. So when I first started talking to so, so I don't sell cars or such, I sell the idea of electrification. So I don't physically go and sell. I'm not a not a a car salesperson in that sense. But I work for automotive companies to help sell the idea of decarbonization and electrification. 

00:30:45 Speaker 3 

But when I first started this 17 years ago, if you the the choice of electric vehicles, well, I'm. 

00:30:52 Speaker 3 

Was limited, shall we say so. If you bear in mind the Nissan Leaf, which was arguably the first mainstream family sized car that sort of had a respectable mileage, albeit that realistically was only 50 to 80 miles at best. That was 2010. So I was talking to fleets. 

00:31:13 Speaker 3 

About how to electrify before the Nissan Leaf was launched. So which does make me laugh cause people say, oh, it's really hard to electrify and actually, well, you should have tried having that conversation. 

00:31:23 Speaker 3 

15 years ago, when the infrastructure was barely, barely, barely existed and and and the vehicles didn't exist. So. So the difference has happened. Now is that the vehicles available? 

00:31:34 Speaker 3 

The taxation system in the UK for company cars. 

00:31:38 Speaker 3 

Changed overnight, or rather the the the the incentive that was put in place in 2020 changed overnight. The attitude and the willingness to look at electric vehicles because essentially made it free from a company car tax prospect. So the driver, he was if they were taking a company car. 

00:31:59 Speaker 3 

As an EV in 2020. 

00:32:01 Speaker 3 

They paid 0 tax, which suddenly made it extremely attractive. 

00:32:08 Speaker 3 

You're asking that, Chris. 

00:32:09 Speaker 3 

You're you're, you're. 

00:32:10 

You're poised to. 

00:32:12 Speaker 2 

Yeah. Yeah. So I was about to say something. And so I get the 0 tax and I get it. I I know also even going through the diesel experience living in Europe, that cities were refining what generation diesel you could drive into around the EU. 

00:32:25 Speaker 2 

UM now as we transition to Eva's in the UK, at least have any cities started mandating maybe vans or fleets need to have zero emissions yet is that on the radar or are there legislation proposed to do that in at the city level? 

00:32:41 Speaker 2 

Or the regional level. 

00:32:44 Speaker 3 

It's it's on the radar, but I think it's on a very long distance radar, so we have a thing called the Clean Air Zones, which a number of towns and cities have signed up to, but that essentially from an air quality perspective, the rules around clean air zones are. 

00:33:02 Speaker 3 

In terms of being compliant and not facing a fine, is EUR 6 diesel and EUR 4 for petrol and and now EUR 6 for diesel was. 

00:33:11 Speaker 3 

I think 2015 for cars and 2016 for for vans. So in terms of being mandated, so from a fleet perspective, clean air zones essentially have. 

00:33:22 Speaker 3 

No impact whatsoever now for retail buyers and potentially sort of small businesses, very small businesses that run older vehicles than they are potentially being being impacted. The only place where. 

00:33:40 Speaker 3 

There's a genuine 0 emission zone is in the center of Oxford. It's it's a very small area that was introduced a little while ago to great contentious feedback, but essentially it's it's half a dozen. 

00:33:58 Speaker 3 

Streets right in the center of the center of Oxford. It's taken. 

00:34:03 Speaker 3 

Where are we now, 20/20/23. It's taken so that the clean Air Zone framework, which was the rules that the government set out in terms of the city, wanted to introduce a clean air zone, which I say is all about EUR 6 and EUR 4 that was introduced in 2015. So it's taken years for most. 

00:34:21 Speaker 3 

Local authorities, most towns and cities to actually bring. 

00:34:24 Speaker 3 

Any form of clean air zone which doesn't impact that many people to then take that step to a 0 emission zone is a huge step. And if we think clean air zones are difficult as zero, so CAZ as they call them AA0 emission zone, would be catastrophically difficult to introduce. 

00:34:45 Speaker 3 

On in any sort of large area it will be something they can consider in. Well, I guess it depends on how quickly Eva's Eva's grow in that sense, but inevitably something like that is only ever going to penalise the less well. 

00:35:00 Speaker 3 

So it becomes a real social discrimination piece against. So it's a very difficult, very contentious piece to to go down. So we're not seeing it. So say it it is, it will definitely be on the radar, but it's gonna be definitely a long. 

00:35:11 Speaker 3 

Long distance radar. 

00:35:14 Speaker 4 

So beyond just the cities setting very restrictive zones, what else do you see in the future for Evie? Where do you see this, you know? 

00:35:21 Speaker 4 

If you were to look back in another 17 years time, what kind of things would you be considering in that period happening? 

00:35:29 Speaker 3 

Well, that's a question. Well, all the driving 80s. Yeah, they'll have come normalised finally, which which would be a start. I mean, I mean, even then, 17 years isn't actually that long in the great scheme of things in terms of if you think about the the actual transition because there are only 2 million. 

00:35:47 Speaker 3 

New cars every year. 

00:35:49 Speaker 3 

We're still a long way from being 100% EV of all our new cars, so in 17 years time the actual car park of our 30 million cars will still probably be only just about 50% EV. At that point, I think autonomous. 

00:36:09 Speaker 3 

Is is the real big change player which which EV allows us to do in in a much well more easily way. So that's that's going to grow. I don't think from an EV. 

00:36:18 Speaker 3 

If anything is going to significantly change other than the technology is going to be a world away from what we're looking at today and that's that's again again helps the sort of fleet transition piece because everyone says you know, all the sort of EV anti EV sort of they they they fixate on the. 

00:36:38 Speaker 3 

On the problems that we have today, but if you look back five years, if you look back 10 years, you look at how far we've come and if you then extrapolate that forward 5/10/15 years, the technology that we're looking at today and what it's capable of and the energy density of batteries. 

00:36:54 Speaker 3 

You know the the batteries in 20-30 are not going to be the same batteries that we've got today. They're going to be completely different made out of. 

00:37:01 Speaker 3 

Different materials will. 

00:37:03 Speaker 3 

We still, you know, in 17 years time, will we still be using lithium ion batteries and we ask questionable, you know, will we, will we be going down sodium ion or something else so which all start to if they can make. 

00:37:15 Speaker 3 

Those those technologies cost effective and then it starts to transform the transition piece for, for for business and and for individuals because. 

00:37:24 Speaker 3 

A key bit about some of that development is about bringing prices down and making it more cost effective and more, more affordable for for all. So that's that will be the big change around users, just battery chemistry and technology. 

00:37:36 Speaker 4 

I love. I love your answer to this question because you started by saying 17 years wasn't that long, and then you gave us a list of all the things that could change in that period. And it does actually make you think that the rate of transition is quite impressive. You've taken us on a cool journey through some of the subsidies, tax incentives, definition of fleet. I loved your point about. 

00:37:55 Speaker 4 

Businesses potentially being paralyzed by the scale of the problem, and therefore their ability to start small. So I'd like to say thank you very much for taking the time to talk to us today. It's been fabulous to go on this journey with you. 

00:38:07 Speaker 3 

Thank you. It's been fun. 

00:38:09 Speaker 2 

For our audience, we hope you've enjoyed this interview with David. It's been a fantastic conversation. Don't forget to follow us. Check this out on YouTube and we'll see you again next time on the insiders guide to Energy EV series. Bye bye for now.