Companies have up to three years to substantially transition their fleet operations to low carbon or risk reputational damage in the wake of COP26 pledges, according to a new report from PwC: Fleets ahead! Emerging pathways to decarbonise UK fleets.
The transport sector is responsible for around 30% of the UK's total emissions. Of that transport share, 90% of emissions1 are generated by taxis, cars, heavy goods vehicles and vans, with over six million commercial vehicles contributing to this. As more and more companies announce net zero pledges after COP26, decarbonising vehicle fleets is a critical component in achieving their goals.
The report forecasts that the cost of commercial electric vehicles will be on equal footing with their petrol and diesel counterparts (internal combustion engine - ICE) by 2024. It suggests that while those who act too quickly might miss out on cost savings, the greater risk is for those who act too slowly in an increasingly emissions-conscious market, as they could be judged harshly by consumers who have made the transition to electric themselves.
While some fleet managers are following a decarbonisation pathway, with our research revealing how they are meeting critical milestones, many are not following a structured approach. This is slowing down the decarbonisation process and sometimes causing unnecessary complications.
But achieving this won’t be easy unless choice and capacity of commercial EVs and charging options accelerate to meet demand, as Matt Alabaster, PwC Strategy& partner and co-author of Fleets Ahead, explains.
“As soon as electric vehicles cost the same as their ICE equivalents, electric will be the default choice for consumers. 2024 will likely mark the point at which electric fleets cease to be brand enhancing for the companies that run them. Companies that are still operating ICE vehicles after that point risk damaging their brand: seeing a diesel delivery van running its engine outside your home will cause the same reaction as seeing someone smoking in a bar.
“Electrifying your vehicle fleet is not just about buying the vehicles - it requires new thinking about energy procurement, about how to access the charging infrastructure needed, and about what skills and capabilities you need to manage and operate the fleet.”
The report outlines a number of focus areas that could define the future of the market:
Public charging provision - Councils should be mandated by the government to do more to accelerate EV charging provision in public spaces, a move that could create a major opportunity for public-private sector collaboration. 66% of those organisations interviewed for the report believe councils have a critical role to play in driving this transition with almost half of fleet drivers stating they have no charging facilities at home.
Alliances to accelerate the decarbonisation pathway - The report suggests that emerging alliances such as EV1002 with original equipment manufacturers (OEMs) could not only better inform them of industry requirements but create opportunities to co-develop new vehicles.
Addressing choice and capacity - despite there being over 4.6m vans on the road, of which c.3.5m are in fleets, the options available to fleet managers still remain two to three years behind that of the consumer car market. For example, there are only 20 light commercial electric vehicles on the market compared to over 9o EV options for consumers. EV vans currently on the market don’t cater for the full range of performance parameters that fleet operators require with many having to weigh up the trade-off between payload and range. In addition, current charging infrastructure is not designed for larger electric vans, making on-street charging more difficult.
Complex decarbonisation pathway for fleet managers - issues in transitioning to an electric fleet include not only procuring electric vehicles, but also securing access to charging infrastructure, increased power consumption, encouraging staff to adopt/embrace EVs and modifying route networks to adapt to EV performance parameters. Running an electric fleet will also have implications for how and where servicing would be done.
Tackling the difficulties in decarbonising heavy transport - options for decarbonising heavy vehicles are even less developed, with no commonly agreed pathway. While hydrogen is seen as a long term solution, the lack of refueling options across the UK and the lack of low carbon hydrogen supply creates a barrier to adoption. Biogas is seen as an interim solution but again, infrastructure and manufacturing capacity and range of vehicles available to the industry is key.
As Governments globally align around EVs, promoting policies to enable charging, the UK is seen as a positive force for change. But this is at odds with the sanguine outlook for fleet charging by charge point manufacturers, who believe a ‘hearts and minds’ battle is still underway with fleets. They believe there is an ongoing need to educate businesses on the challenges and opportunities in decarbonisation.
According to Adrian del Maestro, PwC Strategy& Director and co-author of Fleets Ahead, both the UK and local government have a critical role to play as a catalyst for change in the rollout of EV and hydrogen infrastructure and as a positive influence in the commercial sector's decarbonisation journey.
“While local councils have been identified as a major catalyst given their access to land, everyone recognises the financial constraints they face as well as the lack of technical specialism in charging.
“Ultimately they do not have statutory obligations to deploy charging solutions, a move that could be a game changer in accelerating EV adoption. This is where a clear UK government policy could act as a major catalyst for change, boosting investment and accelerating the provision of much needed infrastructure.
“The UK government is already leading the way in accelerating adoption of EVs. It now has the opportunity to encourage local authorities to pioneer public charging solutions in association with the private sector. This will fastrack the EV revolution.”
Notes to editors - PwC interviewed 40 organisations from fleet owners and infrastructure providers to investors. The report can be found via (insert link)
Transport and environment statistics 2021 annual report, May 2021
EV100 is a global initiative bringing together companies committed to switching their fleets to electric vehicles and installing charging infrastructure for employees and customers by 2030.
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