- Revolution in transport at inflection point, promising huge environmental benefits
- Industry players optimistic about collaborating to turn eMobility into a commercial reality
- Transitioning fleet first will accelerate the electrification and decarbonisation agendas
The electrification of vehicles in the UK is generating significant momentum with policy makers, the automotive and energy sectors and significant numbers of consumers all helping to drive forward the Electric Vehicle (EV) revolution.
But while the environmental benefits are clear, there are also significant commercial rewards for the fastest movers in the evolving eMobility ecosystem.
This is according to a new study from EY and Eurelectric, Accelerating fleet electrification in Europe: When does reinventing the wheel make perfect sense?, that reveals fleet electrification should lead the revolution and will make the biggest and fastest contribution to the decarbonisation of road transport.
The study includes analysis from discussions with industry leaders across automotive, utility, oil and gas, battery manufacturers, fleet management, leasing and charging infrastructure businesses. It collates insights and opinions, identifying key value pools and actions to accelerate and build out eMobility solutions at scale.
David Borland, EY UK & Ireland Automotive Leader, comments: “Electrifying transport is critical for the UK and Europe to meet its tough emissions targets and create a decarbonised future. Transitioning fleet first will pave the way and generate new commercial opportunities, including vehicle-to-grid and electric vehicle charging solutions among others. In order to achieve this, a fleet-centric approach is needed across both government and industry, which aims to remove barriers in areas including common standards and investment.
Maria Bengtsson, EY EV Leader, adds: “Winning customers’ hearts and minds through a greater choice of vehicles and a seamless charging experience is also essential. However, no one sector can drive the transition alone – collaboration between all players in the eMobility ecosystem is critical to achieve success.”
eMobility nears inflection point
In the UK, the government announced that new ICE vehicle sales will be banned by 2030. Regulatory pressure has also increased for road vehicles that are sold today, with new carbon dioxide (CO2) emissions standards for automakers coming into effect across Europe. Meanwhile COVID-19 economic recovery packages largely focus on carbon-neutral and renewable energy solutions, that together have favored the shift to eMobility.
According to the study, in the 11 months to November 2020, a landmark one million vehicle sales in Europe were either pure electric or hybrid models – accounting for one in every 10 passenger cars sold. Across the UK, sales of electric and electric hybrid vehciles are bucking the trend of falling sales. Battery Electric Vehicles ended last year +185% year-on-year sales, with Plug Hybrid Electric Vehicles registering +91%.
Borland continues: “If you consider that this performance occurred during a year that was -29% down on overall passenger car sales, then this is one aspect of the sector to feel genuinely optimistic about. It is clear we are seeing significant shifts in the direction of travel for consumers towards electric vehicles and January saw this trend continue with BEVs increasing 54% and PHEVs 28%.”
This is a significant turning point in moving toward achieving 30%–40% EV sales volume by 2030, putting Europe’s carbon-reduction targets within reach.
Kristian Ruby, Eurelectric Secretary General, says:
“We stand right at the knee of an exponential curve. In the next several years we will experience a turbo evolution in the transport sector. The study shows that electrifying vehicle fleets can create massive benefits both for fleet owners and society at large. Aligning the policy ambitions and commercial opportunities is therefore a must. Targeted policies to push additional demand for electric vehichles as well as a smart strategy for charging infrastructure roll-out will be critical to success.”
The need for speed
How soon countries decarbonize will determine climate, health and environmental outcomes for decades to come. According to the study, transport emissions have been rising for the last 3 years, and a 65% reduction, or 10% year-on-year saving, is needed to achieve Europe’s targeted 55% reduction, compared with 1990 levels.
The study identifies that in order to achieve this ambition, accelerating the pace of transition to fleet electrification is essential. To enable this, policy goals need to align with commercial opportunities around cohesive regulation; new funding models for public and private charging infrastructure; a fresh focus on the end-to-end supply chain; improving consumer confidence by clearer education and communication whilst boosting physical infrastructure; and a seamless digital interface between vehicle and grid.
The fleet sector must electrify first
Europe’s fleet car parc, though relatively small at 63m vehicles (20% of Europe’s total vehicle parc), is disproportionately damaging to the environment according to the study. It accounts for more than 40% of total km traveled and half of total emissions from road transport in Europe. In addition, the lessons learned from accelerating fleet electrification such as the development of sustainable business models that support charging infrastructure investment and integration of smart charging capability, will enable the wider secondary and passenger vehicle market to transition quicker. It therefore makes for the biggest and most impactful test case.
The study highlights four key drivers that will support a fleet first transition:
- Fleets will have to switch to alternative vehicle types over time as CO2 emissions standards restrict non-EV sales.
- Polluting fleet vehicles are banned from more than 300 major European cities and towns that operate low-emission zones. The options are to either pay a penalty or switch to EVs.
- Fleet vehicles tend to travel regular routes and cover a fairly consistent daily distance. They have fixed destinations and stopovers, which can be combined with charging.
- The total cost of ownership of EVs is fast reaching parity with internal combustion engine vehicles. Incentives and grants can bridge the gap, while reduced servicing and maintenance, as well as significant fuel savings, make the economic case for fleet electrification.
An emerging eMobility ecosystem
Bengtsson concludes: “As with other sectors in transformation, a supporting ecosystem has begun to develop to accelerate the eMobility transition. It includes innovative customer solutions and value-added propositions to propel eMobility into mainstream adoption. For example, energy providers are already forming partnerships with charge point operators and leasing companies, and automakers are teaming-up with utilities and setting up their own captive leasing businesses.”
Combinations of new and established players are working collaboratively to earn customers’ trust and enhance their overall experience of eMobility. The study states that significant gains are possible for the earliest adopters. The study also identifies opportunities within the eMobility ecosystem, including network management; EV power and charging solutions; fleet management; vehicle and battery management; battery end-of-life solutions; financing; and data management.