How can you adapt to meet new electric vehicle targets within the Commercial Vehicles market?

The Commercial Vehicles market is on the precipice of some the most substantial changes the industry has witnessed. Businesses are now entering into the initial stages of adapting their commercial fleets to alternative fuels, in support of zero emission goals. From the types of vehicle fleets available, to the total cost of ownership, the sector must anticipate the changes ahead to adapt to new standards that will soon become a marker of success in the industry. Sales Manager, Scott Barnett, commented:

‘Through our valued LCV partners we are already funding electric vans on both Hire Purchase and Finance Lease. Previously we have seen an increasing demand from larger fleets and we are now seeing much smaller fleets consider the electric options where the requirement fits the infrastructure. We are constantly reviewing the market and the options available so we can remain a funding option for end users looking to shift to alternate fuels.’

 

What environmental targets have been put in place?

In 2030, a ban on production of wholly petrol and diesel vehicles will be enforced [1], with hybrid vehicles due to be phased out shortly after in 2035 [2]. Beyond this, only electric, hydrogen or alternative fuelled vehicles will be permitted. As we approach this point in time, plenty is being done to support this initiative. OEM environmental targets set by the European Union seek to significantly lower emissions and there are CSR/ESG mandates being set by corporations in support of climate change efforts. The introduction of clean air zones will also play a large role in changing the industry infrastructure. Clean air zones are already present in cities such as Bath and Birmingham and are steadily being rolled out across the country.

What EV options are available on the market?

There are multiple manufacturers producing Electric LCV’s within the market today, available in a range of sizes. In order to assess the right type of vehicle for your business, it will be important to evaluate charging speed and payload. The market currently offers a choice between battery electric vehicles (BEV) or plugin hybrid electric vehicles (PHEV). There are benefits to both. BEV’s are often more affordable to run, however, PHEV’s are not reliant on charging infrastructure [3]; which currently is awaiting mass development throughout the UK. A further alternative is HEV (Hydrogen Electric Vehicles) and HFCV’s (Hydrogen Fuel Cell Vehicles), which are currently being trialled in Germany. The key advantage to these vehicles is their fast energising/charging time. The downside resides in the difficulties that are faced in storing hydrogen. The infrastructure will be a challenge to overcome, comparable with the electric charging infrastructure we have in place today.

What is the total cost of ownership?

The benefits of purchasing an EV fleet are already beginning to far outweigh that of their non environmentally friendly alternatives. Petrol and diesel fleets will now be met with high maintenance fees, cost of fuel, and congestion zone charges as time goes on. Any diesel vehicle registered prior to 2010 will also incur diesel tax moving forwards. In contrast, a 130% tax super deduction has been introduced to support the acquisition of Electric Vehicles [4]. Leasing can further support a reduction in total cost of ownership.  When the cost of any vehicle can be spread over a fixed period it enables return on investments to be clearly identified, and investments are not restricted by affordability at the time of purchase. 

How can BNP Paribas Leasing Solutions help?

It’s clear that now is the time to start implementing changes to meet outlined targets set by the government. Communicating with stakeholders, calculating the total cost of ownership and maintenance, as well installing the necessary charging infrastructure are all essential factors to consider ahead of 2030. BNP Paribas Leasing Solutions has been committed to the Commercial Vehicles sector for more than 40 years, supporting customers to make the right long-term decisions for their business by utilising the benefits of asset finance.

[1] https://www.bbc.com/news/science-environment-54981425  BBC, November 2022, Ban on new petrol and diesel cars in UK from 2030 under PM’s green plan

[2] https://www.cnet.com/roadshow/news/uk-gas-hybrid-car-engine-ban-electric-vehicle-2035/#:~:text=UK%20will%20ban%20new%20gasoline%20and%20hybrid%20cars,government%20accelerates%20its%20ban%20from%202040%20to%202035. CNET, February 2020, UK will ban new gasoline and hybrid cars by 2035

[3] https://www.buyacar.co.uk/cars/economical-cars/green-cars/1867/phev-vs-bev-should-i-get-a-plug-in-hybrid-or-electric-car  Buy A Car, February 2022, PHEV vs BEV: should I get a plug-in hybrid or electric car?

[4] https://www.bvrla.co.uk/guidance/tax-vat/130-super-deduction-for-capital-expenditure.html BVRLA, 130% Super Deduction for Capital Expenditure

BNP Paribas Leasing Solutions are not authorised to provide tax advice. Buyers should consult an accountant in order to understand the tax consequences of any investment decision.