The opening keynote speaker at the 2019 AfMA Fleet Conference was a late change to the program. Though Johan Verbois from 5S Consulting didn’t disappoint the audience with his conversational style and presentation slides packed full of interesting data from Europe.
Verbois shared the challenges in Europe as governments make legislation that promotes the rapid adoption of electric, or alternative powered vehicles, at the expense of diesel which has been the fuel of choice for fleets and consumers.
Fleet Managers are rushing to implement new fleet policies that cover the selection of non-diesel vehicles and rules for charging plug-in hybrids (or penalties for staff that don’t charge them). Leasing companies are dealing with the decline in used diesel vehicle values as they become unpopular with private buyers.
It’s the environmental goals that are steering government decisions at a rate that is forcing manufacturers to work hard to keep up. European countries have introduced CO2 targets for new vehicle sales and EVs are the option for manufacturers to achieve the targets quickly and avoid the large penalties.
And this quick introduction is causing lots of stress and worry across the European fleet community. Verbois warned Australian Fleet Managers not to worry about the small stuff when it happens here. “Its an evolution. Just like when cars were invented.” He believes the infrastructure will come, and the debate about green or coal powered electricity will sort itself out.
The running costs, or Total Cost of Ownership (TCO), presents a unique set of challenges for EVs in Europe. What works in France doesn’t work in Germany because of different cost structures for road usage and electricity prices.
Maintenance cost curves are changing because there’s no oil or filters. Brakes last longer thanks to regenerative braking though tyres are more expensive. The tyre for an EV is different to a petrol or diesel vehicle. And it’s not just the construction and design to carry the extra weight from the batteries. The sizes are unique with each vehicle because tyres are there to improve the ride quality while decreasing the drag or rolling resistance to increase range. Verbois showed examples where the narrow large diameter tyres being used on EVs can cost 100% more than the traditional fleet tyre sizes.
Verbois believes EVs will eventually win the TCO battle when scale is achieved because purchase prices will come down and reduce the amount of depreciation in a lease.
In a traditional TCO calculation fuel and and depreciation are the two biggest costs for fleets. The cost to power an EV is less than a petrol vehicle which makes depreciation a larger percentage of the total costs. Over time residual values will stablise and EVs will get cheaper to buy. So the depreciation component for an EV will be the same as a petrol model giving EVs a cheaper cost to run and own.
