FSGB chief cautions against an ‘electric revolution’ for fleets in 2020

Pundits across the global motor industry are championing electric vehicles claiming that 2020 will be a watershed year for plug-in technology.

But, Geoffrey Bray, executive chairman of Fleet Service Great Britain, believes that amid continuing political and economic uncertainty, fleets will be reluctant to ditch established petrol and diesel powertrains.

Below, he outlines his 2020 thoughts on the internal combustion engine versus plug-in vehicle debate. 

“Fleet operations are invariably the second largest figure in the expenditure column – after employees – for many business.

“What’s more in times of uncertainty – and that will continue in 2020 as the issues surrounding the country, notably Brexit, will not be resolved overnight by the newly elected Government – boards of directors invariably maintain the status quo.

“Pundits across the UK fleet market are championing 2020 as a potential watershed for plug-in vehicles with demand soaring, particularly due to company car benefit-in-kind tax rates on 100% zero emission models falling from 16% to 0% in 2020/21 and then rising to just 1% and 2% respectively in the following two financial years.

“However, despite politicians talking about a ‘climate emergency’, the challenges facing the UK are so enormous that it would take a brave fleet decision-maker and board of directors to plunge headlong into embracing plug-in vehicles.

“The electric vehicle market is embryonic. That is, in part, due to limited model ranges and lengthy manufacturer lead times for those that are available. However, it is often forgotten that electric vehicle battery technology is continuing to evolve and that means vehicle range is improving all the time.

“When businesses make significant investments they do so having, invariably, undertaken a root and branch review and concluded any risk is extremely limited and outweighed by the benefits. This is what pundits are forgetting in their rush to encourage fleets to embrace the electric vehicle revolution.

“The ‘big issue’ for me is residual value uncertainty. In recent years we have seen prices for used electric cars improve. But as new and facelifted models with enhanced batteries and therefore a higher mileage range are launched, residual values on ‘old’ models will plummet.

“In turn that means outright purchase fleets are exposed to a lower than forecast return on their investment. Similarly, contract hire and leasing companies will be just as exposed but are likely to turn to so-called ‘rate creep’ over a period of time in respect of monthly rentals to reduce their cash losses.

“As a businessman of almost 60 years standing – and still learning – the natural inclination amid times of uncertainty is caution.

“There remains other unanswered questions around electric vehicles – chargepoint infrastructure and multiple payment methods are two – so with residual values and therefore whole life cost uncertainty those chasing the electric dream in 2020 are likely to be disappointed.

“Conventional petrol and diesel vehicles will still enjoy dominance in 2020 compared to electric vehicles, in my opinion.”

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