The UK is striving to meet its most ambitious carbon target yet – reducing greenhouse gas emissions from 1990 levels by 50% by 2027. Recent data suggests that 22% of all domestic carbon emissions in Britain are caused by transport, with a staggering 90% of this coming from our roads.
Approximately half of all new vehicles purchased are bought by fleets, creating a challenge for companies at a time when sustainability and cost reduction are at the forefront of operations. Integrating electric vehicles (EVs) into commercial fleets could be the strategic solution. With advancements in EV technology, evolving customer expectations, and government incentives, integrating EVs offers tangible financial and environmental benefits.
Reduced Operating Costs
One of the key benefits of electric fleets is the potential for reduced operational costs. While they often have higher upfront purchase costs compared to traditional petrol or diesel vehicles, EVs typically have lower costs over time due to several factors, including:
Reduced Fuel Costs: The price per mile for electric vehicles is significantly lower than that of petrol and diesel counterparts, allowing fleet operators to achieve savings of up to 50% or more on fuel costs, particularly when utilising off-peak electricity rates with on-site charging stations.
Minimal Maintenance: EVs have fewer moving parts than internal combustion engine (ICE) vehicles, meaning they generally require less maintenance and fewer repairs. For instance, there is no need for oil changes, transmission services, or exhaust system repairs, leading to reduced costs and downtime.
Cost-Effective Charging Strategies: A study by Schmidt et al. highlights the importance of developing an efficient charging schedule to optimise costs. Companies with on-site charging can utilise off-peak hours when electricity prices are lowest, thus reducing operational expenses over the long term.
Lowered Carbon Emissions and Environmental Benefits
Transitioning to a partially or fully electric fleet offers several environmental benefits, particularly in reducing greenhouse gas emissions. Traditional ICE vehicles release pollutants including carbon dioxide, while EVs produce zero tailpipe emissions. Integrating EVs can help businesses:
Meet Sustainability Goals: Fleet electrification is an effective way to reduce carbon footprints and make significant strides toward sustainability targets. Companies that switch to EVs can achieve notable emissions reductions, contributing to global climate goals and enhancing their brand’s environmental reputation.
Align with Expectations: As awareness of climate change grows, more customers, employees, and investors are considering a company's environmental impact. By electrifying their fleets, companies can meet the expectations of eco-conscious consumers and investors who prefer businesses prioritising sustainability.
Support Environmental Health: Reducing emissions can also help mitigate air pollution in urban areas, fostering healthier environments in the communities where these fleets operate.
Superior Energy Efficiency
EVs are generally more energy-efficient than ICE vehicles, meaning they can convert a greater proportion of their energy into movement.
Efficient Electric Motors: EVs have highly efficient electric motors that waste minimal energy as heat, especially when compared to the inefficiencies of an ICE. This results in lower energy expenditure per mile travelled, reducing fuel costs for fleet operators.
Regenerative Braking: Most EVs are equipped with a regenerative braking system that recaptures energy typically lost during braking and converts it back into stored electricity in the battery. This makes each journey more efficient, extending the distance covered on a single charge and decreasing overall energy demands.
Maximising Energy Use: A study by Schmidt et al. claims that fleet operators benefit from decision-support tools to optimise energy consumption and vehicle range based on real-time data. These strategies allow operators to manage and adjust for maximum efficiency.
Compliance and Incentives
Countries worldwide are increasingly incentivising the transition to EVs through government tax breaks, grants, and other initiatives. Many nations, including the UK, are also mandating the reduction or elimination of ICE vehicles to curb emissions. The UK government plans to ban the sale of new diesel and petrol cars from 2035.
What grants and financial incentives are available?
As of March 2021, the UK Government’s Office for Zero Emissions Vehicles (OZEV) offers several grants relevant to fleets:
Plug-in Car or Van Grant: This grant provides a discount on eligible new ultra-low emission vehicles, paid to manufacturers and dealerships:
Cars: 35% of the purchase price, up to a maximum of £2,500 for vehicles with a retail price below £35,000.
Vans: 35% of the purchase price, up to a maximum of £3,000 for small vans (<2.5 tonnes GVW) and £6,000 for large vans (2.5 to 3.5 tonnes GVW).
Taxis: 20% of the purchase price, up to a maximum of £7,500.
Workplace Charging Scheme: This provides up to 75% of the purchase and installation costs of charge points, capped at £350 per socket, for fleet and staff use, up to 40 sockets per organisation.
EV Homecharge Scheme: This scheme funds up to 75% of the cost of installing charge points at domestic properties, up to £350 per unit (including VAT). Company car and van drivers are eligible for this grant.
In addition, several tax benefits are available for organisations with electric vehicles:
Vehicle Excise Duty (VED): Battery electric vehicles are exempt from road tax and are not subject to the “expensive car” supplement. Plug-in hybrid cars emitting no more than 50g/km CO₂ have reduced rates.
Corporation Tax Liability: From the 2021/22 tax year, businesses can write down 100% of the purchase price for vehicles emitting 0g/km CO₂.
Benefit-in-Kind (BIK): EV drivers pay significantly less company car tax than petrol or diesel vehicle drivers, with a 1% BIK rate for battery electric vehicles in 2021/22 and a 2% rate through 2024/25.
EVs may also receive exemptions from:
Clean Air Zones: Ultra-low emission vehicles are not charged for entering Clean Air Zones or London’s Ultra Low Emission Zone.
London Congestion Charge: In London, Euro 6 compliant vehicles that emit less than 75g/km CO₂ and have a 20-mile zero-emission capable range can apply for a 100% Cleaner Vehicle discount, though this is gradually being phased out.
Compliance with Future Regulations: With many cities and countries enacting stricter emissions standards, electric fleets enable companies to stay ahead of regulatory changes and avoid future penalties or limitations on ICE vehicles. By transitioning early, companies can secure a foothold in an electrifying market while building goodwill with regulators and communities.
Low-Emission Zones (LEZs): Many urban areas are implementing low-emission zones where only EVs or ultra-low-emission vehicles are permitted. Companies operating electric fleets have greater access to these areas, facilitating logistics in densely populated and heavily regulated regions.
Future-Proofing Fleet Operations
Electric vehicle technology is advancing rapidly, with improvements in battery capacity, vehicle range, and charging infrastructure at the forefront. This means that companies investing in electric fleets today can anticipate a future with even greater operational efficiency.
Additional benefits include:
Longer Battery Life and Increased Range: Modern EV batteries last longer and offer greater ranges, reducing “range anxiety” for companies with long-haul transportation needs. As battery technology continues to improve, fleet operators can confidently rely on EVs for a wider variety of applications.
Widespread Charging Infrastructure: Charging networks are expanding across cities and highways, increasing convenience and accessibility for commercial fleets. Many companies are also installing on-site charging stations to ensure their fleets can be charged as needed, further simplifying operations.
Leadership in Sustainability: Companies that adopt EVs early are well-positioned as industry leaders, inspiring other businesses to follow suit. By establishing themselves as pioneers in sustainable logistics and fleet management, they strengthen their market position and gain reputational advantages.
A Guide to Developing an EV Strategy
Research EV Types and Models: Electric vehicles can be an excellent choice for fleets due to their lower running costs and zero tailpipe emissions when driven on electricity. Battery electric vehicles are always powered by electricity; however, plug-in hybrids and extended-range electric vehicles may also be driven by an internal combustion engine, emitting CO2 and other pollutants.
Identify Suitable Mileage Profiles: Understanding how far individual fleet vehicles typically travel daily is crucial in selecting the right EV. In addition to calculating daily average mileage, gather information on journey patterns. Range anxiety remains one of the biggest barriers to EV adoption; however, most recent models have higher ranges, making them suitable for many fleet journeys.
Consider Charging Requirements: Assess on-site charging points, the type of charging required, charging times, smart charging options, electricity grid connections, and public charging infrastructure. These factors will impact how you charge your electric vehicles early in your decision-making process, ensuring they fully meet business needs while being convenient and cost-effective to operate.
Build the Business Case: One of the most critical aspects of building a business case is considering the purchase price in comparison to the whole-life cost (WLC). Although EVs may have higher upfront costs than their petrol or diesel equivalents, analysing the WLC often shows that these costs are offset by:
Lower electricity costs compared to petrol or diesel. For instance, a Vauxhall Corsa-e typically costs £2.70 to travel 100 miles, while a petrol Corsa costs £9.50 for the same distance.
Lower servicing and maintenance costs due to fewer service requirements, including oils and filters, and regenerative braking, which reduces brake wear and tear.
Additional incentives, such as various government grants and tax breaks.
It's important for EVs to be driven sufficient miles to ensure that the increased lease or purchase cost is more than recouped through running cost savings. EVs become more cost-effective with higher mileage.
Engage with Your Drivers: To ensure a smooth transition to EVs, engaging with your drivers is essential. Update your organisation's policies to clearly outline expectations and benefits, produce communications to dispel misconceptions about EV use, and provide training to familiarise drivers with the vehicles prior to launch.
Monitor and Share Your Success: Collect and analyse data on EV performance, including mileage, electricity consumption, driver feedback, and servicing costs. This data will help predict savings and refine your approach for better efficiency moving forward.
Common EV Questions
What about the carbon emissions from generating electricity?
With the UK’s current energy mix, carbon dioxide is emitted during electricity generation, but even when recharging from the national grid, the emissions per mile for an electric car are much lower (by approximately two-thirds) than those for a comparable petrol car. In 2019, wind, solar, and nuclear energy provided 43% of the UK’s energy. As renewable energy generation increases, the whole-life emissions of EVs will continue to fall. For further information, see Carbon Brief’s Factcheck: How electric vehicles help to tackle climate change.
How long do batteries last?
The lifespan of an EV battery depends on factors such as battery type and mileage. Most manufacturers offer a five to eight-year warranty, but anecdotal evidence suggests that batteries may last longer, and various studies are ongoing regarding degradation over time. Battery technology and performance continue to improve. Additionally, vehicle batteries can be repurposed when they no longer meet high performance standards, such as for street lights or energy storage solutions with solar panels. Many efforts are underway to ensure that large volumes of batteries can be efficiently recycled once they reach end-of-life, as seen in projects like The Faraday Institute’s ReLiB project.
How sustainable are batteries?
EV batteries are typically lithium-ion and often contain cobalt and nickel. The growing demand for these materials has raised concerns about mining impacts, including environmental footprints and child labour issues. EV battery recycling is expanding and will help reduce reliance on newly mined materials. Although analysing the environmental impact of EV batteries is challenging, the non-profit Transport & Environment has developed a tool showing that electric cars in the UK produce about a third of the CO₂ emissions of a diesel car over the vehicle’s lifetime, even accounting for electricity generation, car production, and battery production. EVs reduce emissions in almost all regions, even with the current carbon intensity of electricity generation.
EV Fleets in Use
The Department for Transport provides case studies such as that of Galliford Try, one of the UK’s largest construction companies, which operates a fleet of 1,100 vehicles, including 91 electric and 96 plug-in hybrid vehicles as of April 2020, making up 17% of their fleet. They also have 100 hybrid vehicles, which helped reduce their fleet CO₂ emissions from 125g/km in 2012 to 91g/km in 2020.
Galliford Try adopted a whole-life cost approach to selecting vehicles, highlighting the cost-effectiveness of ultra-low emission vehicles (ULEVs) and reducing the company’s and drivers’ BIK tax bills. This approach led to nearly 50% of employees choosing ULEVs over petrol or diesel vehicles.
To further incentivise efficient use of PHEVs, Galliford Try does not provide a fuel card with these vehicles, encouraging staff to use charge points. They also offer a reduced business mileage reimbursement rate for PHEV petrol or diesel miles to promote charging. As next steps, Galliford Try is adding more ULEV models to its company car list and has ordered 45 EVs and 54 PHEVs and hybrid vehicles, targeting employees who travel less than 150 miles daily to promote ULEVs.
The integration of electric vehicles into commercial fleets is not only an environmentally conscious choice but also a sound business strategy that reduces costs, enhances efficiency, and ensures regulatory compliance. Insights from Transportation Research Part D underscore the viability of EVs for commercial applications, providing companies with a practical roadmap for fleet electrification that aligns with broader sustainability goals.
As electric vehicle technology advances and more businesses embrace electrification, the benefits of reduced emissions, lower operating costs, and enhanced energy efficiency will continue to grow. By switching to EVs, fleet operators can contribute to a cleaner future while reaping substantial financial and operational rewards, making electric fleet integration a win-win solution for businesses and the planet alike.