Plug-in vehicle growth will drive change in company car policies

October 24, 2016

Companies will need to review their vehicle policies in anticipation of growing driver demand for the introduction of plug-in cars.

David Watts, key solutions manager at leasing giant Arval, says firms will need to review vehicle choice lists and key factors related to their introduction, such as total cost of ownership (TCO), workplace chargin facilities and how vehicles are allocated to job grades.

Although companies may only allow petrol and diesel vehicles currently, this policy will come under pressure as a number of manufacturers launch a wide range of plug-in hybrid (PHEV) and pure electric (EV) vehicles up to 2020 and beyond.

Manufacturers have revealed plans for a growing number of plug-in vehicles including Volkswagen, which expects to develop around 30 new EV models as part of its new ID brand.

Watts said: ‘There is definitely growing interest in plug-in cars, particularly PHEVs, often because drivers incur lower taxes. In some cases, companies are not taking action because it is classed as too difficult. It is not as complex as they think and it is better to plan now so there is plenty of time to review policies and strategies, rather than wait until companies are under pressure to make changes quickly.’

The ‘rapid acceleration’ in model launches will raise awareness among drivers and also senior board members, who will want to understand the TCO benefits of introducing plug-in vehicles and also see a strategy for their implementation.

As a result, fleet managers will need to carry out assessments of TCO for plug-in vehicles by comparing them to petrol and diesel equivalents. This needs to include the impact of incentives, such as government grants and running cost reductions enabled from benefits such as free charging facilities and free parking.

Watts added: ‘As vehicles are typically operated on a three- to four-year cycle, this change is only one replacement cycle away for many companies. A lot is going to happen in the next few years.’

National governments and the EU are working on strategies to encourage take-up of plug-in vehicles including the national roll-out of charging infrastructure and ongoing financial incentives to encourage their use.

Some local authorities that have introduced tolls to enter cities provide discounts for low-emission vehicles while others offer access to bus lanes to reduce journey times.

The challenge for companies is confirming whether the predicted expansion in electric vehicle demand will materialise as sales of plug-in vehicles currently account for only a fraction of the new car market.

By the end of Q2 2016, just over 70,000 plug-in cars had been sold in the EU out of a total car market of nearly 8 million. However, non plug-in hybrid models have generated greater demand as they have been available for longer. By the end of Q2 2016, they accounted for nearly 133,000 new car sales in the EU.

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