Government and vehicle manufacturers are going to have to introduce long-term incentives and price cuts if they hope to create a sustainable market for ultra-low emission vans.
This warning from the British Vehicle Rental and Leasing Association follows a newly published report*, commissioned by the Department for Transport.
Examining the market potential for ultra-low emission van technologies, including pure EV, Plug-in EV and hydrogen fuel-cells, the report from Element Energy concluded that:
- The current cost of ownership for pure electric large vans is more than 50% higher than their diesel-engine equivalents.
- 10% is the maximum cost of ownership premium that van operators are willing to accept – with most unwilling to pay any.
- Using government oil price projections, pure electric vans will still have a 10% cost of ownership premium over diesel in 2030.
- By 2030, hydrogen fuel cell-powered vans are likely to reach cost of ownership parity with diesel vans – but there will be concerns over the level of hydrogen infrastructure.
The report was carried out prior to the introduction of the Plug-in Grant for vans and its cost of ownership calculations also do not take into account incentives such as the London Congestion Charge exemption.
However, the report’s authors warn the government that such incentives will need to be sustained in order to compensate for ultra-low emission van ownership costs remaining so much higher over the long term.
They urge the government to introduce non-financial incentives. These include exclusive access to certain loading bays, extended delivery hours, use of bus lanes and relaxation of driver and vehicle licensing rules to take into account the lower payloads of these vans.
They also suggest that van manufacturers should provide guaranteed buy-backs and fixed-price servicing to help de-risk the investment required to run the vehicles.
“This well-researched report is a massive wake-up call for electric van makers and the government,” said BVRLA chief executive, John Lewis.
“The government has put its money where its mouth is by delivering the Plug-in Van Grant and other tax incentives, but they need to give operators confidence that these will be more than just short-term measures.
“And van makers must join the party. Rather than relying on government grants to discount their vehicles, they need to produce some serious price cuts. Their current business model doesn’t work.”
The BVRLA is urging manufacturers to follow-up on the report’s suggestion that they investigate the business case for bringing more hybrid powertrains to market, particularly for smaller vans, where the economics are much more favourable.
“The vehicle rental and leasing industry is ready and waiting to step in and help create a sustainable market for ultra-low emission vans, but fleets make decisions based on cost more than sentiment.”
Ultra Low Emission Vans study, produced by Element Energy, was published by the Department for Transport on 8th March and can be downloaded at:
About the BVRLA:
The BVRLA is the UK trade body for companies engaged in the leasing and rental of cars and commercial vehicles. Its members provide short-term rental, contract hire and fleet management services to corporate users and consumers. They operate a combined fleet of around 2.5 million cars, vans and trucks, buying hundreds of thousands of vehicles each year. Through its members and their customers, the BVRLA represents the interests of more than two million business car drivers and the millions of people who use a rental vehicle each year. As well as lobbying the government on key issues affecting the sector, the BVRLA regulates its members through a mandatory code of conduct