As an established contract hire broker, we strive to offer our clients an extra dimension by maintaining a genuine hunger for the latest developments and knowledge in the automotive space, from legislation and technology to exciting new financial products and, of course, the environment, which currently somewhat dominates – and rightly so.
Our commercial director Craig Davy was invited to the Clean Air Event staged on November 6th as part of a roadshow presented by ALD Automotive, one of the car leasing market’s primary vehicle funders, and is delighted to share his insight with our readers.
A bit of background on the event
Held at the University of the West of England’s Exhibition and Conference Centre, event partners included Chargemaster, Ford and Kia. Talks throughout the day were presented by figures including Robert Llewellyn who is now a prominent green motoring champion, Tom Callow whose impressive automotive career now sees him at BP Chargemaster, plus various other speakers from ALD, the Energy Saving Trust and Lombard, where Craig formerly worked.
ALD’s event in Bristol was based on two premises. Firstly, the Government plans to ban the sale of conventional petrol and diesel vehicles by 2040. Secondly, local authorities across the country are investigating the introduction of Clean Air Zones.
Setting the scene
In 2015, six UK cities including Birmingham, Derby, Leicester and Nottingham were found to have pollution levels that exceeded legally allowable limits, so set about plans and visions to change this. Two years later, the list had grown by twenty-three additional cities, and the number found guilty of excessive air pollution by 2018 has now tipped thirty-three.
The conference was set around Bristol’s vision of a clean air zone but discussed a number of key measures that relate to all towns and cities, with Bolton, Bury and Manchester on Vehicle Consulting’s doorstep all worryingly but unsurprisingly failing air pollution figures.
Local authorities and councils are monitoring which vehicles contribute to poor air quality – and the biggest pollutants are diesel cars, diesel buses and diesel HGVs.
As a morsel of good news for businesses that lease company cars and other vehicles on contract hire, along with their tax-paying drivers, the UK government has now recognised electricity as a fuel, allowing 4ppm.
The cost to life and industry
It’s generally accepted that there are 40,000 deaths each year in the UK which can be attributed to poor air quality, in particular affecting infants, pregnant women, people with underlying health issues, and the elderly, while costing £20bn in lost productivity. Speakers at the ALD event referred to plenty of data showing that the poorest areas of towns experience the worst air quality, but most journeys are ironically started by drivers outside of these areas.
Could there be a conflict of interest?
We appreciate that the government has very specific air pollution figures to meet, such as average CO2 emissions of 95g/km by 2020, but perceive certain conflicts materialising.
The government collects £28bn from fuel duty per annum. Every 1% shift to fully-electric vehicles will cost the exchequer around £300m in lost revenue. VAT on electricity currently sits at 5% whereas fuel attracts 20%. These angles lead to questions over the future of taxation and other financial variables, the government surely not willing or indeed able to lose out in the name of the environment and public health.
The benchmark London Congestion Charge is proving expensive to run, generating £155m in revenue but costing £75m to run, and this is probably the model most cities will use to develop their own clean air systems. There is the possibility that London will expand the area to include either the North Circular or the M25, but we feel they have missed a huge chance by making taxis exempt, however controversial such a move would probably have proven.
Electric vehicles (EVs) and the tech’ behind them
A combustion engine is Victorian engineering in effect, 80% of all energy created getting wasted. There are currently 114,000 EVs registered in the UK, including plug-in hybrid electric vehicles (PHEV). ALD Automotive believes that the largest uptake will be between 2023 and 2027, with a peak in 2025, and while it’s fascinating that Dyson is launching a new electric car, we feel it’s more important that mainstream titan Ford is launching no fewer than fifteen electric models by 2022.
The Hyundai Kona EV starts around £25k, and on show at ALD’s clean air roadshow was a Kia Niro with a 250-300 mile published range. In addition there was a Ford Transit Custom PHEV on display, and although it doesn’t provide a massive range, it has the functionality of a normal Transit Custom.
Electric vehicle charging
There are currently 19,000 public charging points in the UK, all thankfully using the same charging cards, and the conference expects that 80% of all charging will be done at home, with employers providing the infrastructure for charging company cars and vans.
‘Mega charging’ public sites are being developed for the majority of people who won’t be able to charge at home, such as those living in terraced housing, flats, etcetera, and the first one is being opened thirty seconds from the M1 motorway near Milton Keynes.
Much to our blog editor Oliver’s dismay, nobody at the ALD Automotive event believed that wireless charging on/under public roads will actually happen, though. Then again, there could be a reason behind certain voices pouring cold water on wireless under-road charging, like we suspect there is with the scepticism towards hydrogen, which otherwise seems a no-brainer.
Data and telematics
The consensus is that larger fleets will need to employ data analysts and telematics solutions to ensure that the right vehicles legally enter the right areas. For example, fleets with both Euro 5 and Euro 6 HGVs will need to make sure that only the Euro 6 vehicle enters a clean air zone, to avoid the fees. Fleets will have to give more consideration to the type of journeys undertaken, frankly evaluating if they’re necessary, using alternative, greener means of mobility wherever possible, including car-sharing.
The current fleet perspective
For company car fleets, the average cost in terms of P11d has increased by 10.5% over the last three years, and this will continue to rise. Meanwhile, the average price of fuel has risen by almost 25p per litre more in the last two years. The industry experts reckon the threshold is now 20,000MPA where petrol vs. diesel breaks even, whereas a few years back it was 8,000MPA. This shift is due to cheaper vehicles, lease costs, fuel costs and the much-improved efficiency of petrol cars, along with changes in company car tax, benefit in kind (BIK) and national insurance levy.
On a parting note, the ALD event promoted the vision that 50-70% of all vehicles will be ULEV by 2030, which, as a car leasing firm based on the doorstep of Manchester with its undeniably dirty roads, would certainly be a welcome development and one we’ll continue helping our contract hire clients and fleets to work towards.