28 Nov 23

“Faster electrification? Give us cheaper EVs”

Save the best for last: the traditional CEO debate closed the Fleet Europe Conference, on the second of the two Fleet Europe Days last week in Lisbon. Lots of familiar faces, one new function: Tim Albertsen no longer represents ALD, but now heads Ayvens, the merger of ALD and LeasePlan. 

That new market reality was the first topic up for discussion. Would Arval, as CEO Alain Van Groenendael had cheekily predicted, be stealing customers from the new giant, too busy with integration issues to tend the shop? “Let’s say the merger has been helping us a little bit, but not too much”, said Bart Beckers, CCO of Arval (filling in for his CEO).

Consolidation continues

“It was kind of Alain to offer to help us out, but there’s no need”, grinned Albertsen. “By the way, our customer satisfaction rating has recently gone up by 4%, so we’re actually doing quite well on that front.”

Ayvens is a sign of things to come, said Markus Deusing, CEO of Alphabet: “Consolidation will continue in the future. How many big leasing companies will there be? Definitely more than three. There’s plenty of growth potential left in the market. So you’ll always have four or five big ones to fill the chairs of this debate.”

Could consolidation create the economies of scale that deliver cheaper products, moderator Steven Schoefs asked of Christian Schüler, CEO of Athlon. "Pricing is always a hot topic, so it is a relevant question. But all the costs are under pressure from inflation. I think the ambition will be to offer more products and services that help to reduce costs, such as flexible products, second-life leases or even downsizing."

Residual values

Digitisation will help, and also the fact that EVs have now become a ‘normal’ part of the product cycle. “When EVs were introduced, the big question was: How do we set the residual values for this new type of vehicle? I won’t say we used a crystal ball, but it was very close. Now, however, we have market feedback on the actual values of used EVs.”

Standing room only at the back of the auditorium in the Lisbon Congress Centre. 

“EVs are also perfect for use in a second life cycle”, Tim Albertsen chimed in. “Last year we had 60,000 second-life leases – not just EVs, mind you. But a second-life EV lease is a good way to get into electric mobility.”

Staying with EVs, Steven Schoefs wanted to know how lease companies dealt with the variable pricing initiated by Tesla early this year. “In the leasing business, we don’t like unexpected things,” said Bart Beckers. “It’s not that we mind EV prices going down, but we do like predictability. Now, because they are still new, we set residual values for EVs quite low, so we won’t be affected too much by these price drops.”

According to Markus Deusing, the tipping point when EV sales will overtake ICEs is fast approaching: “My guess is 2025 or 2026. Will it then become risky to have a lot of ICEs in your portfolio? I don’t think so. There will still be a lot of opportunities for cross-border remarketing. 

Flexible and affordable

“In the Netherlands, we have almost 50% EVs in our orders”, said Christian Schüler. “So you can really feel the different market reality. But electrification is a transition that is not happening from one day to the next. It will take a lot longer in some countries.”

“We currently have about 14% EVs in our global portfolio, of which 10 to 11% EVs. The only way to ramp that figure up is to remove barriers for the customer,” said Rolando D’Arco, CEO of Leasys. “We do this in two key ways: by offering solutions that are flexible – the customer can quit EVs any time they want – and affordable.”

Tim Albertsen took issue with a debate earlier that day on the same stage, where Transport & Environment had said lease companies could do much more to electrify their fleets. “34% of our deliveries are electrified, that is well above the EU average. So I think we’re doing an amazing job. We’re being attacked by T&E for being dinosaurs, but they’re barking up the wrong tree. What we need to really speed up electrification, is cheaper EVs, in the 20 to 25 thousand euro range.”

Images: Benjamin Brolet/Fleet Europe

Authored by: Frank Jacobs