2 Oct 19

“Right time” for ALD’s deal with European Bank

“It’s exactly the right time” for ALD’s deal with the European Investment Bank (EIB), says Gilles Momper (pictured), CFO for the mobility solutions provider. As we reported on Monday, the EIB is financing ALD’s clean vehicle transition to the tune of €250 million. Today, Mr Momper explains the why and the how. 

The EIB’s credit envelope – a loan with favourable financial conditions – will help ALD to develop its range of hybrid and full-electric vehicles across its main markets in the EU. It’s the first time ever the EIB has reached a deal of this kind. Why with ALD?

Energy transition
“Three reasons,” says Mr Momper: 

  • “First of all, because we’re the leading full-service leasing company in Europe – and we’re based in Europe.” 
  • “Secondly, because we have a very balanced fleet overall: we have a larger share of our fleet that is leased by SMEs than any other major leasing company.” 
  • “And thirdly, because we are taking major steps in making the energy transition of our fleet, from diesel and petrol to EV and hybrid.”

The combination of those three factors compelled the EIB to undertake this financing deal, as part of its own drive to accelerate the paradigm shift from combustion engines to sustainable powertrains. And the signature under that deal couldn’t have been timed better, says Mr Momper. 

200,000 units
“On the one hand, there’s our own target to grow the number of green vehicles in our fleet from 118,000 at the end of June this year to 200,000 units by the end of 2020,” says Mr Momper. That’s a 70% increase in just 18 months. 

The time is just about ripe for that radical switch, because “on the other hand, from this September through to next year, the OEMs are launching a joint total of more than 100 new green models.” 

Combined with ALD’s own transition ambition and that widening range of model options, the EIB’s credit line will “sustain our initiative to match our efforts to our ambitions and reach that 200,000 target by the end of next year,” forecasts Mr Momper. 

75 g/km
As part of the financing deal between the EIB and ALD, clear criteria were established: only vehicles emitting at most 75 g of CO2/km are eligible for funding. And it’s a concentrated effort, primarily focusing on a limited number of markets: France, Germany, Italy, Spain, Belgium and the Netherlands.

“It’s a combination of ALD’s main markets, and the most advanced markets in terms of electric mobility, where we have an appropriate offer for our customers,” says Mr Momper. “The funding does not apply to markets with less mature demand for electric mobility.”

ALD is ready for a big push towards electrification, according to its Chief Financial Officer. The company’s electric-vehicle programme has recently been substantially overhauled and future-proofed. “Electrification is a complex environment, a combination of many elements. Yes, there are the vehicles themselves. But we’ve also reviewed our offer and launched new products; taken care to provide a bundled offer, for example: combining electric cars with charging points. The EIB funding will sustain that entire electrification offer.”

Positive Impact
It’s no coincidence that EIB picked ALD, reiterates Mr Momper. The company is serious about achieving and maintaining leadership in green mobility in the lease industry. In October of last year, for example, ALD launched the Positive Impact Bond (PIB), specifically aimed to finance the growth of its green fleet – an industry first. 

“Achieving EIB financing to further green our fleet is yet another strong signal to the market that we’re serious about making the transition to clean vehicles – and become lease market leader in green mobility. We’re bound to spend the EIB money within two years, but I’m sure we’ll use the funds well before that deadline,” says Mr Momper.

So, will the credit line from the European Bank help ALD reach its 200,000-unit target well before the end of 2020? “That also depends on the delivery times for electric vehicles. They’re in high demand, and some models in some markets require a wait of up to 60 days...”

Authored by: Frank Jacobs