20 Jun 22

“Early adopters are promoting the transition to a green fleet”

The road to sustainability includes many milestones, but it appears changing the mindset is vital for the transition to electrification. Emin Guluyev, the Global Category Manager of Fleet at Vodafone Procurement Company, manages a fleet of 11,000 vehicles in 13 countries. Guluyev says early adopters are crucial in turning a fleet green as Vodafone has already transitioned 30% of its fleet to EVs in Europe.

Could you briefly tell us about your role at Vodafone? 

Vodafone Procurement Company is the central procurement entity of Vodafone in Luxembourg. We initiate and drive the main procurement strategies and execute global deals. I collaborate with local supply chain, fleet, and property managers. Our fleet mainly consists of passenger cars with limited vans, and our business model is primarily based on leasing rather than purchasing.

How many electric vehicles do you have in your fleet (including PHEV and BEV)?

Across European markets, we have around 3,000 EVs which make up more than 30% of the regional fleet. Germany, the UK, Spain, Greece, and Luxembourg have a higher portion of green vehicles in the fleet. In most of the markets, the decision-makers were early adopters, and being role models, they helped promote the green fleet.

Has your car policy changed during the pandemic and the chip shortage?

The pandemic and global supply issues impacted our fleet management approach. We started to review the required mileage for new orders as we drove less due to Covid restrictions. On the other hand, we had to extend some existing leasing contracts due to a longer lead time for new cars. However, sustainability became even more critical with all these challenges.

We have reviewed our global and local policies to be aligned with this Net Zero strategy. We have a strict limit of CO2 per car order, which was reduced further recently. Our management team in Luxembourg decided to be one step ahead by excluding any ICEs (internal combustion engines) from the car list as of 2021. Now, employees can order only EV (PHEV and BEV) models. Based on my knowledge, Vodafone was the first company to make this unique step toward a future in Luxembourg.

What are the main challenges you’re facing in the process of electrification?

Internal and external factors impact the possibility and speed of our green fleet transition. Charging infrastructure is one of the dependencies during the transition. The number of public chargers is inconsistent across Europe; we still face coverage issues in countries such as the Czech Republic, Romania, Hungary, Portugal, and Italy. Now charging station business has become attractive for private companies due to high demand. Hence the industry is growing rapidly. Fuel companies, car manufacturers, energy providers, and lease suppliers have started to build their solutions, investing in R&D and proposing a bulk service to green fleet owners.

Charging speed is also another area for improvement. Our commercial team cannot wait for charging while the corporate client is also waiting or there is an urgent trip to a radio base station needed. However, fast chargers are becoming commonplace for charging. And while we have this interview, Volkswagen and Volvo are testing wireless charging. Car manufacturers are working on battery range to reach higher mileage. So I am positive for the near future.

What steps do you take to face these challenges, including charging infrastructure, costs and driver behaviour?

To simplify the charging process and invoice, we also install EV chargers at the company parking lot. Demand planning for office charging requires assessing various elements such as future EV ordering plan, hybrid working, usage management, energy capacity, etc. Due to the hybrid working at Vodafone, there is no need to install many chargers. We are working with lease suppliers in some countries to bundle services, including home chargers.

Another important challenge is the total cost of ownership (TCO): EV prices are still obviously higher than ICE alternatives due to production costs. We expect car manufacturers to reach the break-even point by 2025. The other main ingredients of TCO are government incentives taxes, and energy prices. The majority of European countries provide strong EV subsidies, as well as company and employee tax benefits. Across the Vodafone markets, the UK government offers the best conditions for EV owners, followed by Germany, Luxembourg, Spain, and Italy. The rest are at the development stage. We are working on savings opportunities to minimise the cost impact of transition.

Change Management is also crucial; the green fleet is a new culture; it requires changing mindset, driving behaviour and other aspects. Due to sustainability being the core of our mission, we had a lot of early adopters rather than challengers.

What are the main differences between the countries you operate in, and what local strategies do you follow?

Each country is indeed unique, with challenges and opportunities. For example, there is a subsidy for PHEV/BEV purchases in Romania and Portugal. However, each lease supplier has a very limited threshold; if we order around 300 cars, we can get a subsidy for a maximum of three units. While in Germany, the amount is provided for all car orders.

The limited number of chargers in Eastern and South Europe imposes some risk on operations. Sometimes leaves us driving PHEVs on a petrol basis; this results in higher CO2 and fuel consumption which is not aligned with the target. There are great tax benefits for EV users in the UK; now, we are launching the ‘Salary Sacrifice’ project where employees can lease private cars and benefit from reduced taxes at Vodafone leasing rates.

How do you form your relations with your suppliers, especially in reducing lead times?

Delivery times got extended during the Covid period, and neither manufacturers and lease companies nor we were prepared for it. Initially, some internal colleagues expected us to open a legal dispute with car manufacturers for the delay. However, we kept the partner relations with OEMs as this was out of their control and responsibility. The delivery ranges were extended due to supply issues and increasing inflation. As 80% of our fleet is dedicated to commercial & operations, any delay in delivery would cause serious disruptions. To prevent the potential impact, we took two main steps: Firstly, we extended leasing contracts. We have considered the actual mileage of cars in this exercise, and we replaced cars with higher mileage than the group limits with rentals. Secondly, we started tenders at least a year and a half in advance.

Do you apply telematics in your fleet, and to what extent?

We already use telematics in some countries. This year, one of the strategies is to install telematics in all markets. During the green fleet transition, telematics is a must rather than an option; it is an ideal solution that helps improve safety, reduce fleet cost and define eligible cars for electrification. We are working with Vodafone Automotive, which is a leader in this field. There are some challenges in a few markets, such as labour council approval; however, we aim to cover all markets.

What is your policy on driver training and maintaining employee satisfaction?

Driving electric/plug-in hybrid cars requires additional skills such as advanced planning for charging, attention during braking-acceleration, safety awareness, etc. Moreover, a plug-in hybrid car needs to use at least 70% on a battery to achieve optimal CO2 and fuel consumption. Therefore, charging a car must be a new habit for the driver. We are working on a ‘Green Fleet Training’ program to cover all these aspects and help employees have a great EV experience.

Are you adopting or planning to adopt new mobility solutions?

Mobility is the next stage for the traditional fleet. Due to the operational model, we always thought there should be a car dedicated to everyone. But this approach is already changing; we replaced some dedicated cars with pool cars in some markets. Now we consider using car-sharing platforms in a few markets to observe the benefits and challenges. Rental providers are our partners for a while for short business trips. We might consider e-bikes and e-scooters to be part of our journey.

What are your electrification strategy and decarbonisation goals?

Vodafone is committed to achieving the Net Zero target by 2030 for its operations as part of our global Planet strategy. We are keen to contribute to sustainability in all our business cycles; we reduced the size of sim cards to save c. 1.8 tons of CO2, and now the sim cards are made from 100% recycled plastic. Vodafone’s entire European operations are already 100% powered by electricity from renewables.

We work with customers to switch to e-billing, eliminate paper invoices, etc. And the fleet is a critical part of the decarbonisation project. We started the green fleet transition already a year ago. In 2020, we renewed 36% of our fleet upon expiry; 60% of c. 3500 car orders were EV(PHEV or BEV). The average CO2 of orders was 70 g/km, which was a great step further. Accelerating the transition with electric vehicles is the top priority mission for our fleet.

Authored by: Mufit Yilmaz Gokmen