Interviews
26 juin 23

Ethias Lease: “Electrifying without stress”

“Vehicle leasing is a very difficult market to break into – unless you do it at the right moment, with a totally different customer proposition”. So says Erwin Ollivier, who was instrumental in launching Ethias Lease, a brand new player on the Belgian lease market. It promises a leasing experience that is simple, integrated, and close to the customer. Oh, and 100% electric. 

Erwin Ollivier (pictured above) currently is Strategy & Change consultant at Belgian insurer Ethias. Previously, he was General Manager at Athlon Belgium, so he is intimately familiar with the Belgian vehicle leasing landscape.  

Ethias is an insurer. Vehicle leasing is not your core business. So, why Ethias Lease?

“On the face of it, you’re right. All major leasing companies are owned by either banks or OEMs. But there is an overlap between insurance and vehicle leasing. The essence of the craft that is vehicle leasing is not buying the assets or managing them: it’s risk management. That’s very similar to insurance. Insurers must find out whether there is a risk. If there is, that will lead to cost. Lessors already know there will be a cost. They just need to predict how high that cost will be via, amongst others, residual value management.”

“There is another motivation. Ethias is very disappointed with the vehicle leasing industry. Everything to do with automotive is transitioning to electric mobility. We feel we never get the answers on electrification that we need from the leasing providers. That’s why we thought: Why don’t we deliver the answers we want and the service that goes with it to the market ourselves?

“Finally, there’s a business motivation. The share of leased vehicles in the total Belgian market is growing while the fleet of privately owned vehicles is shrinking – and with it the market for private vehicle insurance. By offering an all-in B2B vehicle leasing product, Ethias can compensate for that shrinkage. It also allows us to gain data and insights on new trends, like electrification, and how they impact the potential risk and cost evolution for an insurer, as the leasing market  is always ahead of the private vehicle market.”

I’m struck by the disappointment that you mentioned. Sometimes it feels like electrification is all everyone talks about. How then is it that finding the right answers is so difficult?

“As customer, it has become very hard to see the forest for the trees. There are so many offers out there – but many are commercial partnerships: the leasing company will provide you with the EVs. However, for charging infrastructure, please contact this or that party.”

“Additionally, the end user is often completely lost, especially in this transformation phase towards electrification. Those who already drive full-electric now were the innovators and early adopters. They are interested in and passionate about EVs. For them, exploring the potential of EVs is a exciting journey. But now in Belgium, all company car users will need to switch to EVs at their next order. That includes the laggards, and yes, even the plain opponents of electric cars. If they can find answers to their questions and doubts, the wording is often too technical. So what happens? They bombard their HR or Fleet Manager with questions.”

Fair enough if you want to solve that issue. But does that mean there’s room for another leasing company in a market as mature as Belgium?

“Belgium indeed is a very mature, and a very consolidated market. There are only about 12 to 18 players – or just 12, if you look at the back office. In the Netherlands, there are about 40 to 45 players, so there’s a lot more variety there.”

“It is exactly this consolidation on the Belgian market that creates an opportunity. The larger the leasing companies, the less differentiation there is in the product, and the less personal the contact with the customers. Now, Belgium is very much an economy dominated by SMEs. For companies of that size, having to deal with a huge multinational fleet supplier often feels like a disadvantage rather than an advantage.”

“That’s where a smaller player like Ethias Lease comes in. Of course we welcome all customers to our B2B product, but our main focus are fleets in the 20 to 200 vehicle range. Typically, those are fleets without a full-time fleet manager. It is precisely that market segment we want to help, by taking away the burden caused by electrification.”

(Picture: on the left, Julien Balistreri, Chief People & Organisation Officer - Deputy CEO Ethias & President Ethias Lease Corporation & on the right Erwin Ollivier, Strategy & Change Consultant Ethias)

By 2027, you want to have a fleet of 8,000 vehicles, and 6,000 home chargers. How do you want to grow? By being cheaper than the big ones? 

“Our ambition is not to be the cheapest, but to offer the best value for money. We can do this by offering a different customer proposition. For example, most vehicle leases in Belgium have a four-year runtime. This is purely for historical reasons. We’re challenging that model by offering a six-year lease. That’s better tailored to EVs, because the batteries typically have warranties of around  seven to eight years. That gives us a longer period in which to write off the vehicle, and that will allow us to offer lower leasing fees.”

That makes sense – except that with longer leases, the risk of lower residual values also increases.

“This is where the risk assessment expertise of Santander comes in. Leasing companies have a conservative approach to risks that are outside their comfort zone… and their comfort zone is the four-year horizon. Ethias Lease is strongly convinced that stretching the term does not dramtically increase the RV risk. Yes, we’re aware that battery technology is evolving at a fast pace. But at the same time, we see that it’s evolving rather than radically changing. Solid-state batteries will happen, but it will take plenty of time. And different battery types - lithium-ion and lithium-iron - can exist next to each other, each with their advantages and disadvantages.”

“Plus, we’re still only at the beginning of the electrification of the private market. Throughout the next 15 to 20 years, there’ll be a huge demand for used EVs, provided of course they come with a certificate on the battery’s state of health.” 

Ethias Lease is a collaboration between Ethias and Santander. What are they bringing to the table?

“They are our backoffice partner. Ethias will be doing all the customer-facing activities, while they will be providing the right systems to deal with all the operational needs. For Santander, this kind of partnership is core business. What brought Santander and us together on this project, is our joint desire to take the challenge of electrification and to deal with it in a disruptive and innovative manner. One of Ethias’  core values is to put the human being at the centre of our thinking. Hence also our attention for the driver, as well as for the fleet manager.”

Explain.

“We’re only offering BEVs – no PHEVs or mild hybrids. That’s not just because hybrids are no longer fiscally interesting in Belgium. We also believe pure electric vehicles are the future and better for the environment.”

“At the same time, we realise that going totally electric requires a massive shift in user habits. Basically, if you move from ICE to EV, you need to adopt a whole new philosophy of mobility. It is our ambition to explain to the end user – the driver – what is going to happen when they make that change, and to do so in very plain language. For example: which options should you choose on your new EV? What kind of tires? All these choices are much more relevant with EVs than with ICEs. We’re here to help you with the choices to be made.”

As part of your all-in approach, you also offer subscriptions to home charging stations. How does that work?

“The easiest way to think about that is to consider that you’re leasing a home charging station from us. Today, there is no clarity about what happens to most home chargers installed by lease companies. Often, the driver ends up owning the charge point. But who is responsible for updating and innovating? Who bears the cost in case of defect or damage? Is it the driver? Their company? The lessor? The charge point provider? Everybody has a different answer. Our solution couldn’t be simpler. You subscribe to our service, which includes updating, upgrading, maintenance. At the end of the lifetime of the charging point we just replace it by a new unit. No hassle!”

Another issue where you want to make a difference is cost transparency. How? 

“We want to end the practice of recalculating lease contracts. Currently, about 90% of Belgian corporate fleets have their deals recalculated during their term. And that’s when a lot of customers lose sight and control over the total cost of their fleet. Our alternative: the contract remains fixed and once a year we credit or debit the difference in mileage. No magic, no distrust, but full transparency and easy to check with the initial contract.”

Is this disruptive and innovative model something you would like to replicate in other markets?

“Ethias is a Belgian company with a mission for the Belgian market. Also Ethias Lease will focus on the market we know best, our Belgian home market. But it’s true that the conditions that sparked our entry into the vehicle leasing market exist in other countries as well: the consolidation of the market players, and the resulting distance to a certain segment of customers; electrification, and the lack of attention to the resulting needs of fleet managers and end users. Santander, for its part, is very excited about this project. We’re staying in Belgium, but who knows, they might take this formula up in other countries as well.”
 

Picutres : Ethias 

Authored by: Frank Jacobs
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