COVID-19: Arval still believes in EV - and here are 5 reasons why
In its recent whitepaper Fast forward to Electric Vehicles, Arval highlights five key factors that will accelerate the shift to electrified vehicles as of 2020.
The document – a must-read for every fleet manager looking for a comprehensive, well documented set of arguments as well as a roadmap to switch from ICE to EV – was published before COVID-19 had made its mark on society and the economy.
Do the five factors mentioned in this document still hold water, considering the short- and mid-term outlook in new vehicle sales and the economic recession, or should we prepare for a prolonged life in the ICE age?
Fleet Europe asked Arval’s International Consulting Director, Shams-Dine El Mouden (pictured), to take us through them one by one.
1. European legislation. Today, it is very much in favour of plug-in hybrids and BEVs, pushing OEMs to launch them by the dozens. With many OEMs saying the current CO2 goals are too tight given COVID-19, won’t Europe relax the targets?
“It’s a mixed picture. On the one hand, there is no denying that production and supply of new vehicles and parts is disrupted. On the other, we mustn’t forget that the CO2 targets have been set years ago. OEMs have long been preparing the ramp up of BEVs and PHEVs, so not all of them will have difficulty in complying, even this year. Still, in this moment it would be surprising to see the EU imposing fines in 2021 for carmakers that fail to hit the target. What is more likely to happen, is that the EU will postpone the target into 2021.”
2. ICE vehicles will become more expensive, BEVs ever cheaper. Combustion engines have to comply with ever stricter emission standards, while battery cell prices are dropping. In many cases, the TCO is already in favour of EVs today. Does that still hold true now that oil prices have fallen dramatically and emission regulations might be relaxed?
“Fuel indeed represents a large piece of the TCO pie. Now that oil prices have fallen dramatically, EVs might lose part of their TCO advantage over ICE cars. Yet, this is only temporary: fuel prices will eventually reach pre-crisis levels again as demand for oil increases. Also, even today’s 15% drop in the fuel cost will not offset the increase in residual values of EVs – which started 18 months ago at Arval and will continue in future, reducing the latter’s TCO considerably.”
3. Reputational risk. ICE vehicles, and diesels in particular, are increasingly frowned upon by the public. More and more LEZs are emerging. Will people be a bit more forgiving with COVID-19 in mind?
“Our clients tell us they are moving forward with their CO2 reduction plans, regardless of the crisis. (that is also confirmed by Fleet Europe’s recent survey; editor’s note). There will be challenges for sure, but they have made commitments. As their mobility partner, we will do anything to support them in the transition – for instance by providing this whitepaper, in which we explain our SMaRT approach. The first step is client profiling. Our tool helps the client to define what is important for the organisation: driver satisfaction, CSR – which is linked to reputational risk – or TCO. Each of the three are interconnected and it’s a balancing act. Still, with today’s BEVs, it is possible to focus on TCO without compromising driver satisfaction or CSR.”
4. Increasing electric range and infrastructure. Perhaps there will be less budget to expand the public charging network? Maybe people will be less inclined to switch to a temporary (shared) ICE vehicle for longer distances lest they catch COVID-19?
“These are legitimate concerns. Still, shared mobility is here to stay and will take off again once the current situation is contained. It answers a real need – a need that cannot be fulfilled by non-shared mobility. At Arval we are currently looking at solutions for our corporate car sharing service to assure the safety and security of our employees and our clients with regards to this unprecedented health crisis. These include cleaning the car before and after each trip, providing disinfectant hand gel in the cars, et cetera. This issue should be considered in close cooperation with OEMs.”
“That being said, we mustn’t forget that the latest BEVs offer between 300 and 500km of real-life range. That means that the number of cases you temporarily need an ICE vehicle will be very limited. Finally, the charging infrastructure has already expanded significantly in recent years and will keep doing so across Europe.”
5. Fiscal measures. Most member states have implemented measures to stimulate the uptake of EVs. Will they continue to support EVs now that they are spending a lot of money on economic relief?
“If governments change anything in their taxation system, it will probably be to solve liquidity issues for companies in the short term by offering tax relief and payment suspension. Overall, the commitment of the EU is to lead the way in the energy transition. That is why, it should not bring any major changes in the member states. The UK, for instance, will still be implementing a benefit in kind system that clearly pushes EVs. The Netherlands will surely continue down the electrification path – there is no way back,” concludes Shams-Dine El Mouden.
Arval's whitepaper, Fast forward to Electric Vehicles, can be downloaded here.
Picture copyright: Shutterstock, 2020