Why fair mileage reimbursement is vital for eLCV success
The successful implementation of a fleet electrification programme for light commercial vehicles (LCV) requires decision makers from fleet, HR and finance departments to put themselves in the shoes of their drivers. Only by implementing driver-friendly recharging and reimbursement policies can businesses maximise the cost savings of switching to battery power.
Energy costs are one of the principal areas where electric LCVs (eLCVs) have the potential to be significantly cheaper than their diesel-powered predecessors, but only if drivers recharge in the most cost-effective way.
It might be simpler from an administrative perspective for eLCV drivers to charge at the workplace or at public chargers, with costs and invoices paid directly by employers, but the cheapest place for drivers to plug in eLCVs is invariably at home, taking advantage of domestic energy tariffs.
Driver support for home charging
Encouraging drivers to use a home wallbox, however, requires their goodwill. With a diesel van, a driver can park the vehicle on the street, fill it with fuel in five minutes, and pay with a company fuel card. With an eLCV, however, a driver with a home charger will often have to park their personal car on the street overnight while the van recharges.
Moreover, charging at home means drivers face the triple-whammy of higher domestic electricity bills, delays before they are reimbursed for business miles, and the risk that their company’s reimbursement rate does not cover the true cost of the electricity for which they have paid.
The combination of these factors means drivers who feel unsure about fair reimbursement will instead use expensive public chargers, relying on a corporate charge card in exactly the same way that they used a fuel card for diesel.
Why fixed reimbursement rates fail
And while it might be tempting for the sake of simplicity to give drivers a fixed reimbursement rate of X cents per kilometre for charging at home, this is a policy that will either leave businesses or employees out of pocket. Even the most efficient drivers will suffer a shorter range from fully charged batteries in winter, compared to summer.
Long-running campaigns in the UK have highlighted how Government-approved mileage reimbursement rates for EVs underestimate the real cost of electricity, especially for vans.
Fortunately, solutions exist and more are in the pipeline. Mina Homecharge, for example, can monitor individual employees’ home charging costs, and pay energy suppliers directly. This avoids the driver suffering cashflow issues while waiting for reimbursement, and eliminates ‘bill shock’ for employees presented with a much higher than expected energy bill for their home electricity use.
Ashely Tate, Mina’s CEO, said: “Our data shows that home charging is by far the most economical way to charge your car or van. We’re able to track exactly when drivers plug in at home, and measure their consumption, too.”
In the UK, ALD Charge+ offers a similar solution in partnership with ChargePoint, providing automatic reimbursement for home charging costs without the need for drivers to submit expense reports.
“Vehicles kept overnight at the home of the primary user need charging points. This raises awkward questions for fleet operators around how a modification to an employee’s property should be controlled, and what happens if, and when, it is no longer required. Concerns in this regard include the complexities of reimbursement to the employee for electricity used, and how out of kilter advisory electric rates are with the actual cost of fuel and electricity,” said ALD Automotive’s guide ‘What to consider when introducing eLCVs to your fleet’. “Software platforms that can manage the time at which vehicles charge and the tariffs paid… will become increasingly important.”
EVBox has developed a slightly different way to reimburse drivers for home charging, accurately measuring the amount of electricity that a wallbox has consumed. Armed with this data, the company can calculate the cost of charging and automatically reimburse employees.
And Bonnet is working on a development of its new app, Dash, to integrate it with drivers’ home chargers, which will enable businesses both to take advantage of low-cost, off-peak charging tariffs, and reduce the administration time of reimbursing drivers.
Only by being fair with drivers, can employers expect full co-operation and support for cost-effective eLCV adoption.