Sponsored by: ?

This article was paid for by a contributing third party.

Blog: The rising business case for electric fleets

electric car

MS Amlin's Simon Fuller on the e-motor revolution in the commercial space.

In June 2019, parliament passed legislation requiring the government to reduce the UK’s net emissions of greenhouse gases by 100%, relative to 1990, levels by 2050. With 28% of UK domestic carbon emissions coming from transport, of which over 90% is on the road, it makes logical sense to target motorists. And more specifically fleets, which account of half of new vehicle purchases, according to The Climate Group.

The key to whether firms begin to electrify their fleets lies in whether it makes practical business sense. If a vehicle is going to require a charge during working hours, businesses will inevitably start to think about the resulting loss of man hours and other associated risks.

But new data from the Department for Transport (DfT) suggests there is a mounting business case for firms to trade in their diesel-fuelled vans for electric.

Location
The DfT figures show that 50% of all British vans stay within 15 miles of their homes “on a typical day.”

Commenting on the findings, Steve Gooding, the director of the RAC Foundation, said that this makes vans good candidates for electrification, adding that drivers can use their local knowledge to decide where and when they can best be recharged.

It seems that companies are in agreement with Gooding. At the end of July, leasing and fleet management firm Activa Contracts reported that one in three (35%) fleet orders placed in 2020 had been for electric or hybrid vehicles.

Activa spent 2019 with many fleets trialling electric vans as well as cars, and says more companies have started to understand how they could strengthen sustainability on their fleet, in particular those vans which operate in urban areas.

“More fleets have begun to understand that many multi-drop delivery routes that return to base can be achieved by using an electric van,” Activa director Lisa Temperton explained.

Aware
She added that some firms have become more ‘green conscious’ during lockdown, and anticipates that we will see more electric vans coming into fleets over the next 12 months.

We’re already seeing this prediction come to pass. In August, Amazon made an order of 1,800 Mercedes-Benz electric vans for its European delivery fleet, including the UK and Germany, as it aims to become carbon-neutral by 2040.

Meanwhile, BT Group, which operates Britain’s second largest commercial fleet, is trailing a small fleet of electric vans and is looking to deploy more this year.

Future-facing insurance solutions

Although electric vehicles are the future, the technology is not there yet for a lot of fleet businesses, due to its limitations and costs. Our insured would have to rely on charging points on routes, which could limit where they are able to drive.

Due to the cost of parts, electric vehicles would be deemed a higher risk for theft and potential claims could cost the insurer more money – therefore having a knock-on effect for premiums.

Positives
However, there are also many benefits for electric vehicles due to the money saved on tax and congestion charges. As technology evolves and driving range and selection of vehicle types grow, we will see more and more of these vehicles on the road. It’s not a question of if but rather when electric will start becoming the choice of engine when buying a new vehicle.

Companies are becoming more aware of their carbon emissions, doing everything they can to reduce their footprint. Insurers will have to prepare their rates to cater for electric vehicles in a different way to combustion engines, due to how vehicles will be used differently until the technology reaches the equivalent standard of use.

Insurers and brokers must understand these issues and provide the solutions required to meet customer demands – both now and in the future.

Simon Fuller is e-trade fleet underwriter at MS Amlin.

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have an Insurance Age account, please register now.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: