Make or break - 2024 fleet transition outlook

2023 has been a year of impressive EV adoption progress, set against a backdrop of climate backsliding from politicians and an uneven European transition picture, writes Jon Lawes, Managing Director at MHC Mobility.  Yet, there is a still a long road ahead. 

The good news is many businesses continued to prove their mettle with progress on fleet transition commitments. Policymakers also passed the crucial Net Zero Industry Act to support clean technology investment, and the number of EVs on Europe’s roads has been rising by the month.

But 2023 also brought us the ‘greenlash’ as politicians watered down net zero aims, from diluted Euro 7 standards to the e-fuels lifeline for engines. Meanwhile, EV technology has become a new trade war frontier and extreme weather showed no signs of abating.

There is still a long way to go with Europe’s transition, and EV adoption is beginning to slow as companies grapple with these headwinds. The outcome of COP28 and a decision on the future of fossil fuels could yet do much to set the tone.

Looking ahead to 2024, five things will be front of mind for fleets.

1. Border force

Automakers and corporate fleets were bracing for a New Year’s hangover with costly EV tariffs due to come into effect.

However, the European Commission's proposal to delay the implementation of Rules of Origin tariffs between the UK and EU by three years back from 1 January 2024 to 1 January 2027 is a welcome lifeline for the UK and European motor industry. The Rules of Origin tariffs were widely expected to drive up costs, denting consumer appetite and complicating the path to net zero for corporate fleets.

With the New Year's cliff edge averted, the industry and policymakers on both sides of the Channel need to focus on scaling up domestic battery capacity and tackling the persistent charging infrastructure deficit to create a sustainable, competitive market for EVs and keep the transition to zero emissions mobility on track.

2. Looking East

Meanwhile, all eyes will be on the European Commission’s anti-subsidy probe into Chinese EVs.

These brands have made steady inroads on the Continent and could offer future buyers an expanded range of competitively priced options to help boost EV adoption and the transition - but this has also drawn understandable concern from manufacturers and politicians about competition.

There are no easy answers, but fleets will be closely watching how policymakers navigate these competing priorities.

3. Peak greenlash?

Political uncertainty has been a stubborn headwind for net zero this year. More consistency and ambition from the top down will be high on fleet operators’ wish lists.

Promising developments across the Channel could be a sign of brighter times ahead. After pushing back the ICE phase out, the UK government has since launched a new battery strategy and pledged more funding to support the transition and auto industry. However, Donald Trump has already vowed to scrap the Inflation Reduction Act – America’s landmark legislation for green technology – if re-elected, and European parliamentary elections could make or break Europe’s course on the transition.

All this is hurting confidence and investment certainty, stagnating EV adoption and exacerbating the challenges of the switch.

4. The gap widens

One such challenge is infrastructure, which draws into sharp focus Europe’s imbalanced transition landscape.

The state of charging infrastructure remains a perennial concern for corporate fleets and consumers, with over a third concentrated in just two countries. The EU’s new electricity grid action plan offers hope, while AFIR legislation has set mandatory targets to ensure charging rollout keeps up pace, but questions remain over whether the latter’s aims are ambitious enough.

It’s a similar story with emerging hydrogen fuel technology. This could be a shot in the arm for HGV decarbonisation with the UK and Germany recently signing an agreement to accelerate development of low-carbon hydrogen production – but the infrastructure required for end users to access this as a fuel is still in its infancy.

As fleet transition deadlines rear, closing the gap around Europe will be critical.

5. Brave new world

Finally, businesses of all kinds spent 2023 grappling with the wonders, and potential dangers, of AI. Autonomous driving might still be some way off, but it’s a timely reminder for fleets of the power of data and innovation.

The gift of telematic technology is already quietly transforming the industry and has become ubiquitous among fleets. Such tools are driving new efficiencies, automating maintenance, improving driver behaviour and raising safety standards.

This is particularly important when it comes to the many ICE vehicles that will remain in fleets during the transition period. Operators cannot afford to be complacent and must embrace the power of technology to decarbonise the fleet here and now.

Make or break

The transition of Europe’s fleet is making steady progress but there’s a long road ahead. For businesses already well along on their net zero journey, now is the time to shift up a gear. And for those lagging behind, there’s no time to spare.

Corporate fleets must seize the moment, just as policymakers must continue to create confidence in the EV switch. 2024 could be make or break for the transition.