The Future of the Mobility Landscape: Green, lean, and on the move

Friday 16th June 2023

The European mobility landscape has undergone significant change in the last three years, weathering the global pandemic, a strangled supply chain, and the explosive adoption of EVs – and there are a host of further changes on the horizon from e-fuels to infrastructure hurdles.

Our European Business Development Manager, Andrew Wilson has taken time to answer some of the most important questions facing the industry.

There has been significant upheaval in the last few years for the fleet sector, what is next?

While it’s almost impossible to tell what the next big change will be, we do see a few technologies coming down the pipeline that are expected to have a major impact on the mobility landscape.

New technologies, such as connected cars and autonomous vehicles, are changing the way fleets are managed. As these technologies become more prevalent, fleet managers will need to be able to adapt to these changes to remain competitive.

In the near-term greening fleets and adapting to an EV-filled future will be the number one priority for the fleet sector.

The move toward ‘green fleets’ is well underway, what are the challenges that remain on this journey?

As many fleet providers and users will tell you, infrastructure remains a challenge for adoption - without adequate charging points the ability for fleets to transition is severely diminished.

The availability of stock could remain a major hurdle. While availability of EVs has increased, the introduction of regulatory changes and subsidies may complicate this picture. There are concerns that protectionist policies could limit the availability of vehicles, an experience from the pandemic that the sector will not want to revisit.

There are also a range of specialty vehicles that will continue to exist outside of the current EV boon. EVs have come on leaps and bounds in the personal vehicle market however they remain in their infancy for light commercial vehicles and the landscape remains unclear relating to zero emission heavy-duty vehicles of the future.

With European fleets still containing large numbers of ICE vehicles, how can their impact be reduced?

Fleet managers will do well not to forget about the incumbent ICE vehicles, of which potentially millions will remain in use during the transition. As much as a full EV fleet is the end goal, there are many things that must be done to reduce emissions and carbon footprint in the meantime.

For example, there is a difference of 6% in fuel consumption between the lowest and highest-grade tyres. This means that a ‘cheap’ tyre policy is likely costing you more in the long term while increasing the impact the fleet has on the environment.

Increased use of telematics will likely also play a significant role in the next few years. Arguably the largest influence on fuel efficiency and CO2 emissions is driver behaviour – teaching, incentivising, and monitoring for good and efficient driving will be essential to ensure ICE fleets minimise their impact on the planet. It is common to see fuel savings of 10%, not to mention insurance savings.

Should fleets be preparing for e-fuelled vehicles?

Discussions and development are still ongoing amongst regulatory bodies and automotive manufacturers as to the future of e-fuelled vehicles. It’s too early to say right now, but there is certainly momentum for the adoption of this technology from certain territories and manufacturers.

However, it is important to understand that e-fuels are likely to be a significantly more expensive option, hampering mainstream adoption and potentially confining the technology to niche use cases or markets with strong subsidies. Ultimately EVs remain the future for sustainable fleets.

Differing local government investment is continuing to impact EV adoption, how pan-European is this issue?

Green fleets will demand green infrastructure to ensure they can achieve their own, and their local governments’, net-zero targets.

There are countries within the EU that have already committed to ensuring EV infrastructure matches the adoption of EVs within their country. Fleet providers in these regions will find themselves able to commit to more ambitious greening targets – a massive benefit for clients and the environment.

However, this infrastructure investment is not universal, and some markets have fallen behind, or simply not started to approach the challenge. Data from the European Automobile Manufacturers’ Association reveal almost half of all charging points for EVs in the EU are concentrated in the Netherlands and Germany – a concerning sign of the imbalanced investment in infrastructure taking place across the EU.

European nations are increasingly turning to regulation and subsidies to promote green transitions, what does this mean for the fleet sector?

Navigating this regulatory environment can be a complex and time-consuming process. The fleet sector in Europe experiences a vast number of different subsidy and incentive regimes for the adoption of green technologies – and this doesn’t consider pan-European policy from the European Commission.

However, fleet providers and operators already work tirelessly to comply with a wide range of regulations within EU markets. Those that make the most of future incentives and benefits will remain competitive and attractive to businesses in the local markets and beyond.

Economic hurdles across Europe have led to businesses downsizing fleets, how has this impacted the fleet sector?

Inflationary pressures and cost increases have continued to vary across Europe, with some markets being hit harder than others. However, broadly businesses are facing increased costs no matter the market. Overall fleet ‘Total Cost of Ownership’ (TCO) is expected to increase by 7-14% by the end of 2023.

While larger corporations are typically more resilient and can better absorb rising fleet leasing costs, smaller companies have been feeling the squeeze and many will continue to look to their fleets to make savings.

Fleet providers will need to ensure that they have the right products and services available to retain the business of these smaller fleets. The use of intelligently pooled fleets and efficiency-boosting telematics will go a long way to meet demands and deliver cost-efficiency.

Car manufacturers will continue to increase list prices during 2023 but high interest rates may scare off private customers. OEMs will therefore need fleet customers more, which could mean more favourable rebates and incentives for corporate clients.

Should the European fleet sector be looking beyond its borders for inspiration?

The short answer is absolutely, yes.

European fleet management companies will need to be able to operate in a global market. This includes needing knowledge of how the fleet sector in other regions is approaching issues and what those markets’ governments are doing that could have a knock-on effect – this requires a deep understanding of different cultures and regulations. Fleet management companies are able to operate in a global market will be better positioned to attract new customers and grow their business.

What does the future hold for Chinese vehicles in European fleets?

Chinese EV manufacturers are currently holding a number of advantages over their European counterparts, with the potential to seriously disrupt the market. The most fundamental of these is price.

It is estimated that Chinese OEMs can, on average, build BEVs for €10,000 less than European rivals. Several Chinese BEV models have also recently received five-star safety ratings from the European New Car Assessment Program (NCAP). This recognition could prove highly significant, as a high rating is often a prerequisite for widespread adoption by corporate buyers.

Together, this could be good news for fleet managers, who are under constant pressure to cut costs and meet client demands, particularly in the current environment of inflation and supply chain woes. It could also be good news for decarbonising mobility more broadly.