Asset ev-olution

Keith Sangwin, Head of Sales – Asset Finance

The push to reduce air pollution in our cities may be a significant driver for companies switching to electric buses, coaches and commercial vehicles.

Electric and hybrid cars are an everyday sight on our roads these days. However, with sales of alternative fuel vehicles accounting for just 6% of the UK new car market in 2018, there is a long way to go before electric becomes the dominant fuel type for UK motorists.

The factors influencing decisions for electric car buyers are similar to those considering switching their bus and coach or HGV fleets to electric variants too; price parity with other power train alternatives, running costs, range, charging and reliability probably being the most important considerations for both groups. However, there is a substantial extra incentive for companies regularly using commercial vehicles in our cities – low emission zones (LEZ) or more specifically the charges if your vehicle doesn’t meet the emission standards.

From 26th of October 2020 London’s LEZ emission standards will be even tougher for heavier vehicles. Lorries, vans and specialist vehicles over 3.5 tonnes and buses and coaches over 5 tonnes will have to meet Euro VI (NOx and PM) standards or pay a £100 per day charge for entering London’s LEZ. Vehicles which don’t meet Euro IV (PM) standards will pay a daily charge of £300. By the end of 2020 Glasgow will have implemented its own LEZ and other cities such as Birmingham, Bristol, Oxford, Sheffield, Liverpool, Leicester and Manchester are all either implementing Clean Air Zones (CAZ) over the next few years or consulting on them. Like London’s LEZ, failure to meet emission standards are likely to result in daily charges.

The switch to electric fleets is likely to happen over a number of years but it undoubtedly offers an opportunity for brokers and funders alike. Some companies are already making significant investments in electric vehicles and infrastructure to support them. At the end of last year delivery company DPD opened its first all-electric ‘last mile’ delivery depot in Westminster, London and plans a further seven similar depots across the capital. The Westminster depot is served by two 7.5 tonne all electric Mitsubishi Fuso eCanter trucks, ten Nissan eNV200 all-electric vans and eight micro vehicles from Norwegian company, Paxster. Of course, SMEs are unlikely to have the financial clout of DPD but their lead is bound to be followed by other companies, especially if their existing vehicles are likely to cost them an arm and a leg in emissions penalties in the future.

Bus, coach and HGVs constitute a significant percentage of our business and we are watching the development of those sectors very carefully to ensure that we can offer competitive and flexible funding solutions when your clients are ready to join the electric vehicle revolution.