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Why Company Cars will be the EV’s Saviour… and its Biggest Problem

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What’s interesting about the UK car market isn’t its size (31 million cars), it’s how these cars get there in the first place and crucially how that will affect the broader adoption of EVs.

Over 2 million new cars were sold last year, of which 57% were bought as company cars. These are sold on quite quickly, meaning companies buy most of the 31 million cars that most people end up owning. In other words, Fleet Directors decide the composition of the UK fleet. And most large fleet directors have said they will move to EVs as soon as there is a suitable model available.

Why do Fleet Directors want EVs?

Corporates are different from consumers. Corporates look at non-car factors such as carbon reduction goals and corporate branding when making purchasing decisions– think how odd it will be for an electricity company to choose not to use electricity to power its cars. They also look carefully at Total Cost of Ownership and already EVs are far ahead of their fossil-fuelled counterparts. All of these factors drive a much higher appetite for electric cars in the corporate sector than in the private sector. We’ve seen this first hand. In our consultancy business, we do not have a single customer who does not have an EV plan in place.

So, all’s good then? Manufacturers will shortly come to market with some viable fleet models, these will be snapped up at volume and the UK fleet will migrate to EVs at a great pace.

Not quite.

Company cars have one inherent difference; they cover high mileages, annually averaging 18,000 miles per year against the UK personal average of 5,104. High mileage means high charging.

The Rising Tide

Consumer EV adoption has been similar, in many ways, to a rising tide. There has been a gentle increase across all types of EVs and geographical areas. DNOs (Electricity distribution companies) have been able to keep ahead of this demand increase by making gentle improvements across all areas. This follows the theory of Diversified Demand, where different people demand power at different times. Charging patterns are the same.

Apologies for all the maths, but we need to chew through this.

An average annual mileage of 5,104 means about 98 miles per week which would require around 28kWh of charging. Off-peak home charging provides around 50kWh per night (7hrs at 7.2kWh) or 350kWh per week. So an electricity company only needs to find 28kWh in the window of 350kWh to charge the average car. This enables the electricity company to spread and diversify the needs of one driver across many others. The Rising Tide.

The Crashing Wave

Company drivers are different though: they are time-constrained, they return home with a low “tank” and need it full the next day. Using the same sums as before, 18,000 annual miles means 346 miles per week and a weekly charge of 100kWh. By definition, this mileage and charging will need to happen during the working week, so we are looking at finding 20kWh per night in a charging window of 50kWh. This is much harder to spread, especially when we try to ask a company car driver to sacrifice charging for the common good.

What makes this worse is that large corporates move in big steps, buying individual models of cars in their thousands. So we go from very few difficult balancers to hundreds and thousands in the time it takes to drive the new EV from the depot. Finally, company cars are not equally geographically spread, they are localised. Recruitment profiles will tend to mean that company car drivers often live quite closely together.

The end result will be very fast build-ups of un-diversified demand in concentrated areas. A Crashing Wave.

Is It All Bad News?

Not at all if the right planning goes in.

While the main manufacturers are moving towards delivering a fleet model, they are still some way off – needing several more battery factories before they can deliver at volume. In addition, the location of these Crashing Waves can be predicted, so strengthening can be focussed.

Biggest Accelerator of EV Ownership

What this will be is great news for the EV market overall. It will bring a whole swathe of new drivers into the EV experience, this positive experience will be disseminated to a wider group of drivers and crucially, the second-hand market will get a huge injection of affordable EVs. Without a doubt, company cars will be the biggest accelerator of EV ownership in the UK.

So bring on the Crashing Wave, just as long as it doesn’t hit your street before the new powerlines have gone in.

 

Article originally posted by Ben Allan on 04/09/2019 via LinkedIn.

EV Adoption – Why the Answer is in French Cheese

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The EU-Japan Economic Partnership Agreement (EPA) deal that went live in February may well turn out to be one of the biggest drivers of EV adoption – if you believe in the two following assumptions:

  1. EV adoption is primarily restrained by supply, not demand – I suggest that you spend 5 minutes with any Nissan Leaf salesman and you’ll be on-board with this.
  2.  EV supply will be dominated by Asian suppliers – I suggest that you spend 5 mins looking at current Japanese and Chinese production numbers and you’ll be on board with this also.

So, anything that fundamentally improves the supply of the EVs will dramatically increase adoption.

What the EPA does is balance Japan’s love of French cheese with our love of Japanese cars by removing the Tariff Rate Quota (TRQ) from both (along with other products and services). A TRQ is the standard ratcheting system that the World Trade Organisation (WTO) uses to enable open trading between countries.
Crucially, its mechanism favours the exporting of high margin products – and as most EVs are low margin they are not encouraged. With the TRQ effectively gone, Japan will be encouraged to export as many EVs as it can build. We will buy them whenever we want, and adoption will surge as supply rises to match widespread demand.

This should mean that everything is fine, right? Well, it would be if it weren’t for two key challenges:

  1. The TRQs on cars will be tapered over 7 years, so the impact is buffered.
  2. Brexit. Assuming Brexit goes through, HM Government will have the unenviable choice of either trying to mirror the EPA, improving our environment but damaging our EV industry, OR putting back-up the trade barriers thereby protecting the UK’s EV industry, but slowing down EV adoption and guaranteeing additional investment requirements.

 

Article originally published on 04/03/2019 by Ben Allan via LinkedIn.

Will Home Battery Storage Kill-off V2G Before it Even Starts?

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Vehicle to Grid (V2G) is a great concept. We could balance the increasing strains on the electricity network, not by building more expensive infrastructure, but by using the batteries that we already have in our electric vehicles (EVs). Only that might not make much sense, and there may be a much better solution available today.

The V2G model requires vehicles to load and unload at times convenient for the network: That is, lots of spare capacity during the day to absorb electricity from solar panels and then full batteries in the evening to discharge to the network to reduce demand.

The trouble is business, and occasional drivers don’t match this profile. Their vehicles are full and empty at the wrong times and it will require careful planning to contribute – not something we can expect from most drivers. In addition, the chargers are expensive, the billing complex and the alignment to network hotspots is difficult.

What really might kill off V2G is home battery storage, as we are really close to a 5-6 year payoff period. This does require some assumptions:

  • An installed 20kWh battery needs to be around £6,000 – currently, a 13.5kWh battery costs about £6,500 but these costs have dropped 80% in the last 5 years, so this isn’t far away.
  • The peak / off-peak variance needs to be 15p per kWh – at the moment it is closer to 10 -11p however, the combination of strong upward pressure on peak electricity costs and the impact of innovative time based off-peak charging means that 15p variance is closer than many think.

Once home batteries become financially attractive than their other 2 key properties really start to make an impact – their fixed location and when they run out of power, nothing stops.

As home batteries don’t move they can be relied upon to make consistent impacts on an electricity network, and with the right incentivisation, networks can be strengthened quickly and cheaply at specific risk areas.

When home batteries are drained, the normal network seamlessly takes over – no cars stop, no-one is stranded. This means that with smart responsive billing, a home battery can become an incredibly flexible resource at all hours of the day.

So what should we put our future bets on? The thing that no-one has quite worked out how to make happen, or the thing that we are all most probably going to buy anyway?

Article originally published by Ben Allan on 27/02/2019 via LinkedIn.