Our last instalment on electric vehicles took a user’s view from our CCO Steve Banks as we investigated whether business travel is ready for EVs. From suppliers to infrastructure, the network of support around the UK is growing at pace, but is it sufficient to support the responsibilities that customers have to their travellers?
EV for business travel
Many businesses are setting long-term carbon reduction goals, including fleets and emissions from business travel.
In November 2021, the UK Government brought forward a ban on the sale of petrol and diesel cars from 2040 to 2030 and will phase out the sale of hybrid vehicles from 2035. To support this transition, half of UK businesses are planning to install EV charge points in 2022 [1] at a cost of £15.8 billion, creating more capacity.
Unfortunately, whilst a lot of companies are keen to improve their carbon footprint and are actively asking about the switch to electric vehicles, not many understand the complexities involved in achieving their aims. They’re looking at the business case for EV in terms of emissions and their sustainability objectives, instead of the practicalities of electric vehicles.
For example, a traveller living in Nottingham travelling to Liverpool, a distance of 130 miles, has the option of train or car but needs to know where the charging points are en route to making an informed decision. More corporates need to think about the user experience for those new to electric vehicles and providing that education to end travellers at booking source will be vital.
Nearly a third of UK business travellers now want to hire an electric car, although 28% would not do so if it was more expensive than petrol or diesel. [2]
At Agiito we’re seeing significant demand amongst travel managers, but less so amongst business travellers, unless they‘re already EV users, due to infrastructure concerns.
Car rental
Many car rental companies are yet to articulate their electric vehicle proposition fully, but all are acutely aware of the important role that Electric Vehicles will play. A completely different set of terms and conditions to traditional car rental is required. For example, if a traveller returns an electric car with a drained battery, that vehicle could be off the road for a significant period of time whilst it charges up. Rental rates are bound to reflect this, particularly given the demand challenges that exist in this sector at present.
Agiito partner Enterprise has focused on rolling out EV vehicles through their subscription-based Car Club product, aimed at non car owners in some major cities. Typically, these cars are on hire for much less time so ‘range anxiety’ is less of an issue and it is now starting to work with customers to bring this product into their car rental programmes.
Oliver Moore, Director of Travel Agency Sales at Enterprise explained their approach:
‘As consumer demand and charging infrastructure increase, EVs are playing an important part in both the future of sustainable mobility at the Enterprise fleet. In Europe we have engaged with a leading management consultancy, Roland Berger, to better understand how we can transition our business model, operations and infrastructure to operate with more EVs. Our global leadership team is using the findings from the Roland Berger study to define a long-term strategic direction for adopting EVs in the markets where Enterprise has wholly owned operations’.
Other car rental companies have fewer EV options for traditional car rental due to limited charging points at rental stations, slower turnaround periods whilst returned vehicles are re-charged, and sheer shortage of electric vehicles or cost, although some markets (due to infrastructure reasons) are much further ahead than others, such as Scandinavia where it’s quite common to hire electric vehicles.
There’s a long way to go before car rental companies offer EV vehicles as standard, but there is a need to get a move on to meet net-zero targets. Hertz has taken the lead from a car rental perspective as they look to bounce back from the pandemic and bolster their fleets by placing an order for 100,000 Tesla vehicles, which will equate to circa 20% of their fleet, in addition to announcing a partnership with Swedish EV manufacturer polestar that includes purchasing up to 65,000 electric vehicles over five years for use in the North America and Australia markets.
Taxis and Executive Vehicles
The larger taxi firms, such as Addison Lee & Free Now are well underway in rolling out electric fleets. Free now aims to be fully electric by 2025, as does Uber. Addison Lee is looking to outdo both and move to an all-electric fleet by 2023.
These providers all benefit from the clean air zones in and around major cities like London in that ICE vehicles are subject to charges to enter these zones.
Whilst electric taxis will be commonplace in London, the rest of the taxi industry, particularly those outside of London (as many cities have less restrictions) will take longer to adopt EV. Many drivers, be that chauffeurs or taxi drivers, are self-employed and with the significant cost involved to purchase EV vehicles it’s likely to be some time before EV becomes commonplace, increased rates could also be adopted to factor in the high purchasing costs.
The private hire industry will also need to overcome other challenges such as EV vehicles not being included as standard on taxi dispatch systems to enable users to select a green vehicle, whilst continuing to ensure that taxi drivers have access to reliable charging networks to avoid time off the road. Q-Park and TFL’s Taxi Card product, allowing taxi drivers to charge their vehicles in car parks throughout London is a step in the right direction but this needs to be more widely thought of for the rest of the UK.
Blacklane, which procures and manages chauffeur services worldwide on behalf of customers and proudly states that it is 100% carbon neutral, commented:
We continue to lead the way in electrification, offering Electric Class in 10 cities across 9 countries, we know that the future of the chauffeur industry is electric. The move toward a fully electric fleet worldwide is slower than expected, and this is largely due to three external factors: availability, cost and infrastructure.
‘The private hire industry has been hugely affected by Covid, and this has left many chauffeur operators and self-employed drivers struggling to purchase new electric vehicles (which often cost substantially more than their petrol equivalents). Also, waiting lists for electric vehicles are often months rather than weeks. This has been further impacted by the microchip shortage across the automotive sector. And thirdly, charging points are still not as widespread as demand requires, particularly in urban environments where chauffeurs may not have their own driveways. The increase in demand post-pandemic, however, is significant, surpassing 2019 levels. Blacklane is aiming to complete 75% of all rides in electric vehicle rides by 2025, and we are working with our partners and our largest investor Mercedes-Benz to match the demand for Blacklane Electric Class’.
Rail
Train companies have always viewed the car as its main competitor and the wider rollout to electric vehicles provides an interesting dynamic given that it could further impact passenger numbers due to the much cheaper running costs available. After the drop-off in business travel due to the pandemic, rail operators are focussed on attracting passengers back to the trains and with rail only accounting for 1% of total transport emissions, it has its own green story, whilst also being able to provide a productive working environment to the traveller.
Ironically, we’re seeing more partnerships between rail operators and mobility solutions, like the tie-up between LNER and Enterprise. A sign that the supply chain is gradually recognising the value of Mobility as a service by doing more to create joined-up solutions from door to door, helping to promote more sustainable trips.
Hotels
As with Wi-Fi in the 2000’s, EV charging has handed hoteliers a new opportunity to differentiate themselves. Marriott, Hilton and Accor have already started to provide EV charging points in some of their hotels.
The true value in EV charging to hotels lies in filling otherwise empty car parks with drivers wanting to charge their vehicles, by offering a package that includes coffee, Wi-Fi access and even a hot desk for an hour.
Up to 40% of Agiito clients now want hotels with electric charging points on their preferred programmes. They also want to know how many charging points a hotel has, whether they are rapid or slow charging, whether the charging stations can be pre-booked and what the payment process is. We’ll be taking a deeper dive into how well-prepared hotels and venues are when it comes to EV support in a future instalment.
TMCs and EV
EV is an issue on which the TMC community and industry associations are adopting a watching brief.
At Agiito, we’re adding value to our client relationships by capturing good data. Our sourcing solutions are still evolving, so we need to understand where sustainability fits into each client’s business strategy. And that starts with questioning the need for travel in the first place.
In RFPs we are asking hotels more in-depth questions because of the challenges faced by our users, so programme negotiation can become an integral part of EV sourcing.
We are also helping our customers identify greener solutions in which price is only one of the primary drivers alongside emissions and hotels’ other green credentials. We have the tools, knowledge, and expertise to help customers make informed choices.
So, is business travel ready for electric vehicles?
Right now, no. There's a lot of rhetoric and a lot of people wanting to, and doing, the right things but there’s a long way to go.
By 2030 many organisations will have some very aggressive carbon targets and will have to make some big decisions. Especially as more and more organisations are talking about having travel policies that are based on CO2 emissions rather than the financial cost.
The infrastructure is the main problem, though lack of understanding of the practicalities is close behind. The UK is still some way off having effective and efficient green solutions nationwide.
Over time, the buyer and supply chains will understand the practicalities and things will change. In the meantime, it’s all about education but electric shouldn't considered pipe dreams.
Would you prefer an electric vehicle when travelling for business?
- Yes
- No