Electric vans – the future?

The “green issue” surrounding light commercial vehicles is growing week by week as an increasing number of operators are attempting to firstly assess and then reduce carbon emissions.

Vehicle manufacturers are coming under growing pressure to publish accurate fuel economy and CO2 data, with values supposed to be available mid 2009. The government has also announced a multi-million pound incentive scheme designed to stimulate the development and operation of low-carbon light commercial vehicles.

Electrically powered models form part of the offering, but as with any new technology that has not been tested over the whole of a vehicle’s lifecycle, there is a degree of resistance. Taking aside the initial operating cost benefits of zero Vehicle Excise Duty, 100% discounted congestion charging in London and the low cost of recharging, there are other more significant unknowns that may well hinder wide acceptance, especially when considering their acceptability in the used market.

The most significant issue surrounds potential battery life and associated replacement costs in the event of failure. Battery packs have a finite number of charge cycles, and their ability to hold charge degrades over time. Currently there is no standardized means of testing potential future battery life, and this coupled with the extremely high cost of replacement could lead future used buyers unwilling to commit to purchase. Another factor to consider is that many such vehicles are fitted with battery packs tailored to the first user’s delivery and work patterns, and may not be suitable for a subsequent owner.

The trade press features articles on a regular basis highlighting large operators that have either ordered or taken delivery of electrically powered commercial vehicles. The majority of these operators such as major supermarkets or parcel delivery companies are able to provide significant budgets to be “seen to be green” and are financially strong enough to support the residual value risk, especially when taking into account the extremely high capital cost of such vehicles.

On an operational basis it is important to assess the financial implications and the day-to-day practicalities of running electric vehicles. The capital cost is extremely high when compared with conventional models, leading to potentially excessive depreciation if funded over a normal change cycle of three to four years. Their range is limited by the specification of the battery pack, operating terrain and work cycles. Some models require wall-mounted three-phase chargers, and all should have undercover secure recharging areas to avoid potential security problems while charging. How much of this is available to any successive operator without incurring significant costs?

Whilst the appetite for congestion zones seems limited to London, and we’ve recently seen the residents of Manchester reject their proposed scheme, there seems little incentive for the used vehicle buyer to pay more for an electric vehicle than for a conventional diesel powered equivalent where the operating parameters are well known and trusted. This is despite the day-to-day running costs advantages offered by electric power. Indeed, when considering the risk associated with the batteries, residual values could even be significantly lower than diesel versions.

The most cost efficient method of operation for the first user of electric light commercial vehicles may well be to write the value down to a nominal amount over at least seven years, and then recycle the vehicle. This ensures that the first life operator gains maximum benefits from a vehicle tailored to match their operational needs, providing reduced running costs, discounted congestion charging and zero Vehicle Excise Duty. This method also removes vehicles from the used market, thereby reducing the risk associated with estimating future used values, and remarketing vehicles using technology that remains untested over the longer term.

ends

Note: The published version of this feature appears on page 10 of the February 2009 edition of Fleet Van

John Watts is CAP's Project Delivery Manager