Fewer than a quarter (23%) of UK firms know when and where clean air zones will be introduced, new research suggests.

The British Business and Mobility Study, conducted by Sewells, spoke to more than 1,000 vehicle operators.

More than half (56%) said they thought that clean air zones will not be in place until 2020, eight months after London’s Ultra Low Emission Zone (ULEZ) comes into force from April 2019.

Businesses with vehicles operating in London are more aware of the capital’s ULEZ, but even there, one-third of companies are unaware of the forthcoming regulations.

The report’s findings present major opportunities for both leasing companies and manufacturers to support customers with company vehicles, says Sewells.

Leasing companies have the opportunity to develop outsourced payment solutions to avoid their clients’ drivers incurring fines for non-payment of clean air zone (CAZ) charges, while 16% of van fleets and 12% of car fleets say they will immediately replace non-CAZ compliant vehicles.

In the short term, diesel vehicles that meet Euro 6 emission standards will comply with CAZ standards, but the longer-term solution clearly appears to be vehicles with zero emission capabilities.

Oxford is already proposing a ban on petrol and diesel vehicles from a small number of streets in 2020, and a city-wide ban from 2035.

Companies, however, forecast that electric vehicles (EVs) are at least three to four years away, if not longer, from being viable for business use.

Familiar arguments about range, recharging infrastructure and recharging time are all still front of mind, yet the typical 150-mile range of an EV would already satisfy the daily requirements of more than a third of fleets.

However, given the Government’s new consultation on the impact of WLTP emissions figures to calculate VED and company car tax from the 2020-21 tax year, the tax liability of petrol, diesel and hybrid cars may make pure electric vehicles significantly more attractive to drivers, and to employers who pay National Insurance contributions on the provision of company cars, says Sewells.

The consultation document makes it clear that pure electric cars will still be taxed at just 2% of their P11D price from 2020-21, regardless of how WLTP alters their officially-recorded range.

This certainly supports one key finding to emerge from the research - the acute price sensitivity of businesses. Even if EVs can satisfy operational requirements, 30% of car fleets and 22% of van fleets are not willing to pay any price premium for an EV, and only 3% of fleets are prepared to pay a premium of 20% to lease or purchase an EV.

Manufacturers face a major task to convince customers that lower fuel and maintenance costs can offset EVs’ higher price, says Sewells.

Government grants, manufacturer and dealer discounts and underwritten residual values may all be required to persuade fleets to adopt the technology, supported by lower company car tax.

On the positive side, if EVs can satisfy the range, recharging and cost demands of businesses, 30% of operators would choose electric as their favoured power source, making it the most popular option.

Already 60% of businesses have installed or are considering the installation of workplace charge points. With rapid (50kW+) and fast (7kW+) chargers their preferred options.

Moreover, early fleet adopters of electric and ultra-low emission vehicles (ULEVs) have much higher opinions of the technology than those waiting to make the switch, indicating that test drive and trial programmes are vital for manufacturers to persuade business customers to select zero emission vehicles.

Ian Richardson, general manager of Sewells Research & Insight, said: “With urban air quality a pressing environmental and political issue, few doubt that the next motive power source will be electric. The only question is when, not if battery-powered cars become the norm.

“The company car tax system may be tightening the screws on petrol and diesel models and low emission zones threaten to undermine wholelife cost calculations for non-compliant vehicles, but fleets still see the tipping point to electric power as being at least one replacement cycle away.’’

For more on clean air zones, visit our interactive map.

 

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