Less than 2% of commercial fleet vehicles across Europe are electric

Electric vehicle (EV) fleet penetration in the commercial sector is still in its early stages, with approximately 1.4% of the total European commercial vehicle fleet being electric, new research suggests.

Just 0.8% of light commercial vehicles (LCVs) and 0.1% of trucks operated by commercial fleets were classified as electric at the end of 2022, according to the new fleet report from Charles River Associates (CRA).

It found that 9% of all new passenger cars sold around the globe are electric while this figure decreases to 1% when examining vans and trucks.

The CRA reports suggests that the low adoption rates are driven by high upfront costs, increased operational complexity and a lack of availability of commercial vehicles able to meet operator needs.

Despite these challenges, fleet electrification is rising, it says, with 90% of fleet managers believing EVs represent the future of commercial fleets.

In recent years, the commercial fleet EV sector has experienced impressive growth. From 2016 to 2022, commercial EV adoption in Europe grew by a factor of 11, from 100,000 to more than one million vehicles, it says.

LCVs are also starting to accelerate their EV transition, with 12% of new registrations being electric.

In contrast, medium and heavy commercial vehicles are lagging, with only 1% of new sales going to EVs. This, says the report, is largely a result of their electrification business case being less attractive than the rest of the commercial fleet segment.

The barriers to EV adoption are many and include high upfront costs and uncertain residual values (RVs).

The upfront cost of EVs is often higher than that of internal combustion engine (ICE) vehicles due to several factors including battery costs, lack of economies of scale in commercial markets, requirements to customise vehicles to meet specific service needs and the accompanying charging infrastructure.

This can be a major barrier, especially in situations where businesses need to purchase multiple vehicles at once.

Some operators, it says, are not ready to commit to a certain technology and have expressed concerns about the unknown residual value of used EVs and underdeveloped resale markets.

Supply chain and vehicle availability, limited accessibility to charging and increased operational complexity are also cited by operators as barriers to adoption.

For larger fleets with a range of operating profiles, operations become more intricate and a lack of experience in managing charging remains a major barrier, the reports says.

At depots, this is often more manageable but an effective/tailored software solution for planning charging (combined with the right internal management capabilities) is needed to meet operational efficiency.

For EVs, it says that further fleet optimisation is required including vehicle range, charging needs, route-charging availability and charging concentration at the most convenient times.

Robert Stocker, senior associate at CRA and co-author of the paper, said: “While fleet electrification holds immense promise and some operators have made good initial progress, our report highlights that progress remains at a nascent stage.

“Currently, less than 2% of fleet vehicles across Europe are electric. To meet the ambitious Fit for 55 targets set for 2030, which aim for 55% electrification of passenger and Light Commercial Vehicles (LCVs), and 30% electrification of trucks and buses, the pace of electrification must accelerate significantly."

However, he confirmed: “Several barriers stand in the way of widespread fleet electrification. These challenges include operational complexity and potential productivity losses, initial capital costs and financial risks, limited vehicle availability, charging infrastructure accessibility, consumer apprehensions, and perhaps most notably, grid constraints.

“Our paper aims to talk to various stakeholders, from the fleet operators themselves, to utilities and even investors in this space to lay out the challenges ahead.”

CRA emphasises that electrification should be part of a broader energy strategy.

By incorporating strategies such as energy storage and on-site renewables alongside electrification, fleets can more effectively manage energy consumption.

Additionally, it says that leveraging fleet vehicles as flexibility assets through Vehicle-to-Grid (V2G) and smart charging solutions can enhance the sustainability and resilience of energy systems.

Toby Kernon, CEO and founder of Wagonex, said: “It is not surprising that the take up of EVs has been slow in the LCV market, as for many companies the infrastructure just isn’t there to support these vehicles being on the road all day every day, as well as the fact that there aren’t many EV LCV models available on the market as of yet.

“It is also very difficult to test drive EV vehicles in a real working world situation too - driving them for a few hours won’t allow the driver or LCV fleet manager to really see how they would manage with them in on day-to-day deliveries etc. But it is important that we look at ways in which this slow take up can be resolved, especially with the Government’s ban on new petrol and diesel-powered vehicles set to come into play in 2035.  

“That’s where we believe subscription can help. By getting a subscription with a company such as ours, LCV fleet managers could see what models of EV LCVs could work for them and their business.

"They could try before they buy and ensure that the EV LCVs they are using are fit for their businesses purpose, rather than having to pay all of the up front costs first and then realising they aren’t a viable and workable option.  

“At Wagonex, we can also offer dealers and OEMs of EV light and commercial vehicles a route to launching their own subscription offering, as we recognise there is a huge opportunity in the commercial vehicle space.

"This would offer dealers and OEMs a new revenue stream as the EV LCV take up increases, as well as a marketplace for second hand EV LCVs returning following lease agreements.

"This is a big part of the commercial vehicle sector that we believe is ripe for innovating, as this research demonstrates.”

The report has been authored by Tilmann Hensel-Roth, vice president, Alpaslan Dilekci, vice president, Robert Stocker, senior associate and Francesco Nobili, associate at CRA. A copy can be downloaded here.