Opinion: Government incentives work - so why stop now?

By Tom Middleditch, head of electric mobility and sustainability spokesperson at Europcar Mobility Group UK

The UK's journey towards a zero-emission future is gaining momentum, with the leased car fleet leading the charge. 

As Fleet News recently reported, a remarkable 17% drop in average CO₂ emissions over three years demonstrates the efficacy of targeted Government incentives, specifically the benefit-in-kind (BIK) tax regime which has made EVs a clear choice for company car drivers.

However, this success story raises a critical question: is a crucial segment of the automotive landscape being neglected – the rental industry?

The answer, unfortunately, is yes. While BIK incentives have propelled EV adoption within company fleets, the wider road using market is not keeping pace, and there are no support mechanisms for rental operators who could play a more fundamental role, delivering an effective alternative to the bigger commitment of leasing or purchase for businesses and private motorists. 

As Europcar emphasised in our contribution to the BVRLA response to the recent ZEV mandate consultation, targeted incentives work and we believe it is critical to extend support to rental fleets, recognising their pivotal role in democratising electric mobility. 

Helping businesses and private motorists to trial EVs before committing, and supporting fleets through seasonal and temporary demand, rental is playing a vital role in the transition to zero emissions motoring and has the potential to provide even greater support. 

Now is the time for policymakers to extend strategic thinking across the entire mobility ecosystem to stimulate demand for EVs.

The SMMT's latest figures paint a complex picture. While battery electric vehicle (BEV) deliveries have surged by 41.7%, accounting for one in four new car registrations, this growth is tempered by a concerning fall in fleet registrations. 

This disparity highlights the limitations of a policy focused primarily on company cars and underscores the need for a more holistic approach. 

The revelation that manufacturers are subsidising EV sales with an estimated £4 billion in discounts signals the strain of mandated targets, raising concerns about long-term sustainability.

Rental challenges

The BVRLA has highlighted that the rental industry faces some unique challenges. In particular, the cost of operations and infrastructure installation combined with a lack of customer demand.  

As a result, BEV registrations among rental operators and those supplying e-vans remain low. The rapid depreciation of used BEVs, losing over half their value in just two years, also creates significant financial risks for rental operators. 

Moreover, electric van adoption is stalled by capability limitations, inadequate charging infrastructure and high costs. It has therefore asked government, as part of its response to the ZEV mandate consultation, to extending the existing car club credit scheme to encompass rental.

To unlock the rental sector's potential, the Government needs to adopt a multi-pronged approach. Targeted incentives are crucial. 

And there is an urgent need for the Government to back a campaign to educate motorists on the benefits and ease of electric motoring to tackle the misinformation that continues to hold people back from making the switch. 

Stabilising the used EV market is also essential. Government intervention, such as guaranteed buy-back schemes or tax credits, could mitigate financial risks and boost confidence.

Infrastructure support is also vital. The lack of home charging for rental customers means there is greater reliance on public charging. 

Expanding public charging networks, especially destination charging, is therefore crucial.

Clarity is also needed over regulatory expectations to enable rental companies to shape their fleet to match anticipated demand.

Beyond Government support

While Government incentives and investment are essential to success, the rental industry must also take proactive steps. 

Investing in EV education and training for staff is crucial to address customer anxieties, as is expanding EV fleet offerings and developing EV-specific rental policies. 

Rental providers should also focus on actively promoting the benefits of EVs and continue to gather data on EV usage to inform future policy decisions.

The Government's ZEV mandate consultation offers an opportunity to rectify the current imbalance. 

By providing targeted support and fostering a collaborative approach, the rental sector could be empowered to become a driving force in the UK's EV transition. 

As the Government rightly states, getting this transition right will unlock a multi-billion-pound industry and create jobs. 

It’s time to extend the benefits of electric mobility beyond the company car and ensure that everyone, regardless of their driving needs, can participate in the electric revolution.