Customers are demanding greener solutions, says VWFS boss Mike Todd

Mike Todd, chief executive of Volkswagen Financial Services UK, shares his thoughts about fleet customers' changing priorities.

The saying goes that we Brits love to chat about the weather and the sweltering temperatures we’ve experienced in recent weeks have certainly got the nation talking. 

Those sizzling summer days in July were met with a mixture of excitement and concern as people sought to make the most of the glorious sunshine whilst also contemplating the wider context of the climate crisis. 

Without doubt, environmental issues are an ever-increasing focus of political, public and industry discourse and in this month’s column I want to shine a light on the impacts of switching to electric for business fleets. 

Naturally, the passenger car market has led the transition to electric, but commercial EV adoption is now also ready to surge into a new era of clean travel.

The latest Department for Transport data shows that, as of March 2022, the UK eLCV fleet size stood at a promising 32,000 – accounting for 4% of the UK’s licensed plug-in vehicles. Despite ongoing challenges, which I’ll come onto later, we are definitely witnessing a shift in attitudes to electrification in the fleet sector. 

In the wake of the pandemic, my colleagues at VWFS | Fleet surveyed 200 Fleet decision-makers (both customers and non-customers) and found that a whopping 75% are looking to add more electric vehicles into their fleet. 

What we observed was that, as lockdowns forced millions to stay at home and a subsequent global shortage of semiconductors disrupted manufacturing supply chains, many businesses used this unique period to plan changes to their fleet.

Companies across the UK have been looking to optimise how they operate, evaluating which vehicles are best suited to be replaced by electric vehicles (EV) or plug-in hybrid electric vehicles (PHEV), as part of exploring ways of reducing their organisation’s carbon footprint.

For example, decision makers have been considering how Clean Air Zones may affect their fleets and whether they need to think about reallocating vehicles if they cover multiple geographical locations; perhaps moving electric vehicles to areas where they can maximise savings and reduce emissions.

And with more than half (57%) of Fleet decision-makers wanting support on emissions-based initiatives, our research clearly illustrates that business owners recognise the importance, and value, of going green. 

All of this feedback meant that we’ve been able to offer customers bespoke solutions including mileage adjustments, longer contract extensions and proactive service and maintenance solutions that reassured the 60% of customers who told us they were continuing to rely on their current vehicles. 

We also leveraged our close relationships with all car and van manufacturers – not just Volkswagen Group brands – to source stock vehicles and provide visibility of lead times. 

For the 25% of respondents who told us they were looking to bridge gaps with short-term rental, we were equipped to help with our own flexible rental product.

Unlike the 35% of non-VWFS Fleet customers who had not spoken to their leasing provider about the situation, we have deployed our teams to speak with every customer. 

Moreover, at Volkswagen Financial Services UK we were ahead of the curve when we began working on our ‘EVolve with VWFS Fleet’ proposition in 2017, long before BEVs and PHEVs became so popular amongst company car drivers.

We developed a series of free-to-use tools for our customers, designed to guide them on their EV adoption journey, and to provide industry insight that can be used to inform decision making around alternative fuelled vehicles (AFVs).

To date, we have analysed over 6.5 million miles worth of real-world driving data through our innovative Future Fleet Analysis tool, and the results have been eye-opening.

In 2019, the real world driving data we analysed suggested that 11% of drivers were definitely suited to a BEV, while a further 37% should be considering a BEV given that over 90% of their journeys analysed could be made in an EV without stopping to charge. 

Our benchmark EV at the time was a Volkswagen e-Golf with a range of around 186 miles.

We re-analysed the same data not so long ago and thanks to the huge improvements in EV driving range, our benchmark electric vehicle now being a mid-range Volkswagen ID.3 with a WLTP 263-mile range, 74% of the drivers analysed are now suited to a BEV. 

The real world impact of this can be felt through the changes in fuel type across our True Fleet portfolio and order bank, with 72% of our current order bank made up of hybrid and electric vehicles.

However, to ensure we capitalise on this positive momentum, more can be done to encourage fleet decision-makers, and fleet drivers, to go electric.

The biggest issue is that we need to knit together the public charging infrastructure and overhaul the current fragmented network that is held back by a confusion of charges. 

We need public chargepoints that are easily compatible with a uniform contactless payment method, reliable and deliver the advertised power (particularly relevant for ultra-rapid chargers); a potential solution could see providers bound by industry standard SLAs regulated by Ofgem.

Notwithstanding this, the future is positive.

As fleets look to make the transition towards electric vehicles, simply giving wider access will make a big difference to the fleet and driver experience of running electric vehicles. 

Our industry can overcome concerns and help to improve the uptake of electric vehicles in fleets and businesses, and once we’ve done that the EV revolution has overcome another hurdle on its journey towards success.

Our commitment at VWFS Fleet is clear: we want to put the right people in the right vehicle and fuel type for their needs, and our role as one of the leading and fastest growing business leasing providers in the FN50 is to ensure customers and their drivers are informed and confident in making the required changes for successful EV adoption.

Whether our customers’ fleet targets are environmental, such as sustained CO2 reductions, cost-based, such as reduced Whole Life Costs (WLC), or legislation driven, such as accessing Clear Air Zones or the forthcoming ban on ICE vehicles from 2030, VWFS Fleet are on hand to support them every step of the way.