There are two schools of thought from manufacturers of electric light commercial vehicles: sell the battery outright with the vehicle or have the operator lease it
Electric cars can be found buzzing around every large UK city, but the commercial vehicle sector has yet to see a significant take-up. Figures from July show there have been 284 new registrations of commercial vehicles joining almost 1,000 already on the road.
From the vehicle manufacturer’s point of view there have been major technical hurdles to jump, as well as the task of persuading operators that the ROI is worthwhile.
Nonetheless, there is movement towards all-electric LCVs from large fleet operators keen to reduce energy consumption on local runs – and this year’s Commercial Vehicle Show was proof that a number of vehicle manufacturers (VMs) have developed commercial EVs that meet the brief. Citroën’s experience with electric vans dates back nearly 15 years, and more recently it’s been joined in the sector by products from companies like Mercedes-Benz, Nissan, Peugeot, and Renault.
There have been automotive casualties along the way – such as Ford’s partnership with Azure Dynamics – however this time around, manufacturers seem to be better prepared for all eventualities when it comes to battery-powered commercial vehicles (CVs). These manufacturers are also keen to work with operators to ensure the total cost of ownership (TCO) remains as low as possible – a factor largely affected by the choice of battery acquisition.
There are two schools of thought: sell the battery outright with the vehicle or have the operator lease it. Looking at options available from vehicle manufacturers, there doesn’t seem to be a simple answer.
Mercedes-Benz, which produces the Vito E-Cell, doesn’t offer the option of a separate battery. “Our approach has been to give the customer peace of mind by offering the vehicle on an all-encompassing Contract Hire package via Mercedes-Benz CharterWay,” says the company. “This [deal] ensures that the only remaining TCO variables are the cost of charging and insuring the vehicle, allowing the customer to know from the outset what the vehicle will cost them.”
Since the launch of the first generation Citroën electric van in the late 1990s, the French manufacturer has adopted a policy of selling the vehicle as a complete package. Peace of mind, experience and simplicity for transport operators were all taken into consideration when Citroën decided to continue with this approach for its latest electric van, the Berlingo Electric.
Renault goes against the grain and offers a lease deal for its battery-powered offerings, but partner Nissan is planning yet another variation on the theme with its e-NV200, which went on sale in June. “We know that, for battery requirements, different manufacturers have different outlooks on which way is best,” says David Hanna, National Corporate Sales Manager at Nissan. “We decided to go for flexibility and offered both options to the customer. So, the same vehicle can be purchased both ways – either lease the battery or buy it outright with the van.”
The whole package
Nissan’s experience with cars is, according to Hanna, “heavily skewed towards buying the whole package,” and he says the company expects the e-NV200 van to be the same mix when operators buy them.
He does, however, understand the appeal of separating battery and vehicle. “Leasing the battery is a good option, but it is not very widely accepted by leasing companies – they find it difficult to place a residual value on something that you don’t wholly own, especially from a repossession point of view,” states Hanna. “Customers and leasing companies are used to owning the whole vehicle and while the leasing option is a good model, I don’t think the market is ready for it on a large scale just yet.
“The difference in costs of operation for leasing versus outright purchase will depend on how long you are going to keep the vehicle, and the mileage you are planning to do,” Hanna adds. “If you are going to keep it for a long time, the advantage of leasing the battery is that it is guaranteed for the whole life of the vehicle. The vehicle, if you buy the whole package, does have a five-year warranty, which is good if you are planning on low mileage and keeping the vehicle for a while.”
In its launch materials for the e-NV200 van, Nissan claims that it can save operators up to £2,500 in fuel costs, with running costs of 2p per mile possible. Maintenance costs can be reduced by £575, based on servicing parts, and wear and tear. These are all details that Hanna says are covered in the initial discussions about orders for new vehicles.
“With electric vehicles, we will write a bespoke TCO model with the customer. We have corporate sales managers who have a lot of experience with EVs, and they know how best to help operators,” he explains. “We work out how long they are going to keep it, how many drivers there will be, what is the maintenance schedule, where it will be charged, whether it will be charged at on/off peak times, and then we calculate what is best for them – either buy/buy, or buy/lease.”
Hanna admits that EVs don’t look appealing when you look at the capital cost; prices for the e-NV200 start at £13,393 for the base van model (including the grant), rising to over £30,000 for the top-of-the-range model. But he remains confident that these costs stack up from a TCO point of view, and explains that is how they look at the situation. “British Gas is a good example,” he explains. “We did an EV van trial for six months, and the dataloggers that were fitted onboard told us that they’d covered 60,000 miles across all of the vans. When we worked out how it compared against its current fleet of Volkswagen Caddy vans, British Gas was happy to place an order for 100 vehicles.
“We are looking at it on a case-by-case basis – British Gas keeps its vans for five years, and covers about 7,000 miles a year. We looked at it from all angles, but the company decided that buying the battery was the best option,” he states.
One further consideration is charging options, says Hanna. “There are different capabilities, but the best way to decide on what is best is to look at vehicle downtime,” he says. “We’ve got LEAFs in with West Midlands police, and they are also looking at the van. They have four hours downtime between shifts, so have fitted a quick charger onboard, which reduces the charging time down to four hours, so it is perfectly aligned to their charging capabilities. So we would spec that option, and it may have a residual value application. You could put rapid charging capability on the van, but would never need it, so operators have to be aware of these things.”
This article was supplied by SMMT’s Transport News Brief.