CommercialFleet

Pump vs. Plug: has the TfL scrappage scheme changed the outlook?

By James Davis customer strategy and insight director (Commercial Vehicles) at Cox Automotive UK

Over the last few years, electric vehicle technology has come on in leaps and bounds. It’s well documented that challenges around cost new, payload, range, charging infrastructure and availability have affected uptake; specifically compared to the trusty diesel workhorse cousin.

With the introduction of Low and Zero Emission Zones and a £23 million scrappage scheme from Transport for London (TfL) for microbusiness vans and charity minibuses, could we see a turning point in the next five years as the zones roll out across the UK?

In reality, it’s large corporate fleets that buy and benefit from new van technologies. Without supply and competitive pricing, first-life electric vans will struggle to “take off” and create a meaningful supply for second-life users. It’s a perfect paradox because electric vans are actually more suited to the average second-life user (sole-trader or SME), that typically does lower mileage.

Interestingly, the London scrappage scheme permits up to three vans to be scrapped, with a £3,500 grant for each – to be used on a new, leased or used Euro 6 van. An electric van qualifies for an additional £2,500 contribution to running costs.

The inclusion of used Euro 6 is great news for the used van sector and UK small business. The SMMT states 30% of vans on UK roads are over ten years of age; very few operators of a £1,500 van could justify financing a £20–30,000 new van, but a £10,000 second-hand van with a £3,500 subsidy is a more enticing proposition.

2021 is a marker - the London ULEZ expansion to Greater London in that year and the air quality target deadline across the UK means we should start to see an increased trend for sole trader and SME van operators upgrading to Euro 6 and electric vans. 

Despite the additional £2,500 contribution to running costs, I suspect the take up for electric vans under this scrappage scheme will be low - they remain a challenging proposition for smaller businesses.

By 2021 the world will no doubt be a different place, and challenges around purchase cost, lead time, suitability and charging will be reduced or possibly even eliminated.

For now I believe small businesses and tradespeople will future-proof themselves as much as they can by upgrading to the newest second-hand Euro 6 van possible. The remainder will keep their old van and reflect the ULEZ charge when pricing for goods and services, just as they do with the congestion charge.

Over the next five years, as availability of Euro 6 vans increases in the used market we’ll see increasing numbers of sole traders and SMEs switching into Euro 6 diesel. That’s good news for the removal of some of the oldest diesel vehicles from the roads.

 

I believe it will still be a few years before smaller operators have the confidence to switch to a fully electric fleet. Large corporate fleets need to register new EVs in volume to create a supply of used vans for small businesses to buy; I suspect, as with used Euro 6 today, that demand will eventually outstrip supply.


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