The long road to green

No longer the stuff of futuristic fiction, electric vehicles and hybrids are an accepted part of the motoring scene across the globe; plugin, charge up and drive away. So why are the majority of fleet managers here still opting for the internal combustion engine rather than embracing what has to be a cleaner, greener, smarter way to drive? By Patricia Moore.

The case for a greater number of electric vehicles on our roads includes higher efficiency; fewer greenhouse gases; less reliance on imported oil, and a quieter drive, although that’s also cited as a potential threat to pedestrians and pets that may not hear an EV bearing down on them.

The term ‘electric vehicle’ applies to motor vehicles – plug-ins (BEVs) – that are wholly – powered by electric batteries and recharged from the power grid; Plug-in Hybrids (PHEVs) offer electric-only power backed by a petrol or diesel engine, whereas straight hybrids use a combination of petrol or diesel engine and an on-board electric motor which supplements the combustion engine and reduces the vehicle’s fuel consumption. Given New Zealand’s high level of renewable energy going the plug-in way makes a lot of sense.

“The technology varies significantly by model,” says Neeraj Lala, Toyota NZ GM, product planning and used vehicles.

“Vehicles such as Tesla in the United States have the ability to travel more than 300 kilometres on pure battery while others can be as low as 20 kilometres. Plug-in hybrids have been designed specifically for short-run commutes.”

A number of reasons are given for the slow uptake. Availability is one; there’s not a lot of choice in the local market, particularly for new vehicles; there’s also a widespread lack of firsthand knowledge and information – getting behind the wheel of an electric vehicle is not something many of us have done. Then there’s the price. “The cost of plug-ins is higher due to the level of technology,” says Motor Industry Association CEO, David Crawford. “And with plug-in hybrids you have two motors, an internal combustion engine and an electric motor – sometimes more than one. On a cost basis they often don’t make the financial cut.”

Hence the call, from the MIA and the Sustainable Business Council, for the government to make greening the fleet more financially appealing. They’d like to see reduced Fringe Benefit Tax and better depreciation considerations. “FBT is calculated on the purchase cost of a vehicle. If you pay a premium for a plug-in then unfortunately you pay more FBT compared to a vehicle that is not the plug-in version,” says Crawford. They’re also asking the government to continue to exempt electric vehicles from road user charges, beyond 2020.

“The business community strongly supports the initiatives we’ve promoted,” says Crawford. “These are targeted at reducing the whole life-cycle costs from a financial burden perspective.”

Bryce Grove, GM trade operations at SG Fleet NZ, agrees these are suggestions worth encouraging, adding that, considering the higher cost of the technology, a change to the IRD maximum ‘useful life’ for operating electric vehicles would allow more economic value to be extracted during the term of a lease. “It’s also important we continue to educate and change the perception of this technology.”

Both the MIA and the SBC welcomed recent statements by the Minister of Transport, Simon Bridges, supporting acceleration in acceptance of EVs – ironically doing so on the same day the biennial OECD New Zealand economic survey, estimating the costs of Auckland’s traffic woes at around $1.25 billion in lost productivity, was released.
Bridges is “hugely excited about EVs”, describing them as the car of the future. He’s rather more reticent when it comes to subsidies or tax breaks but, speaking at the Plug-In Fleet day in April, his statement referred to a big future in New Zealand for electric vehicles, saying “Fleet purchasers are a vital part of New Zealand’s EV story”.

SBC’s executive director Penny Nelson says for many of their members, switching to EVs is only part of the picture. “Businesses are doing sustainability reports, looking at their carbon emissions profile and asking where they can make improvements. Fleets will usually be part of that.”

Nelson sees availability as a big issue for fleet managers. “When you look at what a business needs to do, the makes and models they can easily access are not necessarily lined up with what a fleet manager would call fit-for-purpose. So it’s not as simple as going to your leasing company and saying ‘we want plug-ins, show us where they sit on your list and let me crunch the numbers’. Those vehicles aren’t on the list. If they are you pay a higher premium.”

Grove says they see a “massive lack of understanding on EV and hybrid vehicles, especially when it comes to technology”.

Zealand’s first Electric
Plug-In Fleet day

It was overcoming this problem that prompted New Zealand’s first ever Drive Electric Plug-In Fleet day. Turnout was strong and feedback has been fantastic, say the organisers.

The aim was to clear up any misconceptions corporate fleet buyers may have, help them understand an EV is ‘not a spaceship’, it’s really a normal car, capable of high speeds, and doesn’t require filling up every morning. And attendees were able to get behind the wheel.

“That hands-on physical experience was quite an eye-opener for a lot of people,” says Nelson.

A post-event survey of attendees indicated that, of the 71 percent who’d taken the opportunity to drive one of the four brands of electric vehicles at the event, 92 percent would consider EVs as a fleet option.

Speakers at the event’s Leaders’ Breakfast underlined the economic and sustainability advantages electric vehicles and plug-in hybrids offer. They included Fraser Whineray, CEO at Mighty River Power, one of the sponsors, which announced late last year that the company would convert 70 percent of its fleet to plug-in or hybrid plug-in cars over the next four years.

What the corporates are buying
But, if corporate buyers are reluctant to purchase plug-ins or plug-in hybrids, what are they buying?
Toyota’s Lala says the trend is away from medium size sedans to SUVs and light commercials. “Corporates and fleets have downsized in efforts to lower CO2 but most importantly, to reduce fuel usage.”

Nadine Bell GM marketing, Honda NZ, says they’re also seeing a trend away from sedans into five door hatches and SUV utility vehicles. And it’s a similar story at SG Fleet, both locally and globally, following the GFC and as a result of fluctuating fuel prices, says Grove.

“CO2 levels are definitely a consideration when it comes to fleet purchasing but there are also a number of others. Whole-life analysis is incredibly important, ease of operation, safety rating, and fit-for-purpose are all considerations.”

For manufacturers of plug-ins and hybrids, the challenge is the high cost of production and battery technology, says Lala. “For the consumer it comes down to price and infrastructure. Like many companies Toyota has a dedicated charging station, however until these become more prominent throughout our larger cities, range anxiety – when your power might run out – will play on consumers’ minds. While many plug-in hybrids simply switch to traditional hybrids when stored energy runs out, the technology is so advanced the challenge is explaining this to consumers so they can understand it.”

EV technology will need to move on before these vehicles become tool-of-trade with corporates, says Grove. “We need technology where range anxiety is not even a thought; fast charge and more charging stations will help but EVs need to have greater range.”

Range anxiety could well be reduced should the ‘Renewables Highway’, a countrywide network of charging stations, becomes a reality. A scoping study was announced in March by the Electricity Networks Association with completion due at the end of July; it’s envisaged such a network would encourage further charging infrastructure.

With the number of electric vehicles on our roads still small – around 660 by late June – the time is right for business to change gear. “New Zealand has the power to charge your fleet and you have the power to change your fleet,” says Drive Electric chair Mark Gilbert. 

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