Electric car and van retailers have seen a huge surge in sales despite COVID-19 causing months of stagnation across the industry, according to the latest figures from the Society of Motor Manufacturers & Traders (SMMT). With the new UK Government green deal initiative, we look at the recent developments and trends in electric and eco vehicles and their impact on motor trade insurance and specifically van fleet use.
A Growing Market
In its recent published report on The Global Electric Van Market, international market research company Reportlinker stated that the commercial van market is expected to grow by more than 150 million units in the period 2020-2024. This is backed by the latest Department for Transport data suggesting that the UK has already surpassed 100,000 pure-electric cars on the road, with 99,374 licenced zero-emission vehicles registered in 2019 alone.
More recently, in 2020 The SMMT, which is the UK body that exists to support and promote the interests of the UK automotive industry at home and abroad, reports that 30,957 battery electric cars were registered by the end of June – almost 160 percent higher than sales in the first six months of last year. This comes on the back of the UK government’s announcement of a £37m investment in projects aimed at improving electric vehicle infrastructure, marking the first anniversary of the launch of the Road to Zero strategy, which wants ‘almost every car and van’ in the UK to be zero emission by 2050.
Van Fleets Going Green
In the commercial van sector, fleet insurance brokers are increasingly seeing companies choosing to go down the eco route, either as a demonstration of good corporate governance or because local and national incentives are favourable towards electric.
Openreach, one of the country’s largest fleet operators, has placed an order for 270 fully electric Vivaro-e vans and 9 Corsa-e cars. Trade industry journal Fleet News reports that one in three (35%) fleet orders placed so far this year have been for electric or hybrid vehicles.
A recent study of more than 500 UK companies commissioned by London First, a not for profit advocacy group with a membership composed of leaders of businesses in London, found that almost a third (30 percent) of fleets are already using EVs, while 46 percent have active plans to make the transition and a further 16 percent have begun to discuss it.
Better Tax Rates
The switch to electric vehicles has been driven in part by the by the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). This laboratory test is used to measure fuel consumption and CO2 emissions from passenger cars and vans, as well as their pollutant emissions. WLTP applies to all new type approvals from September 1, 2018. In the UK the move away from conventional petrol and diesel vehicles has been driven, in part, by new benefit-in-kind (BIK) tax rates.
Currently company car drivers pay no tax on pure electric vehicles this tax year, while drivers of plug-in hybrid electric vehicles (PHEVs) are also enjoying much more advantageous rates. HM Treasury says that for cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points. That means for a pure electric vehicle with zero emissions, company car drivers will be taxed at zero percent paying no BIK tax at all.
And in a recent analysis of lifetime running costs reported by This is Money, reports show that electric vehicles are now on average £107 cheaper a year to own than petrol cars.
And, as with the rest of the market, motor trade insurance companies are now starting to recognise the benefits of switching to EVs with predictions that premiums will follow the same route as tax breaks, making the choice for owners and managers even easier.