Paul Barker grabs a cuppa and a chat with one of fleet’s most influential figures – Simon King, Fleet and Procurement Director, Mitie.
Facilities services company Mitie has ambitious plug-in vehicle plans, and expects to be the UK’s largest electric vehicle fleet by the end of Q1 2020. Fleet and procurement director Simon King talks through the whys and hows of the shift
QYou’ve been at the forefront of the moves towards electric. Could you explain how that came about?
Sustainability is critical to us. We are a services company, so 93% of our carbon footprint is down to our fleet. Our belief as a business (and my own personal belief) is you have to look at how you improve your sustainability performance and clearly at Mitie the biggest area for us to focus on is our vehicle fleet.
When we started doing a review of our options, it very quickly became apparent that we were uniquely positioned to go after electric vehicles in a big way. We did an initial assessment of where we would be able to move vehicles across, using a relatively conservative figure of 80 miles as the average daily range. Our initial focus was on the small vans and the car fleet, and we realised that we would be able to move 20% across to electric straight away.
The Mitie fleet is made up of around 5500 vehicles: 3300 vans, 2000 cars, 200 short-term hire vehicles and a handful of HGVs.
The cars include 1500 job-need vehicles, and the move to electric has led to a fleet that includes the Audi e-tron, BMW i3, Hyundai Kona electric, Jaguar i-Pace, Kia e-Niro, Nissan Leaf, Renault Zoe and Tesla Model 3, with the electric Vauxhall Corsa and extended-range Nissan Leaf coming early in 2020.
“You name it, we’ve probably got one,” says Mitie fleet and procurement director Simon King. The majority of job-need vehicles will be the Zoe, Corsa and Leaf, while the Tesla will replace the higher-level perk cars. On the van-side, the majority of vehicles the company is taking on are Nissan e-NV200s.
Mitie has committed to moving around 20% of its car and van fleet to electric power by the end of next year, a figure of 770 vehicles that it claims will save more than 4000 tonnes of CO2 per year. It aims to have its entire fleet (infrastructure and vehicle availability permitting), as purely electric by 2030.
The current EV fleet numbers more than 100, with King saying that another 500 vehicles are on order, which Mitie believes is enough to make it the largest electric fleet in the country.
QWhere are you seeing the biggest benefits as a business?
There are three big benefits: people, planet, pocket. On pocket, whole-life cost is a bit more expensive because it’s
a higher acquisition cost but I believe the residuals will stack up, and SMR is lower as there’s just less to go wrong.
Then with fuel you’re talking about less than 4p per mile for electricity compared with about 12p per mile of diesel, plus for a car you’ve got the employer NI saving as well; from April it’ll be significant.
There are swings and roundabouts but overall, we were comfortable that we would do no worse than break even. Vans are more of a challenge but we’ve looked at a whole-fleet picture rather than say we will do it for that vehicle and not this vehicle; we’ve said we’ll win on some and lose on others but overall, it’ll be the right thing so it stacks up from a pocket point of view.
The last bit on pocket links into people on the company car side as clearly for employees, there is a significant benefit. It depends on your situation but if you assume that an Astra company car driver is a 20% taxpayer; its about £1250 per year saving from April. That’s take home, a tax saving of over £100 per month in that employee’s pocket. When you look at the perk fleet, assuming a BMW 3-Series driver is a 40% taxpayer, it’s a saving of £4500 per year, so it’s definitely the right thing for the employees.
QAre you finding vans more of a challenge to justify?
It’s slightly more of a challenge on vans because there’s neither the employer NI nor the Benefit-in-Kind saving for the employees on vans, so that’s why we are looking at the total fleet.
One of the things when I talk to anyone who’s in a legislative or that kind of role is how can there be similar kinds of incentives for the transition to vans as well. The Road to Zero suggests that by 2030, 40% of new vans are going to be electric. That is a bigger challenge than electric cars to be honest because electric cars make sense financially. Vans would be more of a challenge. We are fortunate enough to have a balanced fleet but if we were a pure van fleet it would be a different story.
QHow have your employees reacted to what is a significant policy change?
We did a survey of all of the people who have either got electric vehicles delivered or who have an electric vehicle on order to ask why they wanted one. I assumed it was going to be cash, and sure enough 32% said that was the most important consideration. But 38% wanted an EV for the environmental benefit.
I’m not sure that people are aware, but a third of CO2 emissions in the UK come from domestic transport. And that’s not international aviation or shipping, because the Government doesn’t measure that in the statistics. Worse still, it’s only reduced 3% since 1990. If you compare that to the electricity supply in the UK, that’s reduced by 59% in the same time period.
QHow are you finding the availability of electric vehicles?
The two big challenges are availability and infrastructure. Availability is getting better, but it’s still a challenge. The lead times are long and getting the numbers of vehicles you want is hard. It’s a bizarre situation, particularly for me with my procurement director hat on. We’ve gone from having e-auctions on the supply of cars to struggling to get OEMs to commit to supply me cars when we are willing to place an order. We’ve had to take a very different approach. I bulk-order vehicles now, so if you’re getting a Tesla Model 3 rather than a BMW 3-Series, or a Renault Zoe rather than an Vauxhall Astra, for example, you don’t get to choose what colour it is or anything else because I have ordered 50 or 100 of them at a time.
If we just order them on a driver-by-driver basis as leases come up, the lead times are so great and we haven’t got any certainty when the vehicles are going to be delivered. So we have to do bulk orders to procure availability and then work out which drivers are going to get them. It’s a different way of thinking about supply.
QHow are you managing the vehicle recharging?
The other challenge we have found is infrastructure, and there are three main areas – at home, public and at work.
Most of our vehicles are home-based, vans as well as cars, and with home charging, the way we are working it with cars is that we pay back on the Advisory Electricity Rate, so they put their business mileage in and we pay 4p per mile. That works OK for company cars and drivers are generally quite happy. But when you get to commercial vehicles, that’s a bigger challenge, because you are then asking someone that is only driving for business to pay for the electricity to charge the vehicle up and then to claim it back from you. Whereas currently they just fill their van up with the fuel card. We wanted to be able to pay for that energy directly, and we know how much energy is going into the vehicle because we are installing smart chargers, but none of the energy companies can do a tariff where if your bill is £50 per month, and £20 of that has gone through the smart chargers, Mitie can pay the £20 and you pay the £30. The technology is there, but the product and the regulation has not kept up. At the moment with the vans we are focused on where they can be charged on a site, or in Scotland where there is free public charging.
With public charging, there is a reasonable amount of infrastructure for the number of cars, but if we’re going to get to a million cars a year in 10 years there will need to be a more readily available charging infrastructure. And the other big challenge is because there are lots of different providers, I have got a screen full of apps, and with some of those companies you have to put a minimum amount in to pre-load your account. We can’t ask commercial vehicle drivers and job-car drivers to load up all these different accounts with money to recharge their vehicle. It makes it slower and more complicated when what you want is to make it easier. 80%+ of the charging is going to be at home or the workplace which can be on 7.2kW fast charging, which is absolutely fine, but out and about the public infrastructure has got to be rapid and then as a fleet you have got to be able to easily buy that and run it.
The last one, which we really didn’t anticipate, is actually at work. We don’t own many of our sites and just trying to get permission to put charge points in is incredibly painful and incredibly slow.
QRegarding the employee base, how have you managed it in terms of ability to charge. Are EVs only open to people that can install a home charge point?
We’re making them available to all. Where people can have a charge point at home we have partnered with Pod Point; the employee applies for the point to be installed, gets the OLEV grant, and Mitie pays the differential directly to Pod Point so there is not an impact on the employee.
Clearly if someone lives in a block of flats or a terraced house where there is only on-street parking, then we are unlikely
to be able to install a charge point. That doesn’t mean we say you can’t have an electric car, but they need to be comfortable that they can recharge that vehicle.
Air quality is a focus for many cities; you’ve seen the Bristol announcement on diesels. At the moment it seems to be down to each city or each council to take their own approach, and we have a national road infrastructure and a national plan to move us to electric vehicles, but we have a completely local charging infrastructure approach; there’s a bit of a disconnect there.