Electric vehicles and fleet management

14 April 2015

Charles Willmer, CEO of LeasePlan, shares his vision for sustainability and predictions for electric vehicles with us.

LeasePlan manages and finances vehicle fleets for corporate and public sector organisations. We do this in 32 countries and we manage about 1.4 million vehicles worldwide. LeasePlan is a Dutch company established in 1963. We’re a market leader in this niche and we’ve been operating in New Zealand since 1993.

What is your point of difference compared to other companies operating in this field?

First, the background and experience we have overseas gives us access to information, skills, tools and resources that no one else has. For instance, we have an online fleet reporting tool that cost many millions to develop. A New Zealand company wouldn’t have that resource. We can access information about other markets that helps us in what we do.

Secondly, our focus on managing fleets rather than just leasing a car gives us a holistic perspective. We provide end to end fleet management that is seamless, so a customer doesn’t have to go through an administrative contact.  

Thirdly, we build transparency of all the costs involved into our partnerships.

What is your vision for sustainability?

While we do things that any responsible employer would do – like recycling, switching off the lights, minimising fuel consumption and driver safety – the key thing for us that extends well beyond the reach of the 80 people in our office is the influence we have through our customers.

We are their fleet manager and thus they come to us for advice. We’re in the position where we can influence them on a whole lot of different things regarding their fleet. We do that through vehicle policy selection and through an initiative that we call Greenplan, which I will talk more about shortly.

How has your commitment to sustainability helped your business?

It’s helped us through growth, mainly through retention of existing customers. Sustainability isn’t necessarily going to be a lead strategy, but it is a consideration. There has to be a balance between the three pillars of sustainability – environmental, social and financial – and in New Zealand business the pendulum tends to be towards financial stability.  So typically sustainability aids the next layer of relationship that we build up with our customers.

How can you help customers who want to make their vehicle fleet more sustainable?

First, we help them with their car policy. We talk and consult with our customers every one to two years about what vehicles they’re running. We assess the types of people they’ve got working for them and the jobs they do and then start to identify vehicles that will do the job. We then use our expertise and database to look at options.

We look at vehicle statistics such as engine size, CO2 emissions and fuel consumption, and we put it into a total cost of ownership model, looking at operating costs, purchasing costs and so on. Most vehicles are subject to FBT [Fringe Benefit Tax] as they are business vehicles, so we bring that cost in too. Thus we can get a total overall cost of ownership on a monthly basis for particular vehicles to help the customers make informed decisions.

Greenplan is a system of reporting on an annual basis that takes account of the social and environmental indicators of a fleet. The environmental indicators include consumption, number of vehicles, type of fuel, quantity of fuel consumed, distance travelled, number of tyres fitted and how much fuel is consumed. From that we can work out the carbon output of the vehicles using published CO2 rates and also the conversion rates into trees to offset that carbon. Social indicators include safety of the driver, ANCAP safety rating, accident rates, and speed camera infringements.

Why are you supporting the Million Metres Streams project to offset your carbon?

The Million Metres Streams project offsets carbon through the planting of waterways. In addition to planting it has the added focus of something that’s important for New Zealand: the health of our waterways. It’s an all-round focus that covers all three pillars of sustainability: environmental – the cleanliness of waterways; social – the play areas for Kiwis as a nation of water-lovers; and economic – if our waterways are no good then potentially our fisheries and agriculture will be less efficient.

So while the Million Metres Streams project doesn’t involve accredited carbon offsets, we don’t see it as an issue switching from planting trees to planting metres of streams and we’re happy to support it.

What are your predictions for electric vehicles?

Some overseas markets are well ahead of New Zealand and if I look at that experience electric vehicles (EVs) are going to be hard road. It’s not a no-brainer when you look at the environmental and social impact versus the financial impact. Where EVs have been successful overseas is where the cost of the vehicle has been, in most cases, subsidised quite heavily, mostly by government via tax breaks.

If you compare an EV against a similar petrol vehicle the same size, the cost is much higher. The second hand car market doesn’t pay a premium for the vehicle. Yes, there’s a fuel saving if you run the vehicle correctly. However, when you do the total cost of ownership exercise, especially for businesses who are probably going to be the volume buyers, which means you have to add in FBT, in a lot of cases there’s a premium to pay. Is this going to be a ‘mobile phone market’ where the first mobile phones were hugely expensive and then overall costs come down? That’s a chicken-and-egg argument.

We also need to consider the potential alternatives going forward. At the moment there are none that are close to market but other technologies will emerge over time. In recent times, vehicle manufacturers have been getting smarter about making traditional fuel engines far more efficient. Their efficiency is stunning in comparison to not that long ago.

So we’re not necessarily going to see vast fleets of EVs under the current cost structure. Where we are seeing the take up is for specific types of businesses for specific types of usage: the around-town, run-around fleets that don’t need to do big distances where there’s a lot of stop-start and wear and tear. The resilience of an EV to that type of usage is good.

Our experience of the hybrid – mixed petrol/electric vehicles – is that they need to be carefully managed by the user because depending on the way you drive them, they can consume as much fuel as petrol vehicles. That points you more towards the purely EV rather than hybrids.

Cost-wise, the high upfront price is a consideration. What can be done to subsidise that? Government may need to play its part, and volumes will play their part over time.  The second-hand car market is yet to switch on to any form of premium for EVs as there’s still suspicion about what the vehicles is going to be worth in a few years’ time. The technology needs to keep improving to give people more comfort in buying a second EV that’s four or five years old.

New Zealand has a very free market. What the market demands, the market will pay for. A lot of influences need to come to bear.

Why are you getting involved in SBN’s new project on electric vehicles?

Over the last six or seven years we’ve been involved with a number of our customers in hybrid vehicles. We have existing customers looking seriously at an element of EVs within their fleet. We have some expertise in managing EVs through our history, local and overseas, and we see it as one of the options for the future of the industry. So we are pleased to be involved in supporting and providing information to the project and its members.

Find out more about LeasePlan here.  

LeasePlan is a support partner in SBN’s project on Electric Vehicles. We’re committed to progressing electric vehicles in New Zealand and as with all new initiatives there are a variety of viewpoints. We’d love to hear what you think: to get involved or find out more please contact Rachel Brown.