The road to electric: What will it cost?

SME Publications/ SME XPO 2024

By Denise Beedell, below, Public Policy Manager, Logistics UK

With the phase-out date for the sale of new petrol and diesel vans set for 2030, a key concern among SMEs will be the transition to hybrid or zero tailpipe emission commercial vehicles, and the costs incurred as a result.

Electric has been widely adopted as the viable solution for light commercial vehicles (LCVs), including vans. In 2021 plug-in vans accounted for 3.6% of all new van registrations, with the Society of Motor Manufacturers and Traders (SMMT) forecasting that in 2022 electric van sales are likely to double to 6.4% of the market. However, while there are government grants to support the uptake of new battery-electric vans, some SMEs may face challenges with the cost of purchasing these vehicles second-hand, as there is currently no government scheme in place to subsidise this. As the market grows, and the nation heads further towards decarbonisation deadlines, consideration will need to be given to further support for SMEs if prices remain a key barrier to uptake.

Charge points for plug-in vehicles could also pose a challenge to operators. Logistics depots and sites require sufficient electric capacity to achieve rapid fleet recharging, while employees who need to take their vehicles home must also not be forgotten. Accessibility to sufficient public charge points is also vital. As part of the EV infrastructure strategy published in March 2022, government outlined its intention to expand the UK’s electric vehicle charging network by 300,000 public charge points by 2030, with a minimum of 6,000 high-powered charge points – crucial for an industry that faces increasing time pressures – across England’s motorways and major A-roads by 2035.

While these are encouraging aims, more focus is needed on the requirements for commercial vehicles. As a result, Logistics UK has urged government to ensure the public charging network can accommodate all types of commercial vehicles, with sufficient large parking bays and longer charging cables.

Recent increases to energy prices will also impact the transition to electric vehicles. Previously, the cost of acquisition was high however, the lower running costs were an advantage when compared to petrol or diesel vans, however, electricity prices this winter will be up to 24% more than Q4 2021 for businesses and may rise further as the Energy Bill Relief Scheme ends in March 2023.

Logistics operators typically operate on low profit margins and, with the increased energy costs, the financial viability of investing in new electric vans has been reduced. Logistics UK is one of the UK’s leading business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods.

With COVID-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.

For more information about the organisation and its work, including its ground-breaking research into the impacts of COVID-19 on the whole supply chain, visit logistics.org.uk

SME Publications/ SME XPO 2024