Will Electric Vehicles Thrive or Fail to Survive Through C19 and Oil Price Drop?

15 Apr Will Electric Vehicles Thrive or Fail to Survive Through C19 and Oil Price Drop?

It is quite normal to suspect that the recent growth of Electric Vehicles (EVs) is going to be adversely affected by the double-hit of C19 and falling oil prices. Oil price falls of 44% suggest Internal Combustion Engine (ICE) vehicles may return to favour, whilst the potential recessionary effects of C19 may thwart the capital purchases of EV’s, which are widely considered a more expensive purchase than ICE’s. However, Fleet Europe recently commented that this may not actually be the case, and we tend to agree.

First, fuel prices. Crude oil price has dropped to lows of $28 a barrel (w/c 13/04/20), from more than $65 at the start of the year, and even though the world’s largest oil producers within the Opec cartel agreed to cut up to 20m barrels a day from production, the world’s storage for extra oil is approaching capacity. This drastic drop would suggest a resurgence of popularity of ICE’s as fuel prices fall off a cliff, however as fuel prices in Europe are largely dependent on taxes, these prices are unlikely to make such a difference to the price at the pump that it will remove the incentive to shun EV’s and remain with ICE vehicles.

Second, COVID-19. The impact is obvious and cost containment will be hugely important as companies fight to retain their business and their fleet.  As EV’s are widely considered to be more expensive than ICE’s, they may fall victim to cost cutting plans. This difference between EV’s and ICE’s is true when looking at purchase price, but a recent Leaseplan study showed that the TCO of EV’s when compared with their ICE equivalent, were better across 56% of the 912 testing scenarios.  Leaseplan took 4 car segments and compared 9 different leasing options for each of the 2 cars in each segment and applied that across 13 countries, producing a detailed study of the 912 scenarios. This study showed that the average TCO for EV’s is actually lower than for ICE’s. Although the additional battery cost creates a higher list price for the EV, they require less maintenance as they have fewer moving parts, the average cost per KM of electricity is less than traditional fuels and the support offered by Governments is visible in lower tax costs.  Additionally, as governments across Europe will need to claw back revenues and mitigate the huge bailouts lost to COVID-19, what softer target is there than taxes on polluting fuels: further strengthening the comparative TCO of EV’s

So even though electrification of a fleet, or section of a fleet that is due for renewal, may seem potentially expensive, the better TCO of EV’s provides obvious cost-saving opportunities.

Fleetworx provide independent client-side fleet support, coordinating, managing and motivating the suppliers of our clients to deliver fleet excellence. Coordinating a partial or full electrification of a company car fleet is just one of many fleet support services provided by Fleetworx.

To learn more about how Fleetworx can help you get total control of your car fleet universe then contact Graham Rees on 01926 353 300.