Electric Vehicles

Public, political and industry interest in EV has risen sharply in recent months. The Covid-19 pandemic saw a huge fall in the number of new car sales. Petrol and diesel sales have fallen by 52% and 69% respectively over the last year, but Battery Emissions Vehicles (BEVs)and Plug-in Hybrid Vehicles (PHEVs) have gone the other way. BEV sales rose by over 150% alone.

The figures, from the SMMT, underline the likelihood that EV will take a growing share of the vehicle market going forward. Emissions targets, underpinned by legislation require the UK to produce zero carbon by 2050; the effect is that sales of petrol and diesel fuelled vehicles will stop by 2035. The powerful Parliamentary Climate Change Committee has called for the UK to be 100% EV by 2035 (but ideally 2030). That’s less than ten years away.

This is an issue the credit hire sector needs to grip now, both from the immediate perspective that there is increased demand for like for like replacement vehicles made available to EV owners in need of mobility, and that our members must think through the implications on their business models of a UK vehicle parc without petrol and diesel-engined vehicles.

The CHO’s head of business, Peter Gomes, has written a comprehensive research report which gives members a detailed perspective on the likely route map for the UK’s parc. He explores the political imperatives driving these changes, and clarifies the milestones which all CHCs must take account of as they plan for the future. The report is available to members here.

Peter Gomes said: “I don’t think it (moving to EV) is going to change the world from a credit hire perspective, as people are still going to have accidents driving their cars.”

“With EVs the accident risk is of course greater for pedestrians and cyclists because they won’t hear the engines – especially with headphones or if they’re glued to their mobile phones. So the game changer for credit hire in particular, and claims in general, will be the advent of AV (Autonomous vehicles) which will change the landscape for liability.”

He added: “Nevertheless, it is an exciting time because we are going through the most radical change to motoring for some time.  We are at the start of a revolution. EV is moving from early adopters to the mainstream, and the evidence is more and more people are making the switch. EV is no longer if, it’s when, and whether they buy a hybrid en route.”

“Our driving is going to be quite different in 2030 compared to 2020. After 2010 we saw the rise of SUV vehicles. 2020-2030 we’ll move to EV, and 2030-40 will see the dawn of AV (autonomous vehicles), also it will be easier to move to EV than AV.”

He explained that people are now looking critically at how they drive and their annual mileage miles, and asking themselves: ‘how many times do I take a 300-mile journey each year.’ He also argued that the popularity of leased vehicles for three/four-year period increases churn and will accelerate EV take-up.

He said: “Long distance drivers will be the last people to adopt EV, along with petrol heads who like a car that makes a noise.”

James Allenby is CEO of Novo Insurance Services, a new member of the CHO, and a business that specialises in the provision of EV for credit hire purposes, through his Novo Incident Management Division. Commenting on the implications for CHCs of the shift to EV, James said:

“As purchasing patterns change, CHCs need to be alive to the implications for customers requiring like-for-like replacement vehicles. We find, for example, that Tesla drivers want to be given a Tesla, they are not happy to be provided with a traditional petrol/diesel car for a number of reasons: they rely on Tesla’s own supercharging network which is not only free to use but exclusive to Tesla owners. Further considerations include the ability to park EV’s for free in most London boroughs (saving in some cases £20 per hour in parking) as well as zero congestion charging

He added: “EV’s are at present very tax efficient for both the company owner and the company driver (the capital cost of the vehicle can be offset against corporation tax and company car drivers pay zero BIK).

CHCs and Insurers need to be aware of the additional benefits of owning an EV and how going back into an ICE can have a serious detrimental effect not only from an environmental standpoint but from an ongoing financial one

If an EV is subject to an extensive lengthy repair there are serious financial impacts that need to be considered.

From an insurer’s perspective, it is not acceptable for them to argue that an ICE vehicle is suitable and to pay the additional costs and then claim back, and it’s fair to say that insurers are not ready to deal with EV, and they are still routing damaged vehicles through non-manufacturer approved repair networks which are not equipped to repair EVs. Equally, CHCs must build good relationships with repairers who have the requisite knowledge, training and tooling to reinstate to factory standard.

On rating, James argues that a new rating structure for EV is needed to reflect a shift from the old to the new. The higher holding cost coupled with increased performance/tech demands suggest the need for an ‘all EV’ specific category. He said: “This needs to happen now with a new framework given the volume of new EV products that are coming into the market over the next 12-24 months.”

Repair and salvage will also be affected. Given the complexities of some of these vehicles James believes insurers (and CHCs) must recognise that the days of using panel repairers who are high volume low cost are over. The industry needs to seriously understand what is involved to reinstate EV’s correctly and significant investment is required

Additionally, the industry also needs to consider what to do about salvage and the impacts to values. For example, insurers are generally not aware that when a Tesla is written off, Tesla must be notified, in order to disable all software support for the car.

Further consideration needs to be given to what happens to batteries and in particular whether they are held under a lease agreement with the manufacturer (such as Renault) who will incur the cost of returning the battery? If the battery is removed (as stipulated on the lease) what affect does this have on the salvage given that the power source has been removed?

James said: It’s all about advance preparation. We need to be aware of the impacts but actively looking to build the framework to avoid significant problems in the future.”

Please do bear in mind that CHO does not assume any responsibility for any specific member company. Our updates are for information and guidance purposes only. It is the case that each and every member company must always take their own independent advice in respect of the specific circumstances that apply to their company.