Fears mount over electric transition as demand stalls

In his opening address Toby Poston (pictured right), chief executive of the BVRLA explained that while regulatory relaxations for 4.25-tonne vans have been welcomed, other issues like the high price of public charging are stalling electric van demand. 

Poston said: “As a result, we are seeing electric vehicle demand across the rental sector struggle and utilisation year-on-year is down. I think patience is beginning to wear thin for some big electric van fleets who are still dealing with some of this slightly bonkers regulatory burden, things like driver’s house rules and annual testing.  

“But the biggest problem is what’s happening in the used market. Used EV values are falling relentlessly and that is destroying value on an epic scale. This death by 1,000 cuts is costing fleets hundreds of millions of pounds and it’s eroding confidence across the industry. This is not normal market behavior. 

“Traditional financial risk models are struggling to cope with this scenario and the banks and investors that have piled billions into the electric vehicle revolution are beginning to get spooked. This should worry everybody, because it has the potential not just to slow down the transition, we could begin to see the wheels coming off in some areas.”

Lisa Brankin, chair and MD of Ford of Britain and Ireland said: “The government has said there’s £1.4 billion for EV demand generation. That’s a vast amount of money but when you break it down, it’s about 350 million over four years each year. If you slash that down to the number of vehicles, it’s not going to do a lot to break the back of that issue. If you look collectively at where we’ve been with electric vehicles, the increases we’ve delivered from 2023, into 2024 and 2025, it’s been a huge success story. We’ve seen vast growth but it’s failure because we’re not hitting the trajectory the government wants.” 

While Lilian Greenwood, Minister for the Future of Roads couldn’t provide an update on how the government plans to spend the £1.4bn committed to boost uptake of electric cars, vans and trucks, she noted the need to address EV residual values. 

“There has to be that healthy balance between supply and demand to maintain residual values and give fleet operators and their finance providers the confidence to keep operating, to keep offering EVs at sustainable prices,” Greenwood said. “We know that we need to do more, particularly to boost consumer confidence in used electric vehicles. In part that’s through implementing battery health and durability standards which we’ve incorporated into the ZEV mandate regulations.” 

Although the ZEV mandate is designed to boost supply, Brankin explained the realities from an OEM’s perspective. “We’re building both electric and plug-in hybrids and the challenge that we’ve seen is that customer demand for those vehicles isn’t in line with where the ZEV mandate is, that’s where the tension is.” 

With further legislative changes for 4.25-tonne vans, Brankin believes this would help to unlock a larger range of cost effective and practical solutions for fleets. In the meantime though, Brankin notes the impact of the new vehicle market on used values. “It comes back to demand. We just don’t have the level of demand for the vehicles we’re forcing into the market and we’re having to discount from new, this knocks into the used market. 

“When you try to force a market to go beyond where the natural demand is, it just doesn’t work. That’s the risk of the ZEV mandate, it’s mandating something rather than creating a pull that then pulls new demand which then supports used demand.” 

Per Voegerl, chief executive of United Rental Group echoed this sentiment, he said: “As a large fleet, we are pushed by OEMs, understandably, to take EVs as part of our purchase volume and the reality is we’re buying them without really having a need for them. Very often we are successful with large organisations, people like the British Gases of this world who have good infrastructure, relatively low mileage and organised fleet departments.

“But the rest of the market has a problem, so what we’re doing is selling those electric vans at six or 12 months old, very often with no mileage or maybe up to 3,000 miles. It’s not really that we’re selling a used van, we’re selling an almost new or hardly used van into the market.” Since there’s little demand for new electric vans in the first place, even at much lower prices, these vehicles are struggling to find buyers.

Voegerl explained the issue is multifaceted: “End users of commercial vehicles, especially in the SME sector are fixated on what they think is the right product for them and I think that EVs have a real image problem with these buyers. 

“It’s not about TCO. Ultimately, when you look at commercial vehicles, they are tools like a hammer or a drill. They have to work and if they don’t make sense for the end buyer, no matter new or used, then there’s a problem. My fear is, if the ZEV mandate is pushing more and more volume into the market as new, the prices of used EVs are more likely to decline than to stabilise.”

A lack of dealer buyback programmes for EVs was also cited as a limiting factor for large fleets. Speakers throughout the conference agreed initiatives to support used EV demand were key to mature the EV market. Voegerl added:  “I fundamentally believe that a used EV grant could help better than a grant on a new vehicle.”

Over the coming years, £400m government investment in EV charging along the strategic road network and to facilitate the deployment of electric vans and HGVs is expected to start to address some of the external barriers to entry for fleets. However, the BVRLA’s Road to Zero report noted: “Until van fleets, in particular SMEs, are truly confident that the product, costs, and operations are comparable to their diesel vans the transition will continue to lag outside the largest fleets.”