There’s been a huge amount of talk about the future of diesel cars in the UK of late; talk that has implications for everything from the type of fleet cars we drive to the cost of fleet insurance. These discussions have largely centred on the future of diesel fleet cars. Following the Volkswagen emissions scandal of September 2015 and numerous health warnings relating to the levels of particulates that diesel cars produce – ones that culminated in the UK’s Chief Medical Officer, Dame Sally Davies, calling for diesels to be phased out – the future of diesel fleet cars in the UK looks far from certain.
This striking assertion is lent weight by KMPG’s 2017 fleet industry survey that revealed that 67% of motor manufacturer executives believe that diesel technology is a thing of the past and that 93% are planning to invest in electric fleet car technology over the next five years. Add to this calls by the likes of the Mayor of London for the Government to introduce a diesel scrappage scheme, and the future of diesels looks about as bright as a Beijing morning rush-hour.
So, are diesel fleet cars doomed in the UK? And if so what will replace them and what are the implications for fleet insurance?
Diesel Cars: Taxed To Death?
Fuel has always been seen as a soft target for revenue-hungry U.K.’ Chancellors and the current fuel duty level of 57.95 per litre (up from 48.35 in 2007) is undoubtedly hurting high mileage fleet drivers. The changes in vehicle emissions duty (VED) for new vehicles will usher in new taxes for both new diesel and petrol cars of £140 per year from the 1st April 2017. All-in-all then, diesel fleet car drivers are facing a pretty substantial tax burden as it is. That burden though could be set to get significantly heavier. Following this year’s Budget, Chancellor Philip Hammond announced a ‘review’ (shorthand for a rise) in diesel fuel duty rates in the next Budget in the autumn. Ostensibly this review comes in reaction to new research that has shown that while CO2 emissions – a key contributor to global warming – are lower for diesels, nitrogen dioxide, NO2, emissions are up to four-times higher. N02 is believed to be extremely hazardous to public health and contributes to over 40,000 early deaths in the U.K. each year. Such is the scale of the problem that in November 2016 the High Court ordered the Department for the Environment to come up with a new strategy for cutting fumes by the summer of 2017. It is hard to imagine that this strategy will not involve further tax rises for diesel cars.
Fleet Cars: Time To Go Green?
When challenged on their tax approach to motorists, the Government are often quick to point out that as well as having a responsibility to protect the environment and public health, they are providing incentives to move away from polluting cars to low and ultra-low emission vehicles (ULEVs) such as electric fleet cars.
Electric fleet cars are widely considered to be the future – a future that’s increasingly becoming the present. The 2017 Geneva Motor Show saw another tranche of manufacturers – including Ford and Volkswagen – unveiling electric cars and demand for electric cars in the U.K. is soaring. Between 2013 and 2016 demand grew by a staggering 2,400%, a surge many predict will continue as prices come down and charging points become more widely available. It is thought that by 2020 the U.K. will have more electric car charging points than petrol stations, and with local authorities offering congestion charge discounts or exclusions for electric vehicles, discounts on charging prices and the Government exempting zero emission vehicles from the new VED rates, there are definite incentives to running fleets of electric cars.
Of course, electric cars are more expensive and many a fleet manager or company finance director will baulk at having to pay more to run their fleet. There are, however, currently grants and dispensations available on electric cars, with up to £5,000 off the price of an electric car, 20% off the cost of an electric van, and grants available for up to 75% of the cost of installing a charging point.
And the move to electric fleets is already here. One of Europe’s largest fleet operators, Sweden’s Vattenfall, announced last month that its entire fleet of 3,500 vehicles will be converted to electrical power by 2022.
Fleet Insurance: What Are The Implications?
Fleet insurance costs are obviously a big concern for any fleet manager. At present, given the newness of the electric fleet insurance market and the level of uncertainty as to what could go wrong with electric cars, costs are slightly higher than for standard fleet insurance. That said as adoption grows and more insurance companies offer electric fleet insurance, these costs will come down and fast. The best thing to do if you are considering electric fleet car insurance or would like an electric fleet insurance quote, then talk to the fleet insurance advisors at Coversure.
Will Fleet Drivers Accept Electric Cars?
Increasingly fleet managers are taking electric fleet cars seriously. As batteries have improved and journeys of 200 miles on a single charge become the norm, the serious attraction of reducing mileage costs from about 12p per mile for a standard diesel fleet car to around 3p per mile for an electric vehicle becomes hard to ignore. Throw in the 40% reduction in emissions and the likely tax advantages that these will bring down the line, and the case for electric vehicles starts to look pretty compelling.
Diesels Are Dead: Long Live Electric Fleet Cars?
Fleets need to balance cost with efficiency – something diesel vehicles have traditionally excelled at doing. With the changing climate – politically and physically –the questions surrounding the long-term viability of diesel cars start to look increasingly serious. Electric car technology is advancing at an unprecedented rate and from both a bottom line and a corporate social responsibility perspective, diesels are likely to make less and less sense. The change won’t be immediate; but the pace of change is likely to increase, particularly given the Government seems set on changing the face of U.K. motoring.
Like Some More Help?
Well we hope that’s given you some food for thought. If you’d like to know more about saving money on your fleet costs, or would like some help getting the fleet insurance cover that’s right for you, then please contact us. You can call us free on 0800 977 6037, email us by clicking here or get a no-obligation insurance quote here.
Coversure Hull is an independent fleet and business insurance specialist. From our base on the banks of The Humber, we offer comprehensive commercial vehicle cover, with particular focus on fleet and special types, alongside other essential business covers, namely commercial combined and liability.
Since opening in 2005, our combination of superb service and outstanding value for money business policies have established us as the insurer of choice for organisations both large and small.
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We have made it our business to protect your business. Whether you need fleet, landlord, liability or commercial combined insurance, we can offer you high quality cover from some of the UK’s leading insurers, all at highly competitive premiums that’s backed by our outstanding cover-to-claim service.
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For a friendly independent service and great value cover, contact Coversure Hull today. You can call us on Hull (01482) 434343, for free on 0800 977 6037 or you can email us by clicking here.
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