Written evidence from Evri (ELV0067) 

Response from Evri (Hermes Parcelnet Ltd)

House of Lords Environment & Climate Change Committee Inquiry into Electric Vehicles.

Introduction - about Evri

Evri (formerly Hermes) is the UK’s largest dedicated parcel company. We deliver parcels for some of the biggest retailers, both online and on the high street, including John Lewis, M&S, Next and Asos, as well as SMEs and small independent sellers. We offer consumer to consumer parcel delivery and collection available from one of our 10,000+ Parcel Shops or lockers.

Evri has publicly confirmed our key target of net-zero by 2035 – the most ambitious net zero target in our sector - and building energy consumption reduction of 20% per parcel by 2030.

Evri delivers to every address in the UK and provides services seven days a week. We deliver around 700 million domestic and international parcels a year. We have three parcel sorting hubs in Warrington, Rugby and a new £60 million site in Barnsley, which opened in September 2022. From these hubs all our parcels feed into our network of 26 depots across the UK, for onward distribution to around 600 delivery units, from where our couriers collect parcels for final mile delivery to home around the UK.

Ongoing exploration of alternative fuels for our fleet has put us in a strong position as we head towards net-zero. Our East London depot in Beckton operates with 100% electric vehicles to service final-mile deliveries in central London. We run 168 new zero-emission electric vans to service our out-of-home ParcelShop network. This is the most carbon-efficient way to send, receive and return parcels, and we are working to ensure all vans serving our parcel shops and lockers are electric. To facilitate that, we are currently working at pace to install electric charging points at all our hubs and depots.

We welcome the opportunity to submit to this important inquiry. Please note that we are only answering the questions which are most relevant for our business and where we have expertise.

Response to questions

Government approaches

1. What are the main obstacles to the achievement of the Government’s 2030 and 2035 phase-out dates? Are the phase-out dates realistic and achievable? If not, what steps should the Government take to make the phase-out dates achievable?

Evri sees four main obstacles facing the UK Government in achieving its proposed phase out dates:

• Inadequate charging station infrastructure

The UK is currently hampered by a lack of electric vehicle (EV) charging points and reliability challenges with the ones that are currently available. Our couriers are self-employed and mostly use public charging points for their (non-commercial) vehicles.

Many public charging points simply do not work, or are very slow, or are not compatible with the vehicle our couriers are seeking to charge. An additional problem is caused where they only have an allocated parking bay for the dimensions of a domestic vehicle, which is unhelpful when our drivers need to urgently access power. We have been informed of instances where our couriers get hostile comments from members of the public who believe that our vans are too large to utilise these charging points.

• Capital costs.

The costs of EV vans remain considerably higher than their diesel or petrol alternatives. This not only relates to the initial purchase cost but extends to the lower capacity pay loads we are able to carry in such vehicles. Electric vans do not offer the same amount of space or volume as petrol/diesel vehicles and as such, cannot offer the same value commercially. To lease a diesel van of same specification is approx. £160 a week, compared to approx. £250 for an EV, which creates a major disincentive for businesses such as ours. To buy an EV new it would be around £50,000, to buy a new diesel it would be £28,000-£32,000 and these have a larger payload and are significantly more efficient and cheaper to run for our Parcel Shop routes.

The capital expenditure required to provide sufficient infrastructure at our sites, as well as soaring electricity prices also need to be factored in when looking at the total costs.

The second-hand market in EVs is also very expensive and there is very little availability. The distance range available on EVs in a single charge is no way comparable to diesel or petrol vans and this causes both logistical and commercial issues when allowing time and resource for charging. To minimise these challenges, we would like to see uniform chargers and a significant increase in investment in charging points throughout the UK which are suitable for cars and vans.

• Availability.

The lack of availability across the market for EV cars is a huge barrier to delivering on our sustainability policies. For example, we have implemented a policy that all company cars now need to be electric but the waiting list for these EVs is more than a year, so our staff have little choice but to continue driving petrol and diesel cars.

• Soaring cost of electricity / issue with availability of supply.

Although electricity prices will inevitably fluctuate due to a range of domestic and international reasons, the recent high costs pose a major challenge in how we run EVs to deliver our services to businesses and domestic customers. Diesel alternatives remain cheaper to run and easier to acquire, and this has been exacerbated by electricity costs which has created a further disparity. 

Despite our concerns and the clear challenges, we believe it remains possible that the phase out dates can be met as long as the Government prioritises this agenda at a granular level. There is a need for legislation and market incentives to be put in place to address the four barriers highlighted above. The lack of availability of EVs is the most important of these and it is hard to envisage a solution that does not involve some form of Government intervention. To date, the market has not met the demands of companies for commercial and domestic EVs.

1. Do the 2030 and 2035 phase-out dates serve their purpose to incentivise the development of an EV market in the UK? To what extent are car makers focusing on one date or the other? What are the impacts of the deadlines on the ability of the UK supply chain to benefit and how could the Government seek to further support the development of the UK EV industry? Would the introduction of a plan with key dates and timescales support the development of the EV industry in the UK?

The phase-out targets are welcome because they set a clear destination which the Government is trying to reach. Targets allow businesses to plan with greater certainty and overall, they have been beneficial in creating the right conditions for investment.

However, as set out above, the issue of infrastructure availability needs to be urgently addressed by Government. We would support the introduction of a road map or specific timescale as this would provide greater certainty but we would welcome this alongside legislation on infrastructure so industry can see how the goals would be practically met.

2. What specific national policies, regulations or initiatives have been successful, or have hindered, EV adoption to date? Are these policies or initiatives fit for purpose?

Successful policies include:

• The phase out timescales, which have provided a certainty to businesses so we can take investment decisions and plan for the future.
• Streamlined Energy and Carbon Reporting (SECR), which has helped to reduce carbon emissions.
• The ULEZ scheme in London, which has also been helpful in incentivising EV adoption.

However, we feel that many of the current rules and regulations of EVs are hindering both businesses who use them and are a major obstacle for increased take up. Examples include:

• Requiring an annual MOT on electric vans which are purchased from new. Although this does not impact our business directly (due to our leasing model), it acts as a disincentive in the market for electric vans generally.
• This is also compounded by an additional directive requiring five hours of training for an ‘alternatively fuelled vehicle’ which we believe is unnecessary and provides an extra financial and administrative burden.

3. What is your view on the accuracy of the information in the public domain relating to EVs and their usage?

We believe that accuracy is less an issue than availability of the data and information. Much of the data on EV usage is self-declared data from EV charge point suppliers rather than easily available statistics from an independent body.

We also believe that much of the information from manufacturers is misleading and not representative of the reality regarding the battery capacity of EVs on based on real world conditions. The progression of the technology so far is disappointing, and many businesses are waiting to see this improves before purchasing these vehicles. For example, the electric Ford Transit is reported to have a range of 196 miles on one charge, but our experience is that 130 miles is the maximum range it can achieve.

In our view, EVs work best and are most efficient when being used for final mile deliveries in city centres or other urban areas. However, they are not suitable for our Parcel Shop routes which involve motorway or ‘A road’ stretches. Until the range and payload issues are addressed electric vans and HGVs will not be able to compete with their non-zero tailpipe alternatives commercially and competitively. We should not be going backwards if we want EVs to be a viable proposition for the logistics sector.

8. What are the main routes for acquiring an EV? Which aspects of these routes are working well, and which aspects could be improved?

We primarily acquire all vehicles directly from manufacturers, and currently work with two manufacturers who are well established in the market. We additionally participate frequently in trials of new technology through newer/ less established supply partners looking to disrupt the EV market or with new technology innovation.

It is our experience that the routes to acquiring a new EV are relatively straightforward. The route to market works well, there is a good supply, and lead time for vans now are currently around four months but this depends on the specification of the van. We have very good established supplier relationships and account management, especially where those partners have existing maintenance networks.

We believe that the breadth of availability in the market, and any commercial support to help bring these costs closer to parity with ICE vehicles when taking total cost of asset and fuel type into consideration, needs to be addressed and improved.  A few years ago, very low electricity costs made it easier to make the business case for investing in EVs. The recent significant increases in electricity costs, combined with a volatile energy market, have made this more difficult.

Another area which needs improvement is the comparative cost of an electric van compared with its diesel counterpart as we outlined in our answer to Question 1.

11. Do you think the range of EVs on offer in the UK is sufficient to meet market needs? Which segments are under-served and why? Why is the UK market not seeing low cost EVs, particularly in comparison to China?

No, we do not believe there is a sufficient variety of specifications and the newer manufacturers do not yet have the financial stability to justify large scale procurement by a business of our size.

There is currently a very limited choice between 3 commercial electric vans which we can use (Ford Transit/ Iveco/ Mercedes-Benz). There are clearly other significant manufacturers in the market, however they do not yet have the technology to bring comparative vans to the market. For example, Volkswagen cannot get the specification right and so there are huge gaps in the market.

The parcel delivery segment which is our primary consideration is currently under-served. Our priority is large volume capacity and low weight of the vehicle. Although there are developments being made to the technology, they seem to be prioritising extending the distance range rather than consideration about how can the models be redesigned for higher capacity and maintaining low weight.

It is our view that the UK market is not seeing low cost EVs because primarily we are serviced by incumbent large-scale manufacturers who are retrofitting ICE vehicles to create an EV model, rather than developing / designing EV vehicles from scratch. Most of these are imported, so typically left-hand driving car models are developed, and then they only reach the UK market with right hand drive up to a year later.

Ideally, we would like to see a high cube van design with a high-capacity payload, and we would like to see more European manufacturers competing in the EV van area. We would speculate that this is because the European manufacturers have more restrictions when sourcing the raw materials for sourcing, for example in battery manufacture.

Experience of using an EV

21. How does the charging infrastructure for EVs need to develop to meet the 2030 target? Does the UK need to adopt a single charging standard (e.g., the Combined Charging System (CCS)) or is there room in the market for multiple charger types?

It is our view that the UK does not need to adopt a single charging standard as this may limit competition and innovation, and the technology is still relatively new so we wouldn't want to be committing at a point of imperfect technology. We do support a system that has a common, standard charger with one payment method.

However, we also need to ensure clear links to vehicle manufacturers so that all suppliers are supported by our infrastructure. Open protocol equipment is critical because businesses like ours have previously been locked into relationships with EV charge point suppliers which become unproductive or the technology goes out of date, but we cannot look for competition in servicing the chargers.

We would like to see a minimum charge of 22-50 KW as standard to charge faster and more efficiently and free up chargers for others, with a substantial increase in the numbers of these chargers.

National and regional issues

29. What are the challenges or concerns around grid capacity in relation to significantly increased EV adoption?

Grid capacity is not sufficient, and the system is struggling. If we were to move the entire transport system over to electric immediately, it would potentially collapse. On that basis, Government should incentivise the EV market to reach its full potential but allied with wider infrastructure and energy solutions.

We have two issues of consideration when looking at increased EV adoption – grid infrastructure, and our real estate infrastructure which is both very expensive to install, but there is also a major issue with demand for these services.

The logistics sector has had no assurances that the grid can cope with the Government’s EV targets and it is vital to create confidence going forward by demonstrating there is a clear plan for delivery. We need better communication and clearer guarantees from Government regarding infrastructure planning.

To compound the cost burden, businesses must also factor in the additional financial impact of installing chargers which for Evri has been at an average of £8000 per charger.

30. What is the role of distribution network operators in ensuring EV infrastructure can be rolled out sufficiently to meet 2030 target?

DNOs are needed to update all the power inputs at our sites countrywide. This is an incredibly expensive undertaking and as previously mentioned there is a serious supply and demand issue with huge waiting lists for work to be implemented.

We would therefore call on the Government to reassess the current process to create a cost effective and expedient way of delivering these services.

31. What are the requirements, challenges or opportunities for the development of public charge point delivery across the UK? How will the development of EV charging infrastructure in the UK interact with existing planning regulations?

The prohibitive costs are arguably the biggest challenge.  This is not based on the charge point hardware itself but is focussed on the infrastructure changes necessary for these to be practical. Most of the existing UK public infrastructure does not have enough capacity to service EV charging at scale.
 

In addition to the charging posts themselves, there needs to be work with the DNO, upgrading distribution boards, new cables fitting (which are often under pavement and complex building sites, for example).

The charging infrastructure should interact with building regulations by being mandatory for all new building sites, and any upgrades to sites of a certain size. The size of allocated parking bays also needs to be a key consideration, as the majority are too small for vans and can only be used by domestic vehicles.

We would also like to see more flexibility in submitting a planning application to speed up the system. There is insufficient capacity and skills in planning teams across local authorities in the UK, which is slowing down the roll-out of more EV infrastructure. 

33. What role do you see local authorities playing in the delivering the 2030 phase out target, particularly in relation to planning regulations, charge points and working with District Network Operators? How can government best support local authorities in their roles?

Local authorities should be primarily responsible for supporting the public charging infrastructure for homes and ensuring availability of charge points, which includes the DNO negotiations and tailored changes for their area. It is our experience that the process for engaging with DNOs is too complex and operates within a closed protocol, which makes it hard and costly to access.

There is also very limited availability of sites with high power allocation which makes it very difficult for logistics businesses to use EVs and we would call for significantly improved local infrastructure/ power supplies to support the Government’s 2030 phase out target.