Written evidence from Zenith (ELV0081) 

Response from Zenith

About Zenith

Zenith is the UK's leading independent leasing, fleet management and vehicle outsourcing business. We deliver innovative and intelligent vehicle solutions across all asset types, through a range of funding options. For over 30 years, Zenith has been trusted by many of the UK’s leading blue-chip companies to deliver solutions that support their strategic priorities. Zenith’s vision is to decarbonise the UK vehicle parc by eliminating tailpipe emissions. This is enabling us to support the evolution of sustainable motoring for many more drivers and businesses across the UK.

We have 1,400 employees and a state-of-the-art headquarters at Kirkstall Forge in Leeds, 100 mobile service vans, 4 in-house repair facilities and 10 rental depots as well as other regional locations. Operations run 24/7/365 to keep our customer’s vehicles on the road.

We manage 168,000 vehicles, from cars, vans, and trucks to trailers and specialist vehicles for businesses and consumers.  Our Corporate division provides company cars, vans, salary sacrifice schemes, and short-term rentals for many of the UK’s leading companies and the fleet is 35% electric with an order book of 50% EV. Through our Consumer Division we offer a personal lease through a fully digital car leasing journey.

We also offer commercial fleet operators the most comprehensive range of mobility services in the UK market for LGVs, HGVs and trailers. Our services include fleet management, maintenance, funding, rental, and flexible hire solutions. We are trusted by some of the UK’s most prestigious companies to keep their operational fleets compliant, cost efficient and available.

Earlier this year we commissioned research practitioners Maru/Matchbox to conduct an independent survey of over 3,100 of Zenith’s electric car customers across our corporate and personal lease business ZenAuto. Our research aimed to delve into the day-to-day realities of what it’s like to drive an electric vehicle and, crucially, to enable us to track how these attitudes evolve over time. It is the largest survey of the lived experience of EV drivers in the UK. EVXperience - Zenith

Call for evidence response.

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?
• The phase out dates for cars is achievable but that will mainly be driven by the OEM product range, which for many OEMs will be EV only by 2030. This does not mean that it won’t come at a cost for motorists and business. Key areas to address are:
• There are no incentives for a driver in the retail market to take an EV as they cost more than an ICE equivalent and there will be no tax benefit from April 2025 when VED becomes chargeable for EVs. The average battery warranty is for 8 years with no standard certification for battery health making older EVs a higher risk purchase for the consumer, which limits demand and steepens the depreciation of the asset, which increases the cost.
• Fleets are the main purchasers of EVs and operate typically on a 3-to-4-year replacement cycle. Currently there are no incentives for drivers to take and EV in the second-hand market as they cost more than their ICE equivalents. If there is a lack of confidence in the second-hand market this will increase the cost for the first buyer as the rental, they pay is based on the anticipated depreciation cost of the car or van which will lower demand for new EVs.

• Charging is a key barrier for drivers choosing to take an EV with an estimated 40% of drivers unable to charge their vehicles at home, this increases upwards of 60% for van drivers. Both access to charging at the right price and right speed is essential to ensure there is demand for EVs. Charging also needs to be developed nationally and currently many areas lag behind in the charge point availability. More joined up investment from Local Authorities and the private sector is needed to ensure that charging needs are identified and the roll-out of charging infrastructure keeps pace with the EV transition. One area holding this up is the long delays in upgrading the grid to allow for charge points, this is for both charges point operators and fleet operators who wish to put in charge points at workplaces such as depots. A specific problem here is the high cost and time in doing this as the energy requirements can be large when considering fleets that operate commercial vehicles often on a 24-hour cycle with the need for rapid charging. More needs to be done to simplify the process for requesting grid upgrades and support provided to the cost of doing this, including options to share grid upgrade costs between multiple potential users.

• For van fleets there is still concern that the product available won’t be required to meet the operational needs of businesses or that it would be cost prohibitive. To support the transition Government needs to look at providing continued support for commercial vehicles through the van grant. In addition, there are some barriers in place to operators taking 4.25t EVs such as the need to provide driver training, annual MOT and tachograph reporting when travelling further than 100km for the main location, even though these vehicles are the same size as a 3.5t diesel and the additional weight is purely from the battery. Charging is a particular concern for van fleet operators as the ranges are lower than cars and can be heavily impacted by items such as payload, as such there is a requirement for cost effective rapid charging that is reliable and does not impact on the downtime of the vehicle.

2. 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?  

• Having phase out dates allows business to plan investment decisions with certainty and without it there would be a delay in investment and development needed for all users to make the transition to an EV.
• Currently there is uncertainty about how long it will take for the charge point network to be in place that supports the phase out dates.
• There is no clear direction on future vehicle taxation such as how Treasury will bridge the £25b gap in fuel duty revenues predicted from the EV transition.
• Clear sight of the incentives such as grants and costs of switching to an EV allows users and fleets time to budget and make assured decisions in what can be a considerable expenditure. 

• A clear plan with key dates to cover vehicle supply, taxation and charging infrastructure would give confidence to the market operators. 

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? 

• At Zenith a third of our fleet is already electric and 9 in ten salary sacrifice cars ordered are EV. This has been driven by the commitment made by the Government to keep Benefit-in-Kind tax rates low for EVs until at least 2028. It has also encouraged employers to put in place salary sacrifice car schemes as part of their offering to employees and has provided access to EVs to drivers who would not be able to afford them if they were to purchase or lease them through a retail scheme.  

• The Govt grant was also a success in lowering costs and remains vital to ensure the transition for van fleets where there is still a significant gap in cost to ICE in the large van segment of the market.   

• Workplace charging grants have aided smaller businesses invest in charging infrastructure to support the transition to EV. Home charge point grants were also useful when they were available as they covered 1/3 of the cost of a charge which is now c. £1,000.

3. Given that the Government should apply a behavioural lens to policy—which involves people making changes to their everyday lives, such as what they purchase and use—is there a role for clearer communication of the case for EVs from the Government? If so, who should take the lead on delivering that? 

• Behavioural change plays a huge part in the transition to an EV, and there should be more information on this topic, with the Government taking the lead. There is not enough clear information available to the public on costs and charging of electric vehicles giving a factual and balanced view. The uncertainty that an EV will work for them is a factor that causes people to stay with their ICE vehicle. There are financial and environmental benefits to moving to an EV which could be made clearer. 

• With CO2 emissions held centrally and calculated and reported in a standardised way the same could be done for life cycle emissions. Like food labelling this would enable the consumer to understand their choices. 

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

• The information available to the average consumer is through the media and some articles have gained high press coverage that has painted a negative picture of EVs that is widely accepted as commonplace e.g., articles on long queues for charging creating a view that this is the norm.
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• At Zenith we commissioned the UKs largest survey of the lived experience of EV drivers and 86% would not switch back to an ICE car from an EV and more could be done to share the true experiences of an EV driver to advocate for their usage.

• There is little access to factual and useful information that is easily accessible and digestible to drivers. This includes EV and battery performance, what factors could impact the range of an EV. 

5. What are the overall environmental benefits that would result from achieving the 2030 and 2035 targets? 

• We utilise the DESNZ/BEIS conversion factors for calculating our fleet and customer emissions and the scope 1 co2 savings are very material with an EV saving 2,638kg co2e per 10,000 miles compared to the average petrol car.

• EVs are also quieter for the operation of vans and commercial vehicles in urban areas and in logistic hubs close to housing. 

6. What are the likely costs that will be faced by consumers as a result of the Government’s phase-out dates for non-zero emissions vehicles? Are there policies or initiatives that the Government could use to specifically target barriers arising from unpredictable costs to the consumer, for example significant fluctuations in the cost of electricity, changes to road taxes, or the introduction of low emission zones?

• Consumers and fleets who operate large numbers of vehicles, need certainty in the costs of motoring when making their decision to purchase an EV. Current areas of uncertainty that could be addressed by Government are: 

• Confirmation of motoring taxation as a replacement to fuel duty such as a possible introduction of road pricing. Conversations on this need to happen now to ensure that a well-designed scheme can be implemented and there is sufficient time for vehicle operators to plan for changes to costs. 

• Increased costs from using the public network for those drivers unable to charge at home or whom regular need to undertake long journeys could be addressed by equalising the VAT rate of public charging to home charging where it is 5% as opposed to 20% for public charging. 

EV Market and Acquiring an EV 

These questions relate to the UK EV market and uptake of EVs by UK consumers. 

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

• The main routes to acquiring an EV are through private purchase/leasing, through an employer provided company car or van or as part of an employer benefits package through salary sacrifice.

• Company car and salary sacrifice offer affordable electric car choices and have driven the transition to EV. This is due to the commitment to keep BIK tax rates appropriately low until at least 2028, creating a cost benefit to a driver over and ICE vehicle. 

• In the Zenith EVXperience survey of over 3,000 EV drivers almost half (47%) of company car drivers and almost a third (31%) of salary sacrifice drivers said that cost savings were the best thing about the EV experience, citing the government’s support of Benefit-in-Kind tax (BiK) as the number one point. 

• EVs are not as affordable compared to ICE when taken as a private lease as there are no tax benefits and the cost is higher than an ICE equivalent. 

• The table below shows the average list price data difference of current available electric cars versus ICE (excluding obscure vehicles) 

• Looking at vehicles live and on order on the Zenith funded fleet that reflects popular and practical choices for drivers, the difference in list price is £32k.  

• There are no similar incentives for the used EV market, which coupled with consumer concerns over investing in technology which may become obsolete, battery health and performance risk, is holding back this element of the transition. The used car market is broadly four times the size of the new car market and for EVs to trickle down to the second-hand market at an affordable price point requires financial stimulation to kick start the market.    

8. What are the main consumer barriers to acquiring an EV, either through purchasing, leasing, or other routes? 

• One of the main barriers to consumers would be access to an affordable EV if it is not provided though a company scheme. In particular this is the case for those on lower incomes where the cost is prohibitive.  

• Range anxiety has reduced as range has improved with the main barrier now being that they are too expensive, and the main concern being of battery life span.

10. How is the Government helping to ensure that EVs are affordable and accessible for consumers, and are these approaches fit for purpose? 

See question 3. 

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? 

• With regards to cars there is a good choice of vehicle from a range of manufacturers available that meets the needs of the user. Car battery range tend to be between 200 and 400 miles per charge which is suitable for most car driver’s needs.
• However there tends to be far less options for low-cost small electric vehicles as a large element of the cost is the battery and this market is underserved (see question 8) 

12. What is the future role of L-segment and personal light electric vehicles, and how will that impact car ownership and usage? What is inhibiting their uptake? 

13. What is your assessment of the current second-hand EV market? How is the second-hand EV market projected to develop between now and the phase out dates? 

• There is growing concern on the poor performance of EVs in the second-hand market. With used EV values having collapsed in recent months. And there is real concern about EV remarketing performance.

• There are battery life concerns around the lifespan of the battery. Assurances on the battery health of second-hand EVs is essential to encourage drivers to make the switch. If we think about second hand phones, the battery life is taken into consideration when placing a value on the phone – if battery life is less than 80% it drops the value. EVs need to be looked at in the same way and there is a need for a standardised health certificate.

• In 3-4 years, time when cars go into the second-hand market, and new technology comes out is it going to be a case that drivers opt for a new vehicle and pay slightly more as they want to have the latest technology, so less desire for second-hand EV’s.  

• Used buyers face all the challenges of the EV transition, access to charging, increased concerns over battery health as the vehicle ages but don’t generally get any benefit from lower benefit-in-kind rates as they are likely to be private consumers. 

14. What is the relationship between EV leasing and the second-hand market and how do they interrelate? 

• The relationship between EV leasing and the second-hand market is the resale of the vehicles at the end of the lease.  A lease if based on the purchase price less the anticipated value at the end of contract. If resale performance continues to decline it will make EVs more expensive to lease.  

15. What barriers are there to achieving a sufficient supply of second-hand EVs, mindful that second-hand vehicles make up a high proportion of all vehicles purchased? 

• Continued ability to boost 1st hand sales. 
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17. Are consumers charged higher rates of insurance for an EV when compared to an internal combustion engine (ICE) vehicle, and if so, are these higher rates justified? Can the Government do anything to mitigate this? 

• There are a high proportion of EVs that have been given a higher insurance group than say their ICE equivalent, making the insurance premium more expensive.  

• EVs are inherently more expensive than the ICE equivalent to buy, and accident claims are currently 25.5% more expensive than their ICE equivalents and can take 14% longer to repair, (Thatcham Research, Innovate UK) 
• The repairer market needs to continue to invest in EV specific equipment and the supply of parts needs to catch up with demand which requires the market to mature. Continued confidence in EVs and maintaining the clear pathway to 2030 is essential to maintain stakeholder confidence. 

Experience of using an EV 

18. What are the main challenges that UK consumers face in their use of EVs? 

• Charging, both at home and on the public network  

• Home charging – not all drivers can have a home charger or afford the initial outlay costs to installing one.  

• Public charging – people still experiencing anxiousness around charging, with different payment methods and apps depending on the provider. Broken charge points, long wait times, not enough fast charging in certain areas. Public charging is also more expensive costing c. 10p per mile more than charging at home. In the Zenith EVXperience report when asked to rank the number one worst thing about the EV experience, the most popular response was limited range, with just over a fifth (22%) of respondents citing it. A similar number (21%) ranked the need to plan for where to charge and almost a quarter (24%) found charging availability worse than expected.

• Public charge point regulations 2023 have been widely welcomed to improve access and standards.

19. What are the main benefits that UK consumers could realise from using an EV? 

• Reduce carbon footprint over the vehicle life cycle.

• In life Cost savings – running an EV is less than an ICE (Cheaper to run on fuel, lower maintenance costs) 

• Contributing to help reduce greenhouse gas emissions, improve air quality, and reduce noise pollution locally. 

• Parking incentives in some council areas

• EVs can become part of the home energy solution to manage costs if vehicle to grid is enabled.

• Reduce exposure to volatile fuel pricing in favour of more stable energy pricing. 

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? 

• Room for both in the market, however for ease and to ensure the greatest level of access a single combined charging system would work better. 

• All charge points should be accessible without membership, without downloading an app and without having to prepay/ load credit to the operator. 
• The number of rapid chargers is key to creating sufficient capacity in the network and allowing increased through put of users from the available charging points.

22. The Government recently published the draft legislation of “Public Charge Point Regulations 2023”. What assessment have you made of the draft legislation text, and what contribution will it make in ensuring the charging experience is standardized and reliable for consumers? 

• The public charge point regulations were widely welcomed but only cover fast chargers. All public charge points should include card payment options.

• Price controls and limits on dynamic pricing may be required. Operators should report rates in the same way fuel retails now have to ensure EV users and ICE users have the same and equitable treatment across the country.

• The timelines for Govt to enforce policy is to far in the distance especially in relation to interoperability.

• It is key for fleet users that charge points are working so setting and imposing the 99% uptime is vital.

• Could mandate the standard proposed for disabled access to charge points.

23. What assessment do you make of the requirements set out in the draft legislation of “Public Charge Point Regulations 2023” for charge point operators to make data free and publicly available, and how may this improve the EV charging experience for consumers? 

• Easy access to check charge point availability and suitability for your vehicle to make an informed choice e.g., speed, connector type, vehicle type suitability.  
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24. In terms of charging infrastructure, are there unique barriers facing consumers in areas of low affluence and/or multi-occupancy buildings, such as shared housing or high-rise flats? Do you consider public EV charging points to be accessible and equitable compared to home-charging points? What can be done to improve accessibility and equitability? 

• The home or workplace are the key locations with sufficient vehicle dwell time to regularly charge a vehicle, other than at a rapid charge point and a home charger with off street parking is likely to be the only guaranteed point of access for charging without queuing or additional travel or higher charging costs. 

• There are barriers to EVs for those living in high-rise flats and shared housing as they are unable to have a home charger. It’s about considering if there are enough public chargers in every corner of the UK that provides confidence to consumers that they can run an EV just solely on the public network alone- right now, there is a growing number of people who don’t think you can do this.  

• There is great cost disparity between home and public charging with public charging costing c. 10p per mile more than home charging when using a rapid/ultra rapid charger. 

• VAT is charged at different rates, 5% home charging and 20% public charging, this should be equalised to democratise access to EVs through lowering charging costs. 

25. Is there a financial benefit to the consumer of choosing an EV over an ICE vehicle? Are there further benefits, aside from financial, that a consumer may gain from EV use? 

• Yes, EVs are cheaper to run and maintain, dependant on where you can charge i.e., if home charging.   
• Parking incentives in some council areas 
• EVs can become part of the home energy solution to manage costs if vehicle to grid is enabled. 
• Reduce exposure to volatile fuel pricing in favour of more stable energy pricing.