Fleet electrification has become a pivotal topic in the automotive industry, but questions remain about its financial viability and operational practicality. In a recent episode of JATO’s podcast, mobility expert Alexander Schuh sat down with JATO’s Industry Analyst Felipe Munoz, and shared his insights on the challenges and opportunities facing fleet and leasing companies in the push towards electric vehicles (EVs). With decades of experience and over 55,000 leasing contracts negotiated, Schuh is well-placed to offer a detailed perspective on this complex transformation.
The current state of fleet electrification
Electrifying fleets across Europe is no small task, given the amount of regulation companies must navigate. Schuh paints a picture of a fragmented landscape: “Every country has its own rules. Even within Germany, some states have different subsidies and taxation frameworks. This makes it difficult for companies to roll out a unified electrification plan, especially when operating across borders.”
Despite the challenges, fleet electrification is accelerating, driven by environmental pressures and the need for businesses to align with sustainability goals. “Environmental awareness is a major factor,” Schuh explains. “Being seen as a green company is increasingly important for attracting employees and customers.”
Similarly, although they can add complexity, regulations often aim to encourage electrification too. Schuh points out: “Regulation is doing both – pushing companies to go electric but making it more difficult because of the lack of clarity and standardisation.”
The financial hurdles
Cost is one of the most significant barriers to fleet electrification. While EVs offer lower running costs over time, their upfront price remains a deterrent. Schuh emphasises the importance of a total cost of ownership (TCO) approach: “When you include maintenance, fuel costs, and other factors, EVs often reach cost parity with internal combustion engine (ICE) vehicles. However, the higher purchase price still puts many companies off.”
The residual value of vehicles is another concern. Schuh highlights the risks created by fluctuating subsidies and inconsistent market conditions: “In some countries, residual values are falling because manufacturers are offering bigger discounts on new cars, making used EVs less attractive. Leasing companies are also adding higher risk margins to protect themselves from depreciation.”
The volatility of EV pricing, particularly sudden price cuts by major brands, has compounded the issue.
“When Tesla reduces prices overnight, it impacts residual values dramatically. Leasing companies and fleet operators struggle to absorb these losses.”
Operational challenges
Electrifying a fleet involves more than just switching vehicles; it requires a rethink of infrastructure, processes, and driver behaviour. Schuh outlines the practical difficulties: “Setting up charging infrastructure is a significant challenge. Companies have to deal with landlords who might oppose installing chargers, or they face higher costs for public charging compared to office or home solutions.”
Driver training is another critical factor. Schuh explains that employees need education to fully embrace EVs: “Drivers often worry about range and charging times. It’s essential to provide training that helps them understand how to plan routes and use charging efficiently. For example, regular breaks during charging can also improve road safety by reducing fatigue.”
The regulatory maze
Inconsistent policies across Europe add to the complexity of fleet electrification. Schuh calls for harmonisation: “We need uniform standards across Europe, from subsidies to charging infrastructure. This would make it much easier for companies to plan and operate fleets.”
Schuh also urges governments to invest more in public charging infrastructure and support innovation in battery technology: “Incentives should stabilise residual values and encourage adoption without creating dependency on short-term subsidies. Public charging infrastructure needs significant expansion to alleviate range anxiety.”
Looking ahead
Despite the challenges, Schuh is optimistic about the future of EVs in fleets. He highlights the rapid advancements in battery technology: “Battery efficiency is improving dramatically. In the future, batteries will be lighter, cheaper, and more durable, reducing costs and increasing the viability of electric fleets.”
However, the fast pace of technological change poses risks for fleet operators. “Technology is evolving so quickly that companies need to manage their purchases carefully to avoid rapid depreciation. Leasing is often the best way to mitigate this risk,” Schuh advises.
Schuh also stresses the importance of taking a strategic approach: “Start with a clear plan. Identify stakeholders, conduct tenders for vehicles and charging infrastructure, and implement robust policies. Pilot projects can help iron out issues before scaling up.”
The future of fleet electrification
Fleet electrification is no longer a question of if, but how. While the transition includes challenges ranging from cost barriers to regulatory complexity – the benefits are undeniable. Schuh concludes: “Electrification is a necessary step for reducing emissions and achieving sustainability goals. Companies that embrace it strategically will not only future-proof their operations but also enhance their appeal to environmentally conscious customers and employees.”
For the fleet and leasing industry, collaboration between governments, carmakers, and operators will be crucial. As Schuh points out, the key lies in overcoming short-term hurdles to unlock the long-term potential of electric fleets.
Navigate the complexities of fleet electrification with confidence
Access to accurate and comprehensive data is essential for fleet and leasing companies to make informed strategic decisions. With JATO’s market-leading solutions, we provide the insights needed to navigate regulatory requirements, assess market trends, and evaluate the financial and environmental impact of electric vehicles. By offering WLTP emissions calculations, market trends, model comparisons, and detailed specifications, JATO empowers businesses to identify the most suitable EV options for their fleets.
With our support, leasing and rental providers can confidently respond to shifting government policies, manufacturer developments, and customer demands—ensuring they stay competitive in an electrified future.
SOURCE: JATO
