Fleet management in post pandemic Europe is a challenge, with all parties in the sector operating in unsettled times. The French market is no exception. From operators and suppliers to outsourced support services, all must contend with complex legal and political demands, alongside onerous environmental hurdles.

Whilst there are many opportunities ahead, the e-mobility journey is long-haul. From EV uptake and net-zero initiatives to tax and emission regulations and the impact of WLTP, we examine the greening of French fleets.

 

The force of French law

In 2019, the French government introduced the Loi d’orientation des mobilités, (Mobility Guidance Law) – a legislative framework which integrated environmental initiatives into transportation policy. In fact, France was one of the first European countries to set combustion engine vehicle phase-out targets as law, which will end the sale of new passenger cars and light commercial vehicles using fossil fuels by 2040.

This pioneering legislation is a clear signal of the country’s commitment to greener, cleaner fleets which champion the use of full electric and plug-in hybrids omitting less than 60gr of CO2.

Other taxation measures support France’s ambition to electrify its vehicle fleets. The government has introduced appealing fiscal measures such as a CO2-based bonus-malus vehicle tax when purchasing a new vehicle, a conversion bonus for scrapping an old high-emitting vehicle in favour of a new or used low-emitting vehicle and a CO2-based periodic tax on companies and private households for owning such a vehicle.

Almost all taxation is linked to the vehicle’s CO2 emission and favours owners of clean vehicles by reducing the amount of benefit-in-kind up to €1,800 per year.

There are also malus tax penalties imposed when buying a high-emitting second-hand vehicle.

Furthermore, to encourage the deployment of electric vehicles, the French government secured significant funding for various policies such as a budget for the Ecological Bonus which supported and subsidised the purchase of over 100,000 EVs each year.

Although the French government intends to reduce the ecological bonus as the cost of greener vehicles fall, it is still one of the highest subsidies in Europe.

These progressive actions by the French government are setting the stage for the end of fuel-burning, environmentally-damaging cars by 2040.

 

The WLTP effect

Although the introduction of WLTP had an impact on vehicle supply and choice across Europe, in France, the bonus malus effect had a more profound impact on the choice of vehicle.

Surprisingly, the introduction of WLTP did not have the expected impact to encourage fleet managers to reconsider putting certain makes and models on their fleet shopping lists. Taxation and monetary incentives played a much bigger role in the decision-making process.

 

The French EV route

Germany is by far the biggest adopter of battery electric cars in Europe, but France is still a big player with 30,500 BEVs sales to boast about.

The transition to plug-in hybrids and electric cars is certainly gaining momentum in France which saw plug-in electric vehicle market share reach 18.8% in June 2021 – more than double the 9.0% share of June 2020.

The increase in sales is partly linked to the electric bonuses granted under the country’s pandemic recovery plan which has tripled the market share of electric vehicles.

As the French embrace this more environmentally friendly form of mobility, car manufacturers have also accelerated their green efforts. Renault is aiming for its sales in electric vehicles to reach 90% by 2030, whilst PSA is aiming for its sales in electric vehicles and plug-in hybrids to reach 70%.

These ambitious targets present great opportunities for fleet managers in their long-term green fleet planning and forecasting as the choice in make and model increases and prices decrease making it a win-win situation.

 

On charge

The big challenge for fleets in 2021 is the provision of charging solutions both on the road, on company sites and in employees’ homes.

France is already one of the best equipped countries in Europe in terms of charging points with over 30,000 public charging stations already in place.

But to cope with the growing momentum for electric vehicles, the French government aims to ensure all areas of the motorway network will be equipped with charging stations by the end of 2022.

 

Leasing market highs and lows

The main problem is the uncertainty over residual values ​​of vehicles (mainly diesel) in the used market. Rental companies are having great difficulty anticipating the used-vehicle market value in 4 or 5 years and are therefore penalising longer contracts.

Subsequently 3-year deals from some leasing companies are now lower priced and therefore more appealing than 4 or 5-year contracts which historically offered more appealing monthly terms.

However, this trend has also resulted in huge discrepancies on monthly rental cost from one LSP to another so customers have to be more agile in their search and selection strategy to take advantage of any emerging market price-led opportunities.

 

Mobility on the move

In the large urban areas of Paris, Lyon, Bordeaux and Strasbourg, alternative, greener mobility solutions are streets ahead of the rest of the country.

Each city has well-established infrastructures in place including a network of cycle paths, car-sharing schemes and provision for electric bicycles and scooters giving drivers lots of planet-friendly choices for commuting and business trips.

In fact, The Paris Region Climate Plan sets the ambitious goal to ban diesel vehicles by 2025, and all petrol-fuelled vehicles in the Paris region by 2030. This will force fleet managers to prioritise the electrification of their fleets and include the use of buses and bikes in their mobility strategies.

 

New car market double crisis

The pandemic and car-chip shortage has had a profound impact on new car sales across Europe, France included. Many people are also waiting for the anticipated price drop in electric vehicles rather than taking the EV plunge right now.

2020 saw the lowest new vehicle sales since 1974. Although the market has seen some signs of improvement in 2021, the fall in new car sales accelerated in September at -20.5% year-on-year, marking a fourth consecutive month of double-digit declines.

 

Electrifying to improve total cost of ownership (TCO)

The electrification of a fleet is so much more than buying a few EVs and installing a couple of charging points at HQ and hoping to reap the rewards of lower costs and emissions.

It’s a long-term commitment that requires a thorough understanding of the fleet’s needs and deployment. Will vehicles charge only overnight at the depot? Will they be taken home and charged there? Will these vehicles often drive beyond their range? Are there sufficient ultra-fast public charging points available across the vast French road network?

Where and how a vehicle is charged can have a significant impact on the TCO of running an electric fleet.

Many early adopters of converted EV fleets have already realised the 20-25% cost savings delivered from greater efficiency, more affordable fuelling and reduced maintenance costs.

As more makes and models become available, driving down the upfront purchase price, businesses that are already immersed in the EV new normal will be well-positioned to improve and exploit their TCO and eco-credentials even more.

 

Barriers to greener fleets

Switching to EVs incurs hefty upfront investment and very few companies have made a full EV transition due to the financial impact on their profit and losses (P&L). While they may want and need to protect the environment, they also need to protect their balance sheet and stakeholder investments.

Despite EV prices dropping substantially in the past few years, the cost of a new diesel can still be almost half that of its EV counterpart, making it an appealing option.

But TCO is not just driven by cheaper vehicles. EVs have fewer maintenance and major repair requirements, and a lower downtime compared to diesel and petrol vehicles.

In this era of greenification, the higher upfront purchase cost and installation of the charging infrastructure must be analysed alongside the long-term lower operating expenses afforded by an EV fleet versus an ICE operation.

 

What’s round the green corner?

Fleet operators in France are working amid a transformative but restrictive green revolution. The immediate and dominating challenge is striking the precarious balance between achieving Corporate Social Responsibility (CSR) and legislative targets whilst delivering driver satisfaction and cost control.

The overriding outlook amongst fleet managers across France is therefore uncertainty about how to deliver these seemingly opposing criteria.

However, it’s not all doom and gloom in the fleet sector.

The positive news is that as time-consuming manual systems become obsolete and the fleet management process becomes increasingly digitised and automated, fleet managers will have more time to focus on driver satisfaction and safety.

They can also be more proactive in addressing the medium-term challenges of fleet CSR and TCO, including sourcing alternative sources of mobility, analysing vehicle type and usage and consulting with the supply chain and market intelligence to overhaul outdated fleet policies.

 

French fleets ahead

In summary, the electrification of corporate French fleets is driven by sustainability commitments, the cost, performance and availability of EVs, legislation to ban diesel and petrol vehicles and the charging infrastructure.

As government policy and boardroom CSR objectives align towards full electrification, the marriage of TCO and sustainability is mission-critical for a happy ending in 2040 and beyond.

With more than 620,000 plug-in electric vehicles already on French roads, France’s commitment to greener mobility is already clear.