Many fleets are unaware of additional Vehicle Excise Duty (VED) charges on electric vehicles (EVs) and plug-in hybrids (PHEVs) that are due to take effect in April
Increases announced by the chancellor in the Budget last year are likely to have an impact on organisations that operate EVs and PHEVs, and some will see their liability on widely-adopted EVs rise per vehicle from zero to £2,490 over a five year period.
First year VED rates are being increased from zero to £10 for EVs and from zero to £110 for PHEVs emitting between 1-50g/km of CO2. Second year rates have risen more dramatically for EVs – from zero to £195.
Also, EVs that are registered from 1 April will now also become liable for additional rate VED for all vehicles costing more than £40,000, which will be £425 for each of the second to the fifth years of the car’s life.
James Pestell, AFP director, said: “The feedback we are receiving is that many fleets simply haven’t appreciated and accounted for these increases, which are substantial when applied across entire fleets operating dozens, hundreds or thousands of EVs and PHEVs.
“From April onwards, they’ll be receiving bills from the DVLA or shortfall invoices from their leasing supplier, and won’t have factored them into their running costs. That’s why we are flagging up this issue now.”
He added that taken together, the VED increases represented a major jump in costs for EVs.
“Electric cars costing over £40,000 bought after the start of April – including some of the most common models on fleets – that would have attracted no tax in 2024-25 will be liable for £2,490* during the first five years of their life. That’s a big increase.”
The AFP will be holding a Tax Year End webinar on Tuesday, 4th March at 10 am, featuring tax specialist Harvey Perkins of HRUX and mileage reimbursement expert Barry Monks of TMC. It will cover VED issues and more, including the P11D process, PHEV benefit-in-kind changes, double cab pick-ups, car allowance payments, what is a business mile, and CO2 tax changes from 2028. More details can be found at www.theafp.co.uk/events/tax-year-end-webinar.
*£10 VED in the first year, followed by four years of £195 VED and £425 of additional tax.
The nine biggest issues facing fleets in 2025
By Paul Hollick, chair, AFP
Each year, the Association of Fleet Professionals (AFP) produces a “State of the Nation” piece, highlighting the key issues that are facing vehicle operators right now. For 2025, we believe these are the nine most pressing, together with our ideas for tackling them.
1. Maintaining momentum in the electric car revolution
What has been achieved over the last few years in the electrification of company cars has been nothing short of spectacular. The default company car choice is now probably an electric vehicle (EV), and one that is probably being used with few or no operational compromises.
However, there are issues around electrification that need resolving. Many of these – such as the ZEV Mandate, better charging infrastructure and a better functioning used car sector – are detailed elsewhere in this article but two areas where we would like to see developments include greater availability of lower-cost EV options and filling in gaps around the types of models that are being brought to market.
Some progress looks as though it will be made in 2025, with a greater number of models arriving that are suitable for fleet use in the £20,000-£30,000 bracket, widening the appeal of EVs to more employees and bringing lower whole life costs. The second is more difficult, with an almost complete absence of electric pick-ups and offroad 4x4s, and few practical choices on the horizon. For some major fleets, such as utilities companies, this represents a genuine stumbling block to achieving zero emissions.
2. The future of the ZEV Mandate
The government consultation on the Zero Emissions Vehicle (ZEV) Mandate is now underway and there appears to be recognition at the highest level that the current strategy is placing too much pressure on manufacturers, creating a mismatch between supply and demand. This is especially the case in the van market, where electric sales are low and largely flatlining thanks to widespread doubt about the viability of these vehicles for everyday applications.
Most of the ideas we have seen reported in the press that are apparently being considered by the government – such as allowing hybrids to stay on sale until 2035 – probably don’t go far enough but we remain optimistic that genuine improvements can be identified. The changes made will influence the vehicle choices made by fleets for at least the next decade and the AFP is taking an active part in the consultation.
3. Rethinking zero emissions for vans
This is something of a simplification but the fleet industry reception to electric vans has been largely split between major fleets who have a corporate commitment to zero emissions and adopt them despite their potential shortcomings, and a much larger cohort who look at the perceived range and payload compromises, then decide to stay with diesel.
By 2027 – just two years away – the ZEV Mandate states that more than a third of van sales need to be zero emissions so clearly, something must change. Our thoughts on this are included in the Van Plan that we created in 2024 with the British Vehicle Rental and Leasing Association and others. Essentially, a complete rethink is needed at a government level, including a solution to the long-running 4.25 tonne van issue.
Something that could potentially help is hydrogen. The first viable hydrogen van, from Vauxhall, goes on sale soon. It offers fast at-the-pump refuelling and a 300-mile range, but the van and the fuel are expensive, and there is almost no refuelling infrastructure. Again, government action is needed for this to become a viable choice for most.
4. Delivering on-street charging
We’re experiencing an odd moment for UK’s charging infrastructure. Last year, a record 20,000 public chargers were installed, bringing the national total to around 75,000. It’s a big increase. However, visit almost any part of the country and very few streets of terraced housing or apartments have any chargers. This absence of low cost, practical energy for anyone without the space to install their own charger is not just bad for fleets whose employees live there, but it practically locks individuals out of buying a new or used EV.
At the AFP, we have a long running project that is designed to show relevant parties – including fleets, local government and charging providers – where domestic demand for charging provision from vehicle operators is highest and this has met with some success. For 2025, we’re going to completely overhaul this national map with the aim of having a wider, faster impact in terms of accelerated charger availability. However, we’re only one element of the process and there simply needs to be more on-street charging available quickly.
5. Making shared charging a reality
In 2024, the AFP launched a new committee designed to promote shared charging between our members. Good progress has been made and we are commissioning an online platform that will enable fleets that have spare charging facilities to register while those who need charging will be able to search and book. It will also set prices and payment terms.
A key discussion point for the committee has been the price point of shared charging and general agreement has been reached that it should be a maximum of 40 pence per kWh. Also, there have been extensive discussions around how to gain access to charging sites, health and safety considerations, measuring charging use, and potential payment mechanisms.
Ultimately, shared charging isn’t going to be for everyone because of inevitable compromises – for example, the kind of provision on offer will almost certainly be geographically patchy – but as part of the ongoing journey to fleet electrification, it’s certainly a further step forward.
6. Controlling fleet spending
While inflation has fallen from the worrying rates seen in the last few years, fleet budgets remain under considerable pressure. Insurance premiums, for example, appear to have stabilised after rocketing but remain at historically high levels, uncomfortably so for many vehicle operators. Other unavoidable costs – from buying vehicles to lease rates to service, maintenance and repair have also noticeably increased.
There are no easy answers to any of these issues but many of the conversations happening among AFP members at the moment are based around identifying strategies that are successful in controlling costs and it does appear that for many, 2025 is going to be a year where much time is devoted to scrutinising spreadsheets, trying to work out where price rises can be contained. Being part of an organisation such as the AFP, with channels and forums where these problems and solutions can be shared, has genuine value.
7. Working towards a better used EV market
For fleets to electrify, a properly functioning used EV market is essential and at points in the last couple of years, there were times when it appeared that wasn’t happening, with huge falls in residual values (RVs) hitting leasing companies and anyone else who owned electric cars and vans.
Thankfully, the situation has now stabilised to a considerable extent with some commentators suggesting a good 2025 for used EVs but the fact is that RVs remain lower than anyone in the sector really likes, and one of the key conversations within the AFP in recent times has been how to make these vehicles more attractive to used buyers when they enter the remarketing cycle.
A development that would help is the creation of a standardised battery health check to give used buyers a high degree of reassurance that the most expensive component on their car is in good condition and unlikely to fail. Work on this is currently underway at a UK government and international level, and we hope to see concrete developments soon.
8. Decoding which new entrants are here to stay
Over the last year or two, more new entrants to the UK market have arrived than at probably any time before, with the majority coming from China, a development that has created a high degree of interest within the AFP.
So far, fleets appear cautiously receptive to these companies and their models, even though the sheer number of these new manufacturers and their often broadly indistinguishable mid-size electric SUVs mean that it can be difficult to form opinions about them individually. Also, some fleets have highlighted perceived security risks.
What we expect to see over the next few years is a process where a handful of companies emerge from this pack as substantial players in fleet terms, offering not just competent, well-priced vehicles but an understanding of our sector’s needs. The task facing fleets in the meantime is to work out which companies are here to stay – no-one wants to be stuck with cars and vans from a manufacturer who suddenly withdraws from the UK.
9. Solving the skills shortage affecting fleets
Skills shortages are affecting fleets in two key areas. We have been highlighting for some time how a generation of older fleet managers will be heading towards retirement in the next few years and that not enough new people are coming through the ranks to replace them. The AFP has been working to tackle this problem through initiatives such as promoting our AFP Fleet Academy and progress has been made in higher training numbers. However, while there are some excellent young fleet managers around, there still probably aren’t enough to meet future demand and we hope to see further progress. Also, we are seeing some progress in our efforts to introduce a fleet apprenticeship and hope that 2025 will see us move closer towards this goal.
The second issue is around the maintenance and repair of vehicles. Technicians with the right skills are in short supply and this affects fleets every day, often contributing to already historically high vehicle-off-road times. Much of this situation is being caused by electrification and it appears to be a problem that won’t be resolved quickly.
By Ronnie Gillman |
Picture the scene: you’re having coffee with a friend, and they are telling you all about a holiday they are going on in a few days’ time. You chat about their plans and what they are most looking forward to. They might share a few concerns about parts of the trip they are unsure about, so you offer tips from your own experience and reassurance, so they go off feeling excited about the journey ahead. When they return, you catch up and hear all about the holiday, they share photos and stories (the good and the challenging!), and you feel at times like you can imagine the atmosphere your friend has experienced.
What does this have to do with leadership and training? Everything!
Let’s continue the journey metaphor. You (or one of your team) are about to go on a training course, and the suitcase is packed, ready to go. It already has knowledge, skills, and experience in it, but you’ve left room so you can bring back more. How can we prepare to bring back the best souvenirs?
Tip 1
What new knowledge do I hope to gain, and how will it support my development and role?
Having this conversation before attending training is really powerful in two ways:
Tip 2
On return, a training course debrief can improve recall and application of knowledge gained from the course. You can structure this discussion in a number of ways, but an informal coaching conversation would provide an ideal environment to find out about their journey and what “souvenirs” they have brought back to the office.
Here are two effective ways to apply that knowledge right away:
Like any well-planned journey, you get out what you put in. What can you do to help pack the team suitcase ready for training? Leadership, like friendship, takes time and conversation!
At the AFP, we believe every professional journey starts with the right preparation—just like packing the perfect suitcase for a trip. Through our Fleet Academy, we offer a comprehensive range of online and tutor-led education and training programmes designed to help fleet professionals with the essential knowledge and skills needed for success. Find out more about our courses: https://www.theafp.co.uk/education-training/
Welcome to the new AFP web site!
It’s been designed to help you make the most of your AFP membership. The enhanced fleet directory, enables you to find out more about AFP member suppliers and leave reviews to help other members who are looking for the right partner. You’ll also find handy reminders on the home page, prompting you to register for events and alert you to other member benefits.
A lot of effort has also gone into simply making it much easier to use, so please click on some buttons and look around, and let us know what you think. You may discover benefits to your membership you weren’t even aware of!
Thank you to everyone who attended our inaugural MemberExpo in November. The day featured 70 stands made up of AFP corporate members and a series of roundtables where a range of current fleet issues were discussed.
We are planning several more networking and collaboration events for 2024, which we’ll be announcing very soon. After all, support and collaboration are at the very heart of the AFP.
Paul Hollick, chair, AFP
Hydrogen is not currently a realistic zero emissions alternative to electric vans and fleets waiting to see if the situation changes are probably set for disappointment, believes the Association of Fleet Professionals (AFP).
Paul Hollick, chair, said that the organisation was aware of a sizeable minority of fleet managers, mainly with extensive light commercial vehicle operations, who were waiting to see whether hydrogen would become viable in the short-medium term.
He said: “We’ve discussed this topic at some length at every level of the AFP and our conclusions are clear. Electric is effectively the only option when it comes to the future of zero emissions vans in the UK for at least the next decade. Hydrogen is simply not happening in any meaningful way and there is no real sign of that situation changing.
“The facts are that the hydrogen fuelling infrastructure barely exists, availability of vehicles is limited in the extreme and those that are available are very expensive. Apart from the introduction of one hydrogen van over the next year, we are seeing only minimal levels of investment in the fuel and certainly not on anything like the scale that would be required for widespread, rapid adoption.
“Elsewhere, such as in Germany, there is significant state support for the expansion of hydrogen but government commitment here is low. It is clear that as far as the vast majority of road transport is concerned, our politicians see electric as the future. Fleets waiting for hydrogen to emerge as a realistic alternative are almost certainty set for disappointment.”
Paul explained that operators hoping for a hydrogen solution to occur were quite often those who also had significant reservations about the viability of electric for their van operations.
“It is becoming clear to a significant proportion of operators that electric vans will not always be able to replace existing petrol or diesel models on a like-for-like basis because of compromises over range, charging times and payload. That means that they’ll often have to change their operational model and cause a degree of disruption to their business.
“Hydrogen appears to provide a solution to this situation because of the promise of ease of refuelling. However, there are only around than a dozen hydrogen filling stations in the whole country and literally no programme for widespread expansion. Rapid filling-up of a vehicle is meaningless when the nearest pump is 100 miles or more away.
“There are higher level problems, too. Generating green hydrogen on a large scale would be required and the infrastructure for that is also sorely lacking. In other European countries, there is investment happening and government support in place that could help to overcome some of these issues – but not in the UK at this point in time.”
Paul added that accepting your van fleet would become electrified over the next decade was an important step when it came to identifying solutions that would work for you.
“It is no exaggeration to say that the number one task currently facing light commercial vehicle fleets is to resolve the infrastructure and operational issues that will maximise electric van effectiveness as the transition away from ICE happens over the next few years.
“There are no easy answers to some of the questions created by this situation but fleet managers and organisations such as the AFP are working to find new ways of maximising the effectiveness of EVs – and making substantial progress almost month-by-month.”