View all newsletters
Receive our newsletter – data, insights and analysis delivered to you
  1. Analysis
November 30, 2013updated 12 Apr 2017 11:37am

Service range for UK EVs as BMW fleet lessor launches AlphaElectric

Flexible leasing and service range on EVs part of Alphabet scheme. Mike Cobb and Richard Brown report from the launch at the Saatchi Gallery in London.

By Verdict Staff

Flexible leasing and service range on EVs part of Alphabet scheme. Mike Cobb and Richard Brown report from the launch at the Saatchi Gallery in London.

Alphabet, the fleet leasing arm of BMW Group, has launched its electric vehicle (EV) service range AlphaElectric in the UK, following its launch earlier this year in Germany.

The service will provide vehicle finance for EVs alongside fleet analysis and charging point consultation and installation, with the option to tie into Alphabet’s corporate car sharing scheme, AlphaCity.

Saying there was no question e-mobility (the European term for electric transportation) will take hold in the UK, Richard Schooling, chief executive of Alphabet GB, explained Alpha-Electric would include a consultation side to help businesses assess their EV needs. This would include the mix of 100% EV models, range-extender models (which include a non-electric motor to power the electric battery when needed), and hybrids required by fleets, as well as the options available for installing residential and workplace charging points.

Schooling explained Alphabet was now the third-largest leasing company in the UK with 130,000 vehicles funded or under fleet management, but it "didn’t want to just be a contract hire company". He said Alphabet was targeting the changing needs of city and corporate transport. Expecting 60% of the world’s population to be urban by 2030, and by responding to the political-environmental agenda, the economy of limited fuel supply, and a changing culture of car possession and use, the company is preparing for the market 10-20 years from now.

Although Alphabet would be using CAP to calculate the future worth of an EV model, Paul Hollick, commercial director, said the company was prepared to take a risk on residual values and not pass on the costs of a lease.

Kit Wisdom, mobility solutions manager at Alphabet, identified the hurdles to EV adoption as suitability, charging, cost and range. Therefore AlphaElectric will offer a four-prong service. The first part will be a full-fleet electrification analysis, assimilating telematic, GPS, expense and other data to offer an "optimal blend" of EVs to a company. The second would be to identify the degree of electrification available within the vehicle selection, whether plug-in hybrids, range-extenders or pure EVs. The third is a partnership with EDF Energy to provide charging points at the workplace and, free of charge, at residences.

The fourth is a range of mobility services, including car sharing under the AlphaCity banner and a smartcard for public charging of the vehicles compatible with 85% of the UK network; "everything you’d expect from Alphabet", said Wisdom. These services will also include two trial leasing offers on EVs called Discovery and Comfort.

Wisdom likened the Discovery package to a "try-before-you-buy" scheme, with companies able to take a Toyota Prius or BMW i3 on a limited term rental package (£300 and £500 a month, respectively), after which they would be offered up to £500 discount on the price of either model.

Meanwhile, companies using the Comfort package would take an EV, but be offered a swap for a combustion-engine model rather than an early termination on the EV, after six months of use.

Similar to, but separate from, the BMW Access package on EVs from BMW Financial Services, Alphabet also announced it would offer companies using EVs daily-rental access to combustion-engine models when needed. Packages ranged from £160 a year for seven days’ access, to be taken at any point in the 12-month period, to £700 for 36 days’ access. Cars would be provided by a third party.

Wisdom said fleet was "part of the story" for EVs gaining market share in the UK, just as much of the car market depended on fleet, but he had hopes for AlphaElectric in London, currently the "biggest car-sharing city in Europe".

Given the apprehension of customers regarding EVs, Wisdom expected all vehicles to be financed or leased but said it was too early to break down or understand the penetration of products. By vehicle, Wisdom expected range-extending vehicles to "do very well" with many customers happy to try EVs with a mileage "safety buffer".

However, retail has been the first adopter of EVs, said Wisdom, citing the success of Renault and Nissan in the market which led with retail registrations on small volumes. Wisdom explained retail finance was outstripping fleet on such vehicles aided by "passionate" individual owners and a reducing "scepticism" among consumers.

Fleet will "come to the game", he added. At present the lack of public infrastructure made for a challenging EV market, but one in which Alphabet aimed to be "leaders". As with AlphaCity, said Wisdom, the company wanted to establish an "iconic change". "To be sceptical about EVs is putting your head in the sand," he concluded.

Paul Hollick, chief commercial officer at Alphabet, said the purpose of the scheme and "subsequent products and innovations" was to reduce the carbon footprint and cost-base of customers while facilitating the early attempts of fleet managers to incorporate sustainability and overcome "uncertainties" such as range anxiety. But once EVs were established in fleet, "retail starts to take notice".

He predicted the most-used finance product on AlphaElectric would be contract hire by major corporations, with a majority taking three-year deals with a low (30,000) mileage profile. This would be coupled with an uptake of the six-month flexible leasing option "to get the ball rolling" with companies. And personal contract hire for second-car owners and salary sacrifice drivers may also prove popular.

Hollick admitted setting residual values (RVs) on EVs would be "tough" and a calculated risk. However, with 121,000 vehicles on the road and an aim to work with "stretchy but achievable" RVs, Alphabet could absorb any required adjustments on the initial one or two thousand units. The company doesn’t expect a swing from combustion engines to electric large enough to change the priorities of its income streams or RV policies and saw emergent technology as the only unknown in the mix.

"We need to assure a price that facilitates adoption," said Hollick. "If we don’t, nobody wins. Of course there are market indices out there to benchmark against. Our view is: Let’s be bullish in this marketplace, as well. Rather than competitors sitting on the fence and being led by customers, let’s create a product that will be an iconic change in the marketplace. What we’re doing will force the industry to catch up with that. If we don’t do it, we don’t get a competitive advantage."

richard.brown@timetric.com

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Thursday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Motor Finance Online