When is the right time to electrify your fleet?

As battery technology improves and competition brings down the cost of EV ownership, more businesses may be considering electrification of their commercial fleets.

An October 2024 study in the US found that EVs have a 9% lower total cost of ownership than equivalent fossil fuel vehicles, even when the cost of charging infrastructure is included¹.

Electric vehicles are also getting cheaper to buy. In the US, the average premium charged for a battery electric vehicle over its internal combustion engine (ICE) counterpart fell to 21% in 2023, down from 60% in 2019, according to data from the IEA². In Europe, the premium fell from 52% to 38%, while electric vehicles in mainland China are now cheaper than ICEs³.

One challenge of the electrification of commercial fleets is that it requires a change in thinking for business managers and investors. Switching to EVs means effectively exchanging future operating expenditure (traditional fuel costs) for today’s capital expenditure (new cars, vans and trucks).

Many have already embraced that new mindset, with global sales of battery EVs and plug-in hybrid vehicles rising 27% in 2024 compared to the previous year, accounting for 25% of all vehicle sales, up from 20%⁴. In the UK that share rose from 24% to 28%⁵.

Including all hybrids, global EV sales accounted for 38% of all vehicle sales in 2024, while that proportion reached 63% in the UK⁶.

Leading global logistics businesses have also started to introduce electric vehicles into their fleet operations: As of January 2024, DHL had more than 29,200 of them⁷.

Before making the move, a careful analysis is required to balance lifecycle costs, operational hurdles and other factors. Here are some of the most important things to consider:

• Charging: Key considerations include the time it takes to charge vehicles, the location of charging points and the cost of electricity. Access to charging infrastructure is quickly becoming less of a hurdle: in Europe, for example, the number of charging points increasing at a rate of 55% a year between 2021 and 2024.⁸
• Emissions calculations: Detailed knowledge of the impact on a business’s own emissions is important. Carbon Calculator tools can play an important role in helping businesses track their decarbonisation, with a number being specifically developed for businesses to simplify the data collection process as much as possible.
• Employee engagement: Workforce behaviour will likely need to change to accommodate an EV fleet. Businesses must ensure they bring staff with them by explaining the rationale and benefits, and by helping to ease any transition challenges.
• Costs and financing: Fleet owners need to look beyond the purchase price for a complete picture of the cost of EV ownership. This will be a different calculation for businesses that refresh their fleets every three or five years, compared with those that plan to keep vehicles in operation indefinitely. Depreciation and financing costs for EVs may be higher than their hydrocarbon-powered counterparts, while fuel and maintenance costs may be lower.
• Taxes and incentives: With government policies and regulations still evolving, it is important for fleet owners to be well versed in any available tax breaks and incentives in the markets where they operate.

European fleet management firm Ayvens noted in 2024 that EVs delivered greater overall savings, with extended lease duration and increased mileage, despite the higher upfront investment required. The introduction of cheaper EV models may further tilt the balance in terms of lower costs compared to their combustion engine counterparts – although the variable cost of electricity means that EV ownership costs can fluctuate considerably.

HSBC provides a range of tools and solutions to help businesses that are ready to move forward with electrifying their fleet.

Businesses can start by accessing a range of public tools and calculators to get a full picture of the investment needed and the impact of going electric. To help our customers, Greenly is currently offering HSBC customers in the UK and Singapore a 20% discount on their carbon calculator solutions.

HSBC’s partnerships also offer targeted support in certain markets such as Hong Kong, where HSBC business customers can currently enjoy a discount on EV charging with local partner Halo Energy.

For those ready to make the investment, HSBC offers a range of financing products.

Pelican Bus & Coach has been importing electric buses from mainland China into the UK and Ireland since 2013, and has been supported by green trade finance provided by HSBC UK.

In Asia, Indonesian taxi firm Bluebird used a green loan from HSBC to acquire EVs in 2023. HSBC are continuing to support their annual capex requirements to rejuvenate their fleet by replacing 5-year old vehicles with new ones, helping to meet their commitment of cutting CO2 emissions by half, and using 10% of EVs in its total fleet, by 2030.

HSBC also offers incentives to businesses that can demonstrate their commitment to sustainability. In the UK, HSBC offers 1% cashback on loans to small businesses that are funding eligible green investments, including electric vehicle purchases. In selected markets, we offer Sustainability Improvement Loans that provide preferential interest rates for businesses that increase their sustainability score with EcoVadis , a third-party provider of sustainability ratings.

The transition to electric vehicles is gaining momentum, but the pace of change is uncertain. Fleet owners can start unlocking the benefits of electrification today – and that could enable them to stay ahead of the competition.

Contact your HSBC relationship manager today to start a conversation about how we can support you on your transition journey.