Covid-19 is accelerating the transformation of business fleets as a number of factors are combining to make electric vehicles, plug-in hybrids and hybrids more attractive. However, for small businesses more than most, cost is a major barrier to such progress.

The transition to electric vehicles, plug-in hybrids and hybrids was already well under way before Covid-19 struck, but one of the consequences of the pandemic has been to accelerate the process. Interestingly, where larger firms were once the main drivers of changes, smaller firms are now starting to play a much more prominent role.

Why small firms are targeting larger electric vehicle fleets

According to a new study by Arval Mobility Observatory research, almost 40% of companies with fewer than 100 employees already operate or plan to adopt electric vehicles by 2023, compared to less than a quarter in 2019.

With regard to plug-in hybrids, the figures are even higher, with almost 50% of firms either having them or planning to add them to their fleets, compared with less than 30% in 2019. For hybrids, the number is 45% in 2020 compared to 37% in 2019.

The change is working practices caused by Covid-19 is a key factor behind the shift. For companies that use fleet vehicles, in particular in terms of traditional fleet use, the drop in annual mileage and the increase in videoconferencing has made the use of electric vehicles, plug-in hybrids and hybrids more beneficial.

Other key factors include changes to company car tax rules and the likelihood of more government incentives in the short term, as well as the growing emphasis on sustainability and corporate responsibility and the falling price of electric vehicles and improving charging infrastructure.

At the same time, as the focus on efficiency grows, the use of fleet telematics is growing. Telematics can help companies reduce labour costs and overtime hours, accidents, speeding incidents and fines, maintenance costs, and operating expenses, while also increasing productivity and fleet safety and security.

The fleet technology price tag – how can SMEs pay it?

However, the switch to electric vehicles, plug-in hybrids and hybrids, and the greater use of telematics comes at a cost. While larger companies are better positioned to invest in such change, it is much harder for smaller businesses to find the capital, in particular at the moment.

So, how can small businesses afford to upgrade their fleets and embrace technology such as pure electric cars and telematics?

Alternative finance can help.

In the wake of prolonged caution from traditional lenders, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment. These facilities, which offer a more personalised approach to lending, are helping small businesses survive and grow.

What SMEs need to know about funding options

Investment in new fleet technology has never been more challenging for SMEs as they battle for survival, but finding the capital to drive evolution, such as the use of electric fleets and telematics, is essential for growth. As such, it is vital that owners are aware of all the funding options available to them, from the government emergency loan schemes to the services offered by alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.