How green is your fleet?

The death-spiral of diesel has been quite something. Ever since Volkswagen, in 2015, admitted to cheating on its diesel emissions tests, the speed with which the car-buying public, and the motor industry in general, has turned off the black pump has been enough to induce dizziness. It has been a perfect storm of circumstance. Just as diesel became perceived as evil, so too electric car technology seems to have come of age – the two scenarios are not unrelated; car makers have begun pouring development cash into electric cars ever since the diesel scandal first broke.

While the move away from diesel, and towards electric, is probably a good thing in terms of the environment, certainly in the longer term, right now we’re in something of an invidious middle ground. Clearly, diesel-engined cars still have a major operating cost advantage, especially if you’re covering a lot of kilometres in your working week. Conventional, petrol-engined cars can still sometimes struggle to match diesel’s running costs, and there are implications when it comes to VAT. Electric cars seem tempting, but vehicle choices are thin on the ground right now, and for longer journeys many of them are close to useless.

So, what is the eco-conscious fleet manager to do? Which way does one turn, not just with one’s green conscience switched on, but also with an eye to tax-efficiency, control of running costs, and the potential for new regulations and levies when it comes to diesel?

Hybrid fleet

The obvious solution seems to be to go for a hybrid fleet. If electric is unproven, and diesel is suddenly unpopular, then hybrids seem like the perfect middle ground. While switching to hybrid can mean, in one sense, a wholesale switch to buying Toyotas and nothing but (the Japanese car-maker currently has the widest choice of hybrid vehicles in its line-up), rival brands are starting to catch up.

Better still, the technology has already caught up. It wasn’t that long ago that there was really only one hybrid-vehicle choice on the market, and that was the Toyota Prius. While the early Prius was undoubtedly a clever, technologically advanced car, it had some major limitations. Chief amongst those was the fact that if you drove it out of town, especially at motorway speeds, its fuel economy dropped off a cliff. Basically, at that point, you were hauling around the weight of the car, plus its hefty battery, with a slightly underpowered petrol engine. Sub-30mpg on a long motorway run wasn’t unknown in a prior Prius.

That has all changed now. Toyota has spread out its hybrid technology to its entire model range (and to its luxury Lexus division too). And the technology has improved too. A current Prius will, driven “normally” easily average better than 60mpg, even if you’re putting in some long motorway hauls. The likes of the Auris Hybrid (shortly to be replaced by an all-new Corolla) and C-HR Crossover Hybrid easily beat 50mpg on long journeys. The hybrid truly has come of age.

There are some very good competitor cars, too. Hyundai’s Ioniq and Kia’s Niro hybrids (essentially the same car under the skin) match the Prius punch-for-punch when it comes to economy and are distinctly good value for money. Honda will, early next year, introduce a new CR-V hybrid SUV, while Ford has just brought out a very impressive Mondeo Hybrid, which has the advantage of looking utterly conventional. Not everyone buys into the current Prius OTT styling, it must be said.

Residual value

There also seems to be a benefit when it comes to residual value, with Toyota claiming its hybrid cars are now commanding stronger prices in the second-hand market than their petrol or diesel counterparts.

So, hybrid’s the solution then? Not so fast, as there’s a particular speed bump in the Irish business car market when it comes to hybrid. With very few exceptions, hybrid cars use petrol engines to go with their batteries and electric motors, and while that’s good from a refinement point of view, it’s bad from the point of view of claiming back the VAT on fuel for business mileage. Basically, you can’t.

Everyone had expected the Government, in last year’s budget, to change the rule that says VAT can only be claimed back on diesel, but it didn’t happen, leaving Toyota, for one, fuming.

Steve Tormey, managing director of Toyota Ireland, says: “The softening of diesel demand is something that commenced prior to ‘diesel-gate’. Since then, the EU Commission seems to have taken a dim view on diesel and in the future the manufacturing costs of diesel engines will rise in order to meet stricter future regulations with a consequent reduction in the offer of diesel powertrains from the industry, especially in the smaller vehicle segments. In relation to hybrid, as a significant and environmentally effective powertrain option, we have had ongoing discussions with Government and have provided compelling evidence on how hybrid vehicles assist in the reduction of Co2 emissions and improve air quality.”

We will have to await some future budget for the change to come but it could change the company car landscape if it does.

What about plug-in hybrids? These can, potentially, combine the best elements of pure electric cars and “normal” hybrids. Plug them in to charge them up, and you can generally get about 40-50km out of them using just the battery, before the petrol engine kicks in to keep you going as normal.

They’re ideal for short-hop commuters, and there are some very impressive plug-ins available, including the VW Golf and Passat GTE models, the BMW 330e and 530e, the Volvo XC60 and XC90 T8s, and the Kia Niro and Hyundai Ioniq plug-ins.

The drawbacks? Generally speaking, unless you’re conscientious about keeping them charged up as much as possible, you’re back into the old Prius problem of them being thirsty on a longer run. With the exception of the Kia and Hyundai, you’re looking at – at best – 40-45mpg on average once you’re out of town or out of battery charge. And, again, you’re running into the issue of not being able to claim back VAT on petrol (unless you go for the Audi Q7 e-Tron, one of the few cars to combine diesel and plug-in tech).

Is full electric the answer, then? Probably, and with the best will in the world, not. At least not yet. We have been repeatedly promised electric cars that will go for 500km on one charge, but with the new – and more strict – WLTP tests for economy and range, many of those promises are being wound back down to 350-400km.

Motorway miles

Still, an impressive range, but given that motorway miles are harder by far on electric cars’ batteries, probably still not a realistic choice for those who have to drive Ireland’s motorways day after day. A recent trial of the new Nissan Leaf, for example, showed that in spite of its claimed 270km one-charge range, it was unable to travel from Dublin to Belfast, up the M1 and A1 (a distance of about 170km), without stopping off for a quick top-up of its batteries.

There is the temptation of zero-rate BIK for electric cars, of course, but that is a rule which will be under constant review, and once electric car sales truly take off, there’s little doubt it will be reduced or rescinded altogether. Given the limited utility of current electric cars, and the still-limited choice of models in the market, it would probably have made much more sense for the zero-rate BIK rule to be introduced for hybrids and plug-in hybrids as well.

There is also the issue of the national public charging network. There has been little recent investment in public chargers. With the ESB having been told it must sell off and privatise its E-Cars charging network, there has been a lack of new points being installed, and the reliability of the network too often ranges from the poor to the useless.

There seems to have been no recognition of the fact that, in order to build public confidence in the idea of electric cars, the Government and ESB would need to have over-invested in the network, making it more visible, and more reliable, than it strictly needs to be. While we may, in fact, do much of our charging at home (well, those of us with off-street parking at any rate), people need to be convinced that they can get charge when they need it, before they’ll take the electric car leap.

Which brings us full circle, and back to diesel. We may have to make a choice, either at a political or personal level, between saving the planet and saving ourselves. Diesel engines emit much less carbon dioxide than their petrol equivalents, and so until electric cars are truly and reliably usable (and until the public charging network is fully realised) it could be argued that we’re better off sticking with refining and honing existing technology than banking on a new hope. Not all diesel engines are equal, it must be said, and independent testing has shown that while some have definitely been cheating and lying on their tests, some others are genuinely whiter-than-white when it comes to noxious emissions.

‘Few incentives’

Cathal Doyle, deputy editor of Fleet Car magazine, summed it up: "In the current environment, there are few incentives for fleet managers to move away from diesel, particularly for drivers that do above-average mileage," he says.

“The price difference on fuel, the fact that companies cannot claim VAT back on petrol and the reality that diesel still gives better fuel consumption make it difficult to economically make a case for petrol. Eco-conscious fleet managers will also be aware that switching to petrol doesn’t address concerns over rising Co2 emissions.

“Hybrids probably offer the best compromise between ecology and economics, ideally with a mix of electric vehicles for drivers covering shorter distances, but until such time as the Government encourages hybrids through incentives such as reduced BIK as offered on electric vehicles or offers VAT reclaim on petrol, it is hard to see a wholesale switch away from diesel.”

What about Tesla?

There’s an electric elephant in the room, and it’s Tesla. In terms of how many cars it makes and sells every year, Tesla is still an automotive minnow. It makes fewer vehicles than Porsche, for instance, and yet its influence has grown far greater than its size.

Whatever the arguments about the quality of its cars (often surprisingly poor), or the sense of its stock market value, or even the state of mind of its (in)famous chief executive, Elon Musk, Tesla has done what it set out to do. Musk never said anything about his company becoming a new Ford, or a new Mercedes. He said he wanted to make those car-makers, and the rest, sit up and take notice of electric vehicles, and start to build electric cars that could be as good, or better.

In this, Tesla and Musk have been wildly successful. When discussing a new electric car from even a brand such as Mercedes, which has been making cars for more than 130 years now, it is common to refer to it as a “Tesla fighter”. That alone is quite the achievement for the still-fledgling company.

What of its actual cars? The current Model S saloon and Model X SUV share a common chassis, and use the same battery packs (in 75, 90, and 100kWh outputs) and electric motors. These are the absolute high points of Tesla’s work. While other car-makers have produced some impressive electric powertrains, no one has yet made motors and batteries that perform quite as well as Tesla’s.

Use full acceleration in either S or X (the famed “Ludicrous Mode”) and you will beat a Porsche 911 Turbo from 0-100km/h. Dial back the acceleration, and that elusive 500km one-charge figure is a realistic target. Both cars enjoy the same sepulchral refinement that comes from using electric rather than petrol or diesel power. Both have luxurious, comfortable, roomy interiors and that massive 17-in central touchscreen is close to being a work of art, and shows most other car-makers the way home when it comes to a car’s infotainment system.

The problem? Quality control. While electric motors are inherently more reliable than internal combustion engines (they have only one moving part, for a start), the rest of the cars can too often leave much to be desired. If you’re paying Mercedes-Benz S-Class money for a car (neither Model S nor Model X are what you’d call cheap) then you should expect Mercedes build-quality, and the sort of inconsistent panel fit, squeaky, rattly interiors, and electrical and software glitches that we’ve heard of are unbecoming of cars of this price. Tesla has definitely improved its quality levels, but the strenuous efforts to expand production of its new Model 3 compact saloon don’t bode well.

Worth buying? Oh, yes. Especially as a business purchase, where the BIK advantage just about wipes out any argument in favour of a more conventional rival. As long as you’re prepared to take the rough quality with the smooth propulsion, then both Tesla models are fascinating, compelling, desirable cars.

A word of warning, though. Rivals are starting to stack up. Jaguar’s electric I-Pace is already on sale. Audi’s e-Tron arrives soon, as does Mercedes’ EQC. BMW’s i-Next waits in the wings, while its existing i3 is already pretty brilliant. Hyundai has a long-range Kona Electric crossover coming soon. The big, elder-statesmen car-makers are catching up with Tesla. Then again, that’s exactly what Musk said he wanted all along.