Electric vehicle engagement shifts up a gear

COMMENT The adoption of electric vehicles is experiencing a seismic shift, driven by popular opinion and a collective cultural awareness of the need to respond to the effects of climate change. We are seeing examples of pioneering leadership from companies like Honda, individuals like Elon Musk and the acknowledgment by governments that change must come. Government policies are being rolled out to facilitate the incentivisation and enablement of this rapidly evolving sector – the UK government released its Transport Decarbonisation plan in July – while huge investment is being made in R&D and manufacturing. An entire industry, for example, is developing in EV chargers with energy and infrastructure companies investing in clean and renewable energy. However, what is clear is that the reaction to electric vehicles by national and local governments has been fragmented at best. As identified by the EEA, there is a gulf of preparedness between European countries ranging from industry leaders such as Norway, through to the lacklustre performance of developing Central and Eastern European markets. This means that, for industry players with regional or global interests, a tailored approach is needed. Landlords Regardless of asset type, building owners need to have a sound understanding of the quantity of energy available to the building: how much is currently surplus, how much could be added and where the energy comes from. While different chargers and vehicles consume varying amounts of power, understanding what can be supported is fundamental. The business case for investing in EV requires consideration both in financial and environmental terms. From a capital expenditure perspective it is not only important to understand how much the infrastructure will cost to install, but also the business model behind how the power will be disseminated. A range of options are available to investors from cash positive revenue share options to “charging as a service” and “off the shelf” packages – each possessing a different cashflow and return on investment profile. The environmental aspect also carries weight: appreciating the impact on the building or site’s environmental footprint as a result of EV infrastructure can be beneficial from an accreditation and tenant attraction perspective. Introducing EV to a building or site will also impact on its value and, as examples increase in number, more clarity will emerge on the case for the optimum return on types and quantity of charger. Tenants In the ever-intensifying war for talent, soft employee benefits play an important role in the attraction and retention of people. The provision of EV is gaining momentum as businesses recruit environmentally conscious employees. While the groundswell of employee demand for EV is growing, company car policies, EV incentive schemes and free EV charging at work can also all have a notable impact on take-up. At a corporate level, there is also the opportunity to reduce scope three emissions and improve a business’s corporate image. Understanding where the balance of power lies between tenant and landlord with regard to paying for, managing and operating charge technology, will be key for tenants. This will be partly a function of the number of tenants in the building or site and their collective appetite for EV, remaining lease length and planned commitment to the building/landlord. A final consideration from a tenant’s perspective is if the cost of EV is being passed down to employees or whether the business absorbs that cost: free charging can be an attractive employee benefit and also demonstrates the business’s commitment to furthering the adoption of EV but can come with a sizeable cost profile over a number of years. This financial analysis should be well understood in advance of committing to EV investment. Employees and consumers Consumer choice in Europe is increasing and becoming considerably simpler and more financially accessible owing to government incentives that support the EV purchases, aligned with the provision of better infrastructure and charging facilities by landlords and automotive companies. At consumer level, concerns remain around vehicle range and resale opportunity. The former are diminishing with the roll-out of more efficient battery systems and charging infrastructure, though with range remaining an issue for longer journeys, EV adoption has been largely concentrated in urban environments. Distribution should begin to even out nationally, albeit that it will remain limited to locations where infrastructure is available. Resale values remain a challenge as the second-hand market matures. Automotive companies and corporate car policies have sought to address this through providing attractive rental schemes, which are gaining momentum. Property managers Property managers may need to consider upskilling existing staff or recruiting new expertise to cover the maintenance and management of EV technology across their clients’ sites. Furthermore, awareness of the technology platforms available for dynamic car parking and EV management will become more prevalent as businesses shift from a static model of one car per space to a more fluid model requiring charging to be shared among consumers and tenants. Sectors to keep an eye on Urban logistics operators are increasingly focused on the emissions impact. As congestion zones, ultra low emission zone restrictions and internal combustion engine bans become the norm, running EV fleets will become a necessity and charging sizeable vans will require significant investment in infrastructure. Out-of-town retail will be a key battleground for the provision of EV infrastructure as a mechanism of customer attraction and convenience. The type and speed of charger will be key considerations with emphasis being placed on the versatility of chargers and optimum dwell time. Commercial real estate is in the midst of a flight to quality movement from occupiers whereby environmental credentials are becoming ever more important. EV will be a short-term differentiator in this space while also providing return on investment and tenants’ ability to offer soft benefits, Scope 3 reductions and support a sustainable image. Alister Langdon is director, corporate consulting at JLL Picture © Gill Allen/Shutterstock