The UK’s Plug-in Truck Grant is being absorbed by large fleets placing volume orders, shutting out smaller hauliers making up half of the UK truck market, according to a new report.
The study, called Making the Numbers Work: The Commercial Case for Electric Freight, by operator-led logistics innovation platform TwentyForty, calls on the UK Government to ring-fence at least 40% of annual grant funding for operators with fewer than 50 vehicles.
It is the first output of the 12 Pillars of Change workshop programme, an industry-led initiative designed to deliver answers to the barriers blocking freight electrification – and draws on a March workshop where fleet operators collaborated with a truck financier, insurance firm, energy supplier, and charging infrastructure providers as well as an OEM representative.
The study found the commercial case for electric freight is closer than headlines suggest, with grant-supported tractor units now leasing at diesel-equivalent rates.
Chinese manufacturers are undercutting European OEMs by a third, with diesel-to- electric refurbishment opening up a cheaper route for capital-constrained operators. Where depot charging is available, electric trucks are 15-25% cheaper to
run than diesel.
But it identifies three specific policy failures. Alongside the large fleet purchasing issue, it also found the Depot Charging Scheme does not fund the expensive grid connection upgrade cost, and the Residual Value Guarantee – proposed by the Green Finance Institute – which leaves finance providers pricing blind on used electric trucks.
Jamie Sands, founder of TwentyForty and Head of Solutions at Welch Group, said:
“The current grant structure makes the maths work for operators who already have the capital and the volume. The fleets that actually need a hand to get into electric, the small and medium operators who make up over half the UK truck market, are
walking away because they can’t compete with bulk orders for the same pot. If SMEs can’t join the transition, it doesn’t happen.
“Three things are stopping electrification at scale, and all three are within government’s gift to fix. Ring-fence the grant for smaller fleets. Make the Depot Charging Scheme cover grid connections, which is where most operators get stuck. Implement the Residual Value Guarantee that’s already been designed and modelled. None of these are new ideas. They’re tweaks to schemes that already exist.”
Jamie Sands will be talking at the Transport + Energy Fleet Electrification Forum on 8 July at Warwick Conferences. You can find out more about the event here.
Image courtesy of TwentyForty
