EU Vehicle Fleet Renewal Rate – How To Increase
How to increase the rate of vehicle fleet renewal. Fleet being the vehicles on the road. Renewal being older vehicles being permanently retired.
Enterprise said mandatory vehicle acquisition targets “would incentivise longer vehicle holding times for non-BEV vehicles and the steady reduction of new vehicle acquisitions. Ultimately, they would be self-defeating as rental and other mobility service providers are one of the primary drivers of European fleet renewal.”
https://www.fleeteurope.com/en/new-energies/europe/features/fleets-leasing-and-rental-companies-oppose-eu-corporate-fleet-zev-mandate?a=JMA06&t%5B0%5D=Electrification&t%5B1%5D=Procurement&t%5B2%5D=European%20Commission&t%5B3%5D=Bosch&t%5B4%5D=DPD&curl=1
What drives fleet renewal?
For most cases there is one driver (excluding tax benefits). The cost of maintenance exceed the perceived cost of getting a newer vehicle.
That’s it. The key driver is maintenance vs replacement.
How To Increase?
So if we want to increase the rate of renewal there are two choices.
1.Make maintenance more expensive
2.Make newer vehicles cheaper.
Government Policy
I think we can agree government policy is to encourage fleet renewal ie make the average age of vehicles on the road less. The reasons are numerous and include improved safety of newer vehicles, reduced emissions of newer vehicles (ignoring the manufacturing of the vehicle), employment. Car manufacturing employs tens to hundred of thousands of people directly and indirectly.
Unfortunately – ICE Ban
Government policy in Europe and the UK is/was to ban the sale of ICE vehicles in order to reduce vehicle emissions through fleet renewal (gradual replacement of existing vehicles with EVs).
Unfortunately mandating a date when new ICE vehicles will no longer be on sale has and will, slow fleet renewal and increase the average age of the vehicle fleet.
By trying to increase fleet renewal speed, the speed of fleet renewal has slowed.
How & Why?
Why has announcing the ban slowed vehicle fleet renewal?
Coming back to the two drivers of renewal
1.Maintenance
By creating a feeling of scarcity of ICE vehicles, they have and will continue to become more valuable in the future. They will start to increase in price.
As the value of ICE vehicles increase due to perceived scarcity, it becomes economic to repair older & older vehicles.
2.New Vehicle Prices
By mandating new technology, by forcing everybody to become a early adopter, everyone is forced to buy early adopter prices for vehicles (if they want a new vehicle). In short mandating new technology has increased the prices of new vehicles.
As a cherry on top the EU is also forcing car manufacturers to pay fines for every ICE vehicle they sell over their quota, further increasing the price of new vehicles.
Perfect Storm
The desire of governments to massively increase the speed of vehicle renewal using the 2035 ICE ban, has had the effect of achieving the exact opposite. The policy has attacked the two things that drive vehicle/fleet renewal. They have made older cars worth more and they have increased the cost of new cars.
Cynic
A cynic might say that there is no way a government policy could be so badly thought out and that the real reason for the ICE ban is to reduce the number of vehicles in general (older vehicles will still become uneconomical to repair at some point and the enforced tech and fines are making new cars affordable to less people. Both factors lead to a reduction in vehicles).
I personally do not believe this to be the case.
Governments for whatever reason are all-in on EVs, while the public isn’t.
In response (and instead of listening to the electorate), governments have mandated a alternative reality which is at odds with the actual reality.
And when a person, a government, a business think they can force their alternate reality on those around them, the outcome can only be negative for all concerned.
