“Early adopters are driving the transition to a green fleet”

The road to sustainability includes many steps, but it seems that changing mindsets is vital for the transition to electrification. Emin Guluyev, Global Category Manager of Fleet at Vodafone Procurement Company, manages a fleet of 11,000 vehicles in 13 countries. Guluyev says early adopters are crucial to making a fleet green, as Vodafone has already switched 30% of its fleet to electric vehicles in Europe.

Could you tell us briefly about your role at Vodafone?

Vodafone Procurement Company is Vodafone’s central procurement entity in Luxembourg. We initiate and drive key sourcing strategies and execute global transactions. I work with local supply chain, fleet and property managers. Our fleet consists primarily of passenger cars with limited vans, and our business model is primarily rental-based rather than purchase-based.

How many electric vehicles do you have in your fleet (including PHEV and BEV)?

In European markets, we have approximately 3,000 electric vehicles which represent more than 30% of the regional fleet. Germany, UK, Spain, Greece and Luxembourg have a higher share of green vehicles in their fleet. In most markets, policy makers were early adopters, and as role models they helped promote the green fleet.

Has your car policy changed during the pandemic and chip shortage?

The pandemic and global supply issues have impacted our approach to fleet management. We have started to review the mileage required for new orders as we have driven less due to Covid restrictions. On the other hand, we had to extend some existing leasing contracts due to a longer delivery time for new cars. However, sustainability has become even more critical with all these challenges.

We have reviewed our global and local policies to align with this Net Zero strategy. We have a strict CO2 limit per car order, which has recently been further reduced. Our management team in Luxembourg has decided to get a head start by excluding all ICEs (internal combustion engines) from the list of cars from 2021. Now employees can only order EV models (PHEV and BEV). As far as I know, Vodafone was the first company to take this unique step towards a future in Luxembourg.

What are the main challenges you face in the electrification process?

Internal and external factors affect the possibility and speed of the transition of our green fleet. Charging infrastructure is one of the dependencies during the transition. The number of public charging stations is inconsistent across Europe; we are still facing coverage issues in countries like the Czech Republic, Romania, Hungary, Portugal and Italy. Now, the charging station sector has become attractive for private companies due to the high demand. Therefore, the industry is developing rapidly. Oil companies, car manufacturers, energy providers and rental providers have started building their solutions, investing in R&D and offering mass service to green fleet owners.

Charging speed is also another area for improvement. Our sales team cannot wait for recharging while the client company is also waiting or an urgent move to a radio base station is needed. However, fast chargers are becoming commonplace for recharging. And while we have this interview, Volkswagen and Volvo are testing wireless charging. Automakers are working on battery range to achieve higher mileage. I am therefore positive for the near future.

What steps are you taking to address these challenges, including charging infrastructure, costs and driver behavior?

To simplify the charging process and billing, we also install EV chargers in the company parking lot. Demand planning for office charging requires evaluating various elements such as future EV control plan, hybrid operation, usage management, energy capacity, etc. Due to the hybrid operation at Vodafone, it is not necessary to install many chargers. We work with rental providers in certain countries to bundle services, including home chargers.

Another significant challenge is the total cost of ownership (TCO): EV prices are still obviously higher than ICE alternatives due to production costs. We expect automakers to break even by 2025. The other main ingredients of total cost of ownership are incentive government taxes and energy prices. The majority of European countries offer significant subsidies for electric vehicles, as well as tax advantages for companies and employees. In all of Vodafone’s markets, the UK government offers the best terms for electric vehicle owners, followed by Germany, Luxembourg, Spain and Italy. The others are in the development phase. We are working on savings opportunities to minimize the financial impact of the transition.

Change management is also crucial; the green fleet is a new culture; it requires changing mindset, driving behavior and other aspects. With sustainability being at the core of our mission, we’ve had a lot of early adopters rather than challengers.

What are the main differences between the countries in which you operate and what local strategies do you follow?

Each country is indeed unique, with its challenges and opportunities. For example, there is a subsidy for PHEV/BEV purchases in Romania and Portugal. However, each rental provider has a very limited threshold; if we order around 300 cars, we can get a grant for up to three units. In Germany, the amount is provided for all car orders.

The limited number of charging stations in Eastern and Southern Europe poses a certain risk to operations. Sometimes lets us drive gasoline-powered PHEVs; this results in an increase in CO2 and fuel consumption that is not aligned with the objective. There are significant tax benefits for electric vehicle users in the UK; now we are launching the ‘Salary Sacrifice’ project where employees can rent private cars and benefit from reduced taxes at Vodafone leasing rates.

How do you organize your relations with your suppliers, particularly in reducing lead times?

Delivery times have lengthened during the Covid period, and neither the manufacturers and rental companies, nor we were prepared for it. Initially, some internal colleagues expected us to open a dispute with the automakers for the delay. However, we maintained partner relationships with OEMs as this was beyond their control and responsibility. Delivery windows have been extended due to supply issues and rising inflation. As 80% of our fleet is dedicated to trade and operations, any delay in delivery would cause serious disruption. To prevent the potential impact, we took two main actions: First, we extended rental contracts. We considered the actual mileage of the cars in this exercise and replaced cars with mileage above the group limits with rentals. Second, we launched the tenders at least a year and a half in advance.

Do you apply telematics in your fleet, and to what extent?

We already use telematics in some countries. This year, one of the strategies is to install telematics in all markets. During the green fleet transition, telematics is a must rather than an option; it is an ideal solution that improves safety, reduces the cost of the fleet and defines the cars eligible for electrification. We work with Vodafone Automotive, which is a leader in this field. There are challenges in some markets, such as labor board approval; however, we aim to cover all markets.

What is your policy on driver training and maintaining employee satisfaction?

Driving electric/plug-in hybrid cars requires additional skills such as advanced charging planning, careful braking-acceleration, safety awareness, etc. Additionally, a plug-in hybrid car must use at least 70% on a battery to achieve CO2 and fuel efficiency. Therefore, charging a car must be a new habit for the driver. We are working on a “Green Fleet Training” program to cover all of these aspects and help employees have an exceptional EV experience.

Are you adopting or considering adopting new mobility solutions?

Mobility is the next step for the traditional fleet. Due to the operational model, we have always believed that there should be a dedicated car for everyone. But this approach is already changing; we have replaced some dedicated cars with pool cars in some markets. We are now considering using car-sharing platforms in a few markets to observe the benefits and challenges. Rental companies have been our partners for a while for short business trips. We could consider e-bikes and e-scooters as part of our journey.

What is your electrification strategy and your decarbonization goals?

Vodafone has committed to Net Zero by 2030 for its operations as part of its global Planet strategy. We are committed to contributing to sustainability in all of our business cycles; we have reduced the size of the SIM cards to save c. 1.8 tonnes of CO2, and now SIM cards are made from 100% recycled plastic. All of Vodafone’s European operations are already powered by 100% electricity from renewables.

We work with customers to move to electronic invoicing, eliminate paper invoices, etc. And the fleet is an essential part of the decarbonization project. We started the green fleet transition a year ago. In 2020, we renewed 36% of our fleet when due; 60% of approx. 3500 car orders were EVs (PHEV or BEV). The average CO2 from orders was 70g/km, which was a big step forward. Accelerating the transition to electric vehicles is the priority mission of our fleet.

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