The pandemic fuelled huge growth in e-commerce as lockdowns restricted access to brick and mortar shops, and drove digitisation across the industry. And with the Government’s climate targets, retail fleets are increasingly adopting electric vehicles (EVs).
Tom Jansons, Development Director, Jansons Property, explains that while it is encouraging to see the retail industry moving towards more environmentally conscious logistics, research conducted by ChargedEV found that 33% of companies using or considering using EVs have no charging points at their company premises. And a bigger problem still, is the lack of stop gap charging provisions that have been installed. As both EV ownership and charging are still in their infancy, there is a severe lack of charging infrastructure.
As quoted in The Economist: “Forget Tesla’s production hell. The hardest bit of EVs is the powering up.”
And with the upward trajectory of e-commerce, this teething problem for commercial EV adoption only seems to be growing. Internet shopping is now more popular in the UK than any other country, according to the International Trade Administrator 2022 UK Commercial Report. Consumer eCommerce now accounts for 30% of the total retail market in the UK (up from 20% in 2020), with ecommerce annual revenue totalling over $120 billion. From such growth in this market and immediate urgency in the market, demand and workload for retail fleets have unsurprisingly followed suit.
But simultaneously, the Government’s Net Zero targets still stand and fully transitioning to complete adoption of electric vehicles across personal, public and commercial transport is pivotal to reaching them. The Climate Change Committee (CCC) has stated that all vehicles – including heavy-goods vehicles (HGVs) – must be fossil fuel free by 2050 if we are to achieve net zero goals. However, while drivers are enthusiastic about the glamourous and high-tech EV revolution, a merciless bottleneck created by a lack of charging infrastructure has presented itself, halting widespread adoption.
According to an estimate by the International Energy Agency (IEA), by the end of this decade 40m public charging points will be needed, requiring an annual investment of $90bn a year as 2030 approaches. If net-zero goals are to be met, by 2050 the world will need five times as many. Hence, the UK’s 2030 ICE ban, which will see the end to sales of new petrol or diesel cars. And while there are no plans in place to completely ban petrol or diesel cars, they will only be available to buy in the second-hand market to take the first step towards full transition.
Despite more than 35,000 public charging points across the UK, Arval Mobility Observatory Barometer research found that charging infrastructure was cited as the biggest barrier to EV adoption for 59% of fleets. The availability of the necessary infrastructure though will entirely depend on grid capacity and land availability in prime locations for fleet charging and parking. This means a swift transition may not be feasible across the board and some countries will be slower to adopt EV fleets. And while up to a third of the power required for EV fleet charging can be produced on site, the power sourced must be renewable to meet climate targets.
The real estate industry clearly has a role to play in resolving this but adding EV charging facilities is relatively new to most real estate owners. Investment into this area must be well-informed as failure to evaluate and strategically plan for EV charging brings the risk of stressed power grids, low quality implementation and therefore missed revenue. However, it does have the potential to present a win/win bonus of differentiating portfolios and securing a competitive advantage when full EV adoption becomes the norm. Big players in e-commerce like Amazon have already started building multi-storey parks with hundreds of charging points for vans but other smaller depots can fit very few charging points; despite the clear benefits of a £15 per day cost to charge and park versus £5-10 per day for parking and around £60-70 per day on diesel, as well as taking steps towards net zero. So, although the incentive and willingness for transition to EVs is there, the current availability of charging points is an operationally useless number.
However, as fleets make up 6 million out of the 30 million vehicles on the road, EV infrastructure has been focussed on personal drivers. Unsurprisingly, it is not appropriate for fleet drivers to use these, presenting an almost untapped market for real estate investors and landowners, particularly in prime locations lining major motorways. So, it is an opportune time now to utilise such spaces as EV adoption is still relatively new – and we will likely see a land grab in the near future similar to that of the fibre space to develop competitive and comprehensive networks. This competition will further accelerate the formation of charging networks and reduce range anxiety to support further EV penetration across the country and the sooner this happens, the more viable the widespread adoption of EV fleets.
As a result of this, our strategy going forward focusses on acquiring sites suitable for EV infrastructure, as a property investor and developer. This process starts with developing relationships with distribution and fleet companies as well as land owners to provide this much needed infrastructure.