Which fuel is right for your fleet?
Fleet managers are now able to choose from more types of fuel than ever before. Simon Harris analyses the seven most common options available
Buyers have more choices of fuel and powertrains than at any time since the car was invented.
Drivers and fleet operators are now questioning what had been conventional thinking for low running costs and minimising tax liability. Diesel still dominates on fleets, but in many cases plug-in powertrains, hybrids and petrol could be more favourable.
But it seems we don’t have a repeat of the video format war of the 1980s where VHS saw off rivals – instead there should be room for most, if not all, types of drive.
We outline some of the options available for fleet operators and highlight how they could benefit businesses and drivers, and how they could result in problems.
Petrol became less popular among fleet buyers after 2002 when CO2 emissions were first used to set the level of benefit-in-kind (BIK) tax paid on company cars. Many fleets that weren’t already operating a diesel-only policy switched to diesel, while others saw diesel as the preferred choice for their drivers.
But in recent years we have witnessed a resurgence in petrol engines technology as they have cleaned up their act with smaller capacity, fewer cylinders and the addition of turbochargers.
Although higher in CO2 emissions than equivalent sized diesel engines, manufacturers have been able to narrow the gap between petrol and diesel through these techniques.
Some lower medium cars equipped with petrol engines now offer CO2 emissions below 100g/km.
But recent reports have emerged that in real-world driving – away from the rolling-road test of the official test cycle – some of these smaller turbocharged engines are prone to excessive heat, and are programmed to increase the flow of fuel to improve cooling.
This results in unburned hydrocarbons, particulates and carbon monoxide in the exhaust emissions.
And it is thought that when the official test cycle changes in the near future to better reflect real-world driving conditions, these will perform poorly.
Work is already underway to solve the problem, and it’s likely we’ll see engines grow in capacity over the coming years.
Not all car manufacturers have adopted the smaller turbocharged philosophy for petrol engines, with Mazda, for example, offering normally aspirated 1.5-litre and 2.0-litre engines across its current range, and using alternative techniques to reduce emissions.
Petrol-electric hybrids have gained a foothold in Europe, including the UK, partly through Toyota’s persistence in trying to make them mainstream.
Popular in North America, where the diesel share of the car market is tiny, hybrid has taken more time in Europe to become established.
The first Toyota Prius was launched in the UK in 2000, along with the Honda Insight hybrid.
Both technologies were slightly different. The Toyota was a ‘full hybrid’, which could drive on electric power alone, while the Insight was a ‘mild hybrid’, with the electric motor merely assisting the engine when accelerating to save fuel.
As the market has evolved, ‘full hybrids’ have become the norm, with few manufacturers offering ‘mild hybrid’ technology.
Toyota and Lexus remain the leading hybrid brands with a wide choice of models, including compact hatchbacks, estates, large saloons and SUVs.
Other manufacturers came to market with their own versions, with high-performance hybrids from BMW and Infiniti, as well as diesel-hybrid options from Peugeot, DS, Mercedes-Benz and Land Rover.
They often have lower CO2 emissions than diesel engine cars of the same size, but importantly they don’t attract the 3% supplement on BIK tax, with even diesel-hybrids escaping the extra fee.
If driven around town, the cars are very efficient, as stop-start and low-speed driving conditions create the perfect environment to optimise the powertrain.
Much of the time the car will drive on electric power only, with frequent braking and stops recapturing energy to keep the battery charged up.
However, if hybrids are used mainly on motorway journeys, the fuel consumption is adrift of that achieved in the test cycle, as the engine charges the battery to maximum capacity with electricity that is hardly used until the car has returned to urban roads.
Diesel engines have dominated fleet cars for around two decades because of the improved fuel consumption they offer over petrol engines. But the real drive toward diesel was prompted by a taxation change in 2002, when BIK tax on company cars switched to CO2 emissions instead of business mileage.
It meant drivers could reduce their BIK tax liability by switching to diesel, and most have never looked back.
But although diesel emissions are lower in CO2 than petrol engines, they are higher in particulates and oxides of nitrogen (NOx) emissions, which are known to have an impact on local air quality and exacerbate breathing problems. To comply with European emissions rules for cars, manufacturers have had to introduce technology to remove these harmful emissions from the exhaust, one of which is the use of AdBlue or diesel exhaust fluid, which is stored in a tank and needs refilling throughout the car’s life.
In 2015, Volkswagen became involved in a high-profile scandal where hidden software ensured the engines performed better for the official tests than in real-world driving.
Although Volkswagen Group has taken action to ensure cars no longer cheat the emissions test, and despite no firm evidence of other manufacturers taking similar steps on their vehicles, it has turned the spotlight on diesel emissions and raised awareness of gases other than CO2.
The scandal could have influenced the UK Government to delay the lifting of the 3% supplement on BIK tax for diesel cars, which was scheduled to come in from April 2016, but was cancelled in the Autumn Statement of 2015.
Some local authorities, especially those in London, have been considering penalising drivers of diesel cars with more punitive parking charges on the premise of improving local air quality, while the Mayor of London is set to impose an additional fee on top of the congestion charge on older vehicles, affecting both petrol and diesel cars.
Car manufacturer research into customer habits tells us that most people have relatively short daily journeys by car.
And most of these could be achieved in the EV range of a plug-in hybrid. These vehicles take the hybrid format a step further, with a larger battery to cover greater distances in electric mode, and reaching higher speed.
Typically, plug-in hybrids’ EV running can vary from 15-35 miles, dependent on battery capacity and road conditions. Most will find that in mixed driving conditions, a car with a potential EV range of around 30 miles, would deliver around 20 miles before the engine is required to takeover.
For people mainly making short trips, with charging facilities at their destinations, these cars are perfect. The engine is rarely required and drivers will see mpg figures in the same 100-plus range as advertised in the official figures.
Although plug-in hybrids have been on the market for several years, ranging from the Prius Plug-in to the Porsche Panamera, the model that saw them adopted in volume was the Mitsubishi Outlander PHEV, introduced in 2014, which managed to combine practicality with an attractive price point.
But arguably they have also been introduced as a necessity by car manufacturers to ensure they achieve the average range CO2 benchmarks set by the European Union. Failure to do so results in hefty fines.
And drivers can choose plug-in hybrids to reduce their BIK tax liability compared with alternatives, even though most of their driving might be on the motorway.
This puts good fuel economy at risk, as drivers could be reluctant to stop and plug in the car to recharge, relying on the engine and shorter refuelling stops to keep them going.
The first modern battery electric cars were introduced in 2010, with the Nissan Leaf following in 2011 and establishing itself as a best seller. Volume is still low, with annual EV registrations typically in four figures, but battery chemistry has evolved, allowing manufacturers to offer a range that fits in with the requirements of a greater number of drivers.
A potential 250-mile range version of the Renault Zoe was introduced this year, while other European markets will see a new compact Opel electric car with 300-mile potential, and a realistic range in excess of 180 miles.
At the top-end of the EV spectrum, Tesla has been producing high-performance cars in low-volume, which can comfortably cover 200 miles or more on a single charge, and it’s likely that established car manufacturers will be able to compete in the next few years.
Range-extended EVs have also given drivers something of a safety blanket on longer journeys, with the BMW i3 available with a motorcycle engine that can recharge the battery on the move and double the car’s maximum travelling distance.
Pure battery EVs should have lower SMR costs than other fuels because there are fewer moving parts susceptible to wear and tear, while the cost per mile of electricity is also lower than petrol or diesel.
The charging infrastructure for plug-in cars also continues to improve, although seeing out-of-order charge points is still too common a sight.
Hydrogen fuel cell
Potentially the ‘greenest’ way to drive at some point in the future, but hydrogen fuel cells are not quite there yet.
The technology works, but given it’s still in its infancy the cars are expensive to buy, plus the infrastructure is currently lacking.
For now it’s only really feasible for organisations within a short drive of one of the few refuelling stations and production of this hydrogen is from methane gas. However, greener methods of production, including electrolysis from water, could be feasible when there is a greater take-up of fuel cell cars.
Its cost as a fuel is similar to petrol and diesel, and a full tank in a car would power it for 300-plus miles, with refuelling taking a few minutes.
By the end of 2017, three car manufacturers will offer hydrogen models in the UK – Hyundai, Toyota and Honda – with other manufacturers working in partnership to accelerate development of the technology while reducing cost.
The Europe-wide HyFive project is also attempting to assist in establishing hydrogen vehicles and the refuelling network, although in the UK there are currently nine open or expected to be open soon.
Around 20 years ago, LPG-converted petrol cars had a definite niche in the market, and by the early years of the 21st century, a number of manufacturers, including Volvo, Ford, Vauxhall and MG Rover, offered ‘off the shelf’ LPG-converted cars in the UK.
At the time, there was Government money available off the cost of conversion, which brought forward the impact of the savings in fuel costs.
But after Government grants dried up, manufacturers stopped offering LPG cars in the UK.
While it is still possible to buy LPG-converted petrol cars, without any official manufacturer conversions, there is no CO2 figure recorded on the test cycle for gas, which means although LPG offers lower emissions, there would be no advantage in BIK tax.
Source: Fleet News
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I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.