The German market forbattery-electric lightcommercial vehicles
The challenge of electrifying urban transport

May 2019

Content
Executive summary2

1.		Introduction

4

2.		The regulatory environment in Germany

5

3.		The state of the German eLCV market

6

4.		The current eLCV lineup in Germany

8

5. Requirements of German fleet managers

11

6.		TCO comparison

15

Conclusion

16

Authors:
Andreas Schlosser

Florian SaeftelPartner,
Automotive & Manufacturing Group
Arthur D. Little Central Europe,
Munichschlosser.andreas@adlittle.com

Principal,
Automotive & Manufacturing Group
Arthur D. Little Central Europe,
Munichsaeftel.florian@adlittle.com

Laurin Steinhardt
Business Analyst,
Automotive & Manufacturing Group
Arthur D. Little Central Europe,
Munichsteinhardt.laurin@adlittle.com

Executive summary
German consumers are increasingly embracing electric passenger cars. Driven by longer battery
ranges, an expanding lineup of attractive new models and growing charging-station networks, themarket for battery-electric cars finally seems to be taking off.
Electric light commercial vehicles (eLCVs) – the centerpiece of urban transport – appear to be thelogical next step in Germany’s endeavors to combat traffic-related emissions. In reality, however,
eLCVs have struggled to build significant market demand so far. In 2018, less than 2 percent of all
newly registered LCVs in Germany were all-electric vehicles. Diesel engines are still dominating
this market.
So what has kept German fleet managers from vigorously electrifying their workhorse fleets ofdiesel vans and transporters so far? How do emission regulation trends affect growth prospects ofthis market segment? What do potential customers expect from a convincing eLCV market
offering? Which vehicle attributes are most crucial in day-to-day operation? Which should be thefocal areas of OEMs’ future product development and marketing activities in order to boost the
adoption of eLCVs in Germany?
In an effort to find answers to these questions, Arthur D. Little has analyzed the German market for
eLCVs, including a survey of more than 100 fleet managers across multiple industry sectors.
Results of the market analysis show that regulatory trends in Germany are increasingly puttingpressure on diesel vehicles and supporting an accelerated transition to eLCVs in the upcoming
years. Experts predict approximately 30 percent average annual growth of sales volume over the
next four to five years.
Our survey has shown that there is a high level of general interest in electric LCVs. Over 70
percent of surveyed fleet managers plan to acquire eLCVs in the near future, mostly driven by theirambition to reduce fleet emissions. However, only a small share of them has actually acquired anelectric LCV at this point. In order to develop strong sales arguments for eLCVs, OEMs need togather a profound understanding of their customers’ reservations against electric vehicles, theirmain product requirements as well as their key purchasing criteria.
Fleet managers tend to be very rational buyers who prioritize practical “usability” of a vehicle andobjective commercial considerations like TCO when making their purchase decisions. Our analysis
shows that current generation eLCVs have a hard time competing with diesel vehicles in thesecategories due to battery range limitations, charging requirements and a significantly higher
price tag.
There is a range of issues OEMs need to address in their product development and marketingstrategies if they want to convince customers to switch to eLCVs. In our conclusions to this report,
we have consolidated our most important findings and provided some guiding principles to eLCV
manufacturers and marketers.

3

1. Introduction
German consumers are increasingly embracing
electric passenger cars
“Electric mobility provides a key to the sustainable redesign ofmobility that is climate- and environment-friendly and efficientand conserves resources.”(German National Platform for Electric Mobility)
Battery-electric vehicles (BEVs) are a mainstay of Germany’s
endeavors to fight air pollution and reduce dependence on oil.
The non-existence of adequate public charging infrastructure
and customers’ lack of trust in the new powertrain technology,
however, has initially kept the EV market from taking off asquickly as planned. Germany’s goal of having 1 million electricvehicles on the streets by 2020 had to be postponed to 2022.
Nonetheless, recent market figures indicate that German
consumers are beginning to embrace the electric car. Driven bya growing network of public charging stations, governmental
incentives and an increasing driving range, around 30,000
battery-electric passenger cars were registered in the land of theAutobahn in 2018. The available market offering is continuously
growing, with OEMs launching new BEV models across theboard – from compact city cars to high-end sports vehicles. After
years of slumber, the electric passenger car market in Germany
seems to have awoken from its slumber, and is building up a fullhead of steam.

The electric light commercial vehicle market is still in
its infancy
But what about the electric commercial vehicle market?
Electrifying Germany’s road transport system does not stop withthe passenger car, after all.

While all-electric heavy-duty trucks are still facing severe
technology and battery capacity restrictions, light commercial
vehicles (LCVs) with weight of under 3.5 tons are the logicalnext step.
With roughly 270,000 LCVs sold in 2018, Germany is Europe’s
third-biggest market, behind the UK and France. LCVs are a key
element of urban distribution and transport systems. Electrifying
a workhorse fleet of diesel vehicles can significantly contributeto combatting greenhouse gas emissions in Germany’s mostproblematic metropolitan areas. In light of Dieselgate and recent
initiatives to install diesel bans in some German cities, one
might expect that German companies are already vigorously
working on converting their LCV fleets to electric vehicles.
In reality, however, electric light commercial vehicles (eLCVs) arestill far from seeing serious market demand in Germany. Withroughly 4,900 newly registered eLCVs in 2018, the Germanmarket is still in its infancy, especially when taking into accountthat about 85 percent of those vehicles were StreetScooters –developed, manufactured and employed by Deutsche Post in its
internal delivery fleet.
What is the reason behind the low demand for eLCVs among
German companies so far, and how can it be overcome? In thisreport, we have set out to find answers to these questions.
Arthur D. Little has investigated the current state of the eLCV
market, its market environment, and its competitive landscape.
We have also conducted an in-depth customer study tounderstand product requirements and purchasing criteria fromtypical LCV fleets. The following five key topics are addressed in
our analysis:

Figure 1?
◼

Regulatory and legislative market environment for eLCVs in Germany?
◼

Current state and future prospects of Germany’s eLCV market?
◼

Competitive vehicle model landscape◼
?

Product requirements and purchasing criteria of German LCV fleet managers◼
?

TCO model: comparison of electric and diesel-powered LCVs

Source: Arthur D. Little4

2. The regulatory environment inGermany
Emission regulation is a key driver behind the rise ofelectric vehicles
One of the main forces driving the electric vehicle market ingeneral has been emission regulations at governmental and citylevel.
Across Europe, road transport is widely recognized as the
single-biggest air polluter. In order to fight air pollution, the
EU Council has released its “Directive 96/62/EC on ambient
air-quality assessment and management”, which sets emission
targets for various hazardous substances in the air. NOx and finedust (particulate matter – PM) are considered the most relevant
emissions generated by vehicles, and currently limited to 40 µg/
m3 p.a. each.
In an effort to comply with EU targets, Germany – like other
European countries – has been installing low emission zones(LEZs) in many cities and metropolitan areas since 2008. Thesezones are limiting access for vehicles with older emission
classes. There are currently 58 low emission zones acrossGermany, with 57 of them “level 3” zones, i.e., prohibiting
access for diesel vehicles with Euro 2 & Euro 3 emission class.
Nevertheless, many German cities continue to exceed theNOx limits set by the EU. This has led the German federal court
to grant states and cities the right to implement driving bansfor diesel cars. In 2018, Hamburg was the first city to install a“diesel ban” in a limited area. Other large cities, such as Munich
and Stuttgart, are openly considering bans for the near future.
Figure 2: NO2 emission in major German cities (2017)
MunichMunichStuttgart
Stuttgart
CologneCologneReuthlingen
Reutlingen
Hamburg
Hamburg
Kiel
Kiel
Duesseldorf
Duesseldorf
Heilbronn
Heilbronn
Darmstadt
Darmstadt
Ludwigsburg
Ludwigsburg
Wiebaden
Wiesbaden
DortmundDortmundOberhausen
Oberhausen
Freiburg
Freiburg
BerlinBerlin

40
40
40
40
40
40
40
40
40
40
40
40
40
40
40

78
73
62
60
58
56
56
55
52
51
50
50
49
49
49

EU limit of 40 µg/m3 (yearly average)

As emission regulation becomes increasingly strict atgovernmental and city level, companies operating in urban
environments need to reassess their fleet strategies. Upgrading
their vehicle fleets to the latest diesel powertrain technology
appears to only be a viable solution in the medium term. In order
to not risk losing access to their operating environments in thelong run, most companies need to think about how long they
can maintain their daily business without switching to eLCVs.

Benefits and incentives increase the attractiveness ofeLCVs in Germany
Similar to other European countries, there is a variety of benefits
and incentives for EVs in Germany.
Figure 3: EV benefits in major European markets
Purchase Reg. tax
subsidies benefits

Owner- Company
ship tax
tax
VAT
Other fin. Local
benefits benefits benefits benefits incentives

✓

-

✓

✓

-

✓

✓

✓

✓

✓

✓

-

-

✓

✓

✓

✓

✓

-

-

✓

-

-

-

-

✓

-

-

-

✓

✓

✓

✓

✓

✓

-

✓

✓

✓

-

-

-

✓

✓

-

✓

-

-

✓

Source: EAFO

The most notable financial incentives for EVs at national level
are:nn A €4,000 purchase subsidy (covered 50/50 between
the German government and the vehicle manufacturer),applicable to eLCVs with net vehicle prices up to €60,000
nn Exemption from the motor vehicle tax for 10 years, which
thereby significantly reduces operating cost over vehicle
lifetime
In addition to nationwide incentives, some major cities, such as
Berlin and Munich, have installed local programs to support the
adoption of eLCVs.

Source: Public domain

5

3. The state of the German eLCV market
In line with the overall market trend in Europe, the German
LCV market is expected to cool down after recent years of solid
growth. After it reached its preliminary peak of roughly 270,000
LCVs in 2018, experts predicted the German market to stagnate
until 2023.
Figure 4: LCV sales in Germany [k units]

250

-1%

+5%

300

223

231

252

267

270

266

253

247

246

251

200
150

One of the biggest boosts to the German eLCV market
came from the introduction of the StreetScooter Work. The
StreetScooter is an electric transporter that is developed
and produced by Deutsche Post’s wholly owned subsidiary,
StreetScooter GmbH. Originally intended for internal use in
Deutsche Post’s delivery fleet, StreetScooter launched series
production of its Work model in 2016, and has quickly become
the market leader in Germany. Due to alleged market demand,StreetScooter has recently started to sell the vehicle to externalcustomers as well, with the first sizable StreetScooter fleets
operated by a number of customers in Germany and other
European countries.
Figure 6: Market share of newly registered German eLCVs(2018)

100
50
0

8%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2%
2%

4%

Source: IHS Automotive, Arthur D. Little analysis

The German eLCV market is small but set for growth
In light of these prospects, eLCVs will have to fight theadditional uphill battle of substituting diesel vehicles, because
growing in line with the overall market does not appear to be a
viable option.
In 2018, some 4,900 eLCVs were newly registered in Germany,up 9 percent from 2017. This accounts for roughly 1.8 percentof the overall LCV market. Looking at the historical trend, thesenumbers are already quite an achievement.
After the introduction of the first French and Japanese eLCV
models in 2013/2014, Germany started seeing 400 to 500 newly
registered vehicles per year.

4.5

4.9

4
2.9

3
2
1
0

0.4

0.5

0.7

2013

2014

2015

Source: EAFO

6

2016

2017

StreetScooter

Maxus EV80

e-NV200

othersKangoo ZE

Source: EAFO

Other eLCV models, such as Renault’s Kangoo ZE and Nissan’se-NV200, are struggling to grow their annual sales numbers
continuously.

done

Figure 5: Newly registered eLCVs in GER [k units]
585%

According to many interviews with German fleet managers, one
major reason for the lack of momentum in the past was that the
big German OEMs had not yet released their electric LCVs. In amarket with very strong brand loyalty and considerable brandswitching barriers for customers, this is a huge factor. However,with the recent market launch of Daimler’s eVito and announced
introduction of the eSprinter, as well as Volkswagen’s launchof the e-Crafter, some of the highest-selling LCV models inGermany will finally be available as electric vehicles.

2018

As a result, things are about to look much brighter, and experts
predict approximately 30 percent annual growth over the next
four to five years for Germany.

4. The current eLCV lineup in Germany
Figure 7: Overview of eLCVs in Germany, including their base vehicle specs (as of 10/2018)
NissanE-NV200

Peugeot Partner
CitroenElectric
Berlingo ElectricStreetScooter
Work

Renault Kangoo
Z.E.

StreetScooter
Work L

Iveco Daily
Electric

VW E-Crafter

Renault Master
Z.E.

Mercedes eVito

SAIC MAXUS
EV80

Key specs

Battery type

Li-Ion 40
kWh

Li-Ion 22.5
kWh

Li-Ion 22.5
kWh

Li-Ion 40
kWh

Li-Ion 33
kWh

Li-Ion 40
kWh

Li-Ion 60
kWh

Li-Ion 36
kWh

Li-Ion 33
kWh

Li-Ion 41
kWh

Li-Ion 56
kWh

Range

~280 km~170 km~170 km~232 km~270 km~187 km~280 km~175 km~200 km~189 km~200 km

Payload700 kg591 kg695 kg585 kg625 kg905 kg700 kg970 kg1128 kg1015 kg

950 kgLoad volume

4.2 m3

3.7 m3

3.3 m3

4.3 m3

3.5 m38 m3

7.3 m3

11 m3

8 m3

6 m3

10.2 m 3

Vehicle weight

2.25 t2.225 t2.225 t2.18 t2.13 t2.6 t3.28 t

3.5t

3.1t

3.2t

3.5 t

€34,105€25,335€24,978€48,730€33,180€54,085~€70,000€82,747€59,900€47,588

Only rent
options

Base price1

1 Price incl. German VAT of 19%
Source: Arthur D. Little research, OEM websites

The eLCV market offering is steadily expanding inGermany
While conducting this study in 2018, many German fleet
managers stated a very limited market offering as one of thereasons they had not yet started to electrify their LCV fleets.
With some recent additions by VW, Daimler and Renault,
the eLCV lineup in Germany has now grown to 11 vehicle
models with varying driving ranges, payloads and load volume
specifications.
The small vehicle segment is populated by the StreetScooter
Work, as well as electrified versions of the Nissan NV200, thePeugeot Partner, the Citroen Berlingo and the Renault Kangoo.
Vehicles in this segment typically provide battery ranges
between 170 and 280 km (according to NEDC) and come with
payloads between 600 and 700 kg. With load volumes from 3.3
to 4.3 m³, this segment appeals to companies with moderatetransport or delivery requirements in urban areas. Despitelargely comparable main specs, price points vary significantly:
while the Citroen Berlingo is available at roughly €25,000(including German VAT), customers have to spend almost doublethat amount, i.e., about €49,000, if they aim to acquire theStreetScooter Work.

2018. Payloads in this segment range from 700 to 1,100 kg,
while load volumes vary between 7 and 11 m³. Similar to thesmaller-vehicle segment, larger eLCVs provide driving ranges
between 170 and 280 km. Vehicle prices in this segment go up
to roughly €83,000 (the VW e-Crafter) for the base model.
Discussions with German fleet managers have revealed thatthe driving range is often their most crucial factor in considering
the electrification of their LCV fleets. Here, it needs to beconsidered that real-world driving ranges for eLCVs often
deviate significantly from driving ranges according to NEDC,
done
due to driving behavior, vehicle load, climate conditions and fleet
operation mechanisms.

eLCVs come with a significant price premiumcompared to diesel LCVs
On another note, eLCVs will continue to compete with theirdiesel equivalents in the foreseeable future. Despite overarchingpressure to “go green”, German fleet managers still take a close
look at the price tag when making purchase decisions.
Comparing the purchasing prices of eLCVs to similarly equipped
diesel vehicles reveals a significant price gap in favor of thediesels. This is best demonstrated by matching an electrified
LCV to its diesel brother of the same brand.

The most recent additions to the German eLCV market havebeen made in the larger vehicle segment, namely, the Mercedes
Benz eVito, the VW e-Crafter and the Renault Master Z.E. in7Figure 8: Example: MSRP (base vehicle) comparison, eLCV
vs. diesel LCV

From analyzing available market offerings in Germany, it quickly
becomes apparent that electric LCVs are usually marketed aselectric vehicle “system solutions”. Similar to the passengercar market, OEMs typically do not sell customers stand-alone
vehicles, but rather, bundles of products and services tofacilitate the transition to the new technology.

+67%

MSRP

Diesel LCV

eLCVs are usually marketed together with charging
solutionseLCV

Source: Arthur D. Little researchThis gap is not exclusive to this example, but rather, a consistentpattern in the market: fleet managers usually have to be readyto pay a sizable premium when choosing eLCVs over their diesel
equivalents. The price-tag difference can mostly be attributed
to the cost of the battery pack: with prices for Li-ion batteries
currently standing at €150 per kilowatt hour, costs of 40 kWhbatteries alone quickly reach €6,000.
To express this in metrics meaningful to fleet managers,
customers currently have to pay, on average, €25 per kilogram
payload for diesel LCVs, and roughly €45 for the eLCV
equivalent.
Some of the initial costs will be outweighed over the courseof a vehicle’s life cycle, though. This is primarily due to lower
maintenance, repair and energy costs for eLCVs. But thepurchase price difference still remains a major factor for fleet
managers to only reluctantly substitute their diesel fleets.

Among those complementary products, a home or depot
charging solution is the most notable component of a standard
market offering. All OEMs directly or indirectly (via specialized
partners) provide customers with appropriate hardware torecharge the battery at their own premises. Most OEMs also
support their customers with charging hardware installation
through a network of certified electricians.
Access to public charging networks, unlike with the electricpassenger-car market, is not a standard offering in thecommercial-vehicle segment. At the time of the analysis, only
Nissan was directly marketing public charging products to its
eLCV customers. This can probably be attributed to the factthat many current eCLV models are not DC-charging enabled.
Hence, on-the-road charging would require too much of the daily
operation time of the vehicle.
In the passenger-car market, OEMs are continuously working
on enhancing their market offerings by adding “layers” ofcomplimentary “green” products around the vehicle
donecore, e.g.,green energy contracts and photovoltaic systems. In the LCV
market, however, this is not yet the case. Market offerings tend
to stick to the basics: vehicle and charging station.

Figure 9: Components of eLCV market offerings (selected models)StreetScooter
Work

Renault
Kangoo Z.E.

Citroen
Berlingo Electric

NissanE-NV200

Peugeot
Partner Electric

Vehicle customization



✓

✓

✓

✓

Load box customization

✓

✓

✓

✓

✓

Wall box

✓

✓1

✓1

✓

✓1

Wall box installation



✓1

✓1

✓

✓1

DC fast charging enabled





✓

✓

✓

Access to public charging







✓



Green energy contract











Photovoltaic system











Telematics/apps



✓



✓



1 Wall box & installation offered via partner “The Mobility House”
Source: Arthur D. Little research, OEM websites, public domain

85. Requirements of German fleet
managers
In order to develop better insight into potential eLCV customers’purchase criteria and product requirements, Arthur D. Little
conducted a customer study with German fleet managers in
2018. The main purpose of this study was to analyze general
fleet managers’ attitudes and concerns regarding eLCVs, as wellas to understand what they expected from electric LCVs. The
results of the study provide OEMs with guidance for their future
product development activities and marketing efforts.
The study was conducted in a two-step approach: the firststep was an online survey among more than 100 German fleet
managers, followed by a second step in which the results of thesurvey were further qualified through personal interviews andfocus groups.

Potential eLCV customers typically operate in urban
environments and drive <200 km daily
Initially we identified the most “promising” industry sectors for
eLCVs based on current vehicle models’ technical limitations
and typical use cases for LCVs.
Due to battery range and load constraints, a viable eLCV use
case is characterized by the following factors:

nn LCV rental companies
nn Energy and utility companies
nn Other companies with technical service vehicles (e.g.,household appliance manufacturers)
In order to collect meaningful insight regarding the requirementsof potential customers that could actually employ eLCVs, we
focused our customer survey on these key sectors.
A look at the most restraining factor – the daily driving range –shows that the majority of companies in the survey sample did
not require more than 200 km ranges per day:Figure 10: Survey: Typical daily driving ranges of LCVs
in a fleet
62%

30%
8%

<100km100-200km<200kmSource: Arthur D. Little research

nn Short daily driving ranges of 200 km maximum
nn Predictable operating routes
nn Routing in an urban street environment with no/limited offroad capability requirements
nn Daily return to central depot for overnight charging
nn Plannable payload and load volume with little special
requirements (e.g., towing)

A large share of survey participants planned toacquire eLCVs in the near future
Surprisingly, 55 percent of the fleet managers who participatedin our survey stated that they already had eLCVs in their vehicle
fleets. However, personal interviews and follow-up discussions
revealed that these were mostly single test vehicles. The overall
share of eLCVs in these fleets was still miniscule.

Based on these parameters, we have identified a set of key
industry sectors that represent promising target customers for
current-era eLCVs:
nn Urban distribution and transport companies
nn Local/regional craftsmen
nn City/municipality fleets

9The majority of eLCV owners are satisfied despite
compromises in day-to-day operation

Figure 11: Survey: Do you already have eLCVs in yourfleet?

No

Among fleet managers who had already operated eLCVs as
parts of their fleets, the overall level of satisfaction was solid.
Over two-thirds of panelists responded that they were either“very satisfied” or “satisfied” with their eLCVs.
45%
55%

Figure 14: Survey: How satisfied are you with youreLCV(s)?
48%

Yes

26%
Source: Arthur D. Little

20%

The general interest in acquiring eLCVs among fleets that had
not yet employed them was also significant. More than 70
percent of survey participants claimed that they planned toacquire eLCVs in the near future.
Figure 12: Survey: Do you plan to acquire eLCVs in thenear future?

28%

Source: Arthur D. Little

The main motivations behind fleet managers’ plans to switchfrom diesel to eLCVs were better eco-friendliness, lower
expected total cost of ownership, and access to financial
incentives for electric vehicles, such as subsidies and tax
exemptions.

72%

Figure 13: Survey: Why are you considering switching
to eLCVs?
Lower emissions/eco-friendliness82%

TCO advantages

56%

Public financial incentives

51%

Daily operation advantages

10

Indifferent Unsatisfied

Very
Unsatisfied

Source: Arthur D. Little

Limited range

Yes

Source: Arthur D. Little

SatisfiedFigure 15: Survey: What were the main issues in day-today operation with your eLCV(s)?

72%

OthersVerysatisfied3%

When asked about particular problems in day-to-day operation
with their eLCVs, the majority of fleet managers named
range-related issues as the most important sources of trouble.
Panelists explained that eLCVs fell short when unplanned routedonechanges or spontaneous customer appointments
demandedlonger driving ranges. The lack of widespread public fastcharging network in Germany further aggravated this issue.

No

Better driving characteristics

3%

36%
21%
13%

53%

Limited public charging network

39%

Technical complexity

36%

Limited availability due to charging needs

33%

Limited service point network
Others19%
6%

Source: Arthur D. Little

Despite some compromises in everyday use, an overwhelming
majority of eLCV users stated that they would definitely buy
eLCVs again.

donetheir main purchasing criteria for LCVs (score from 1 – “notimportant” – to 5 – “very important”), most panelists ranked“vehicle quality”, “price” and “total cost of ownership” as top
criteria.

Figure 16: Survey: Would you buy an eLCV again?
No
8%

Other factors, such as “local presence of dealer and service
locations”, “lease options” and “dedicated fleet services”, werestill considered important, but to a lesser extent.
Figure 18: Survey: What are your main purchasing criteria
when acquiring a new LCV?
Yes
92%

Potential customers are often deterred by range
limitations

72%

4.1

Total cost of ownership

4.0
4.0

Consistent with the compromises in day-to-day operation
expressed by actual users, concerns about the battery range
were discouraging potential customers from buying eLCVs.
The higher price tag of eLCVs, as well as apprehension thateLCVs need too much idle time to recharge (“time is money”),
are the other two main factors prompting potential buyers toreconsider their selection.
Figure 17: Survey: What were your main reasons for
deciding against an eLCV?
Range limitations

53%

High price

40%

Limited availability due to charging needs

40%

Limited public charging network

31%

Lack of qualified service locations

Local presence of dealers and service locations

3.8

Lease options and rates

3.7

Fleet customer services

3.6

Source: Arthur D. Little

Asked about their past purchasing decisions, about 50 percent
of panelists expressed that they had considered acquiring
eLCVs before, but then decided against it. In order to explore
general pre-conceptions of non-buyers towards eLCVs andidentify potential purchasing barriers, we asked these panelists
about their main concerns.

Reliability concerns

4.2

Vehicle price
Expected maintenance & repair effort

Source: Arthur D. Little

Technical complexity

Vehicle functionality and quality

21%
14%
3%

Source: Arthur D. Little

Purchasing criteria: Quality and price are the mostimportant factors

In addition to general purchasing criteria for LCVs, weinvestigated the relative importance of specific vehicle
characteristics and features. Again, panelists were asked
to assign an importance score from 1 to 5 to each of thecharacteristics.
The survey responses confirm that German fleet
managers
done
focus on the basics when acquiring new vehicles for their fleets.
Practical considerations, such as vehicle “quality and durability”,“driving range” and “fuel efficiency” are the most importantfactors, while “exterior and interior design”, “vehicle brand” and“top speed” are considered less important.
Figure 19: Survey: What are the most important productcharacteristics when acquiring a new LCV/eLCV?

Vehicle quality and durability
Driving range (tank/battery)
Fuel efficiency
Maintenance and repair effort
Driving dynamics
Vehicle emission
Safety features
Maximum payload
Expected residual value
Vehicle brandTop speed
Interior design
Exterior design

4.1
4.0
4.0
4.0
3.9
3.8
3.8
3.7
3.6
3.5
3.4
3.3
3.3

Source: Arthur D. Little

Fleet managers tend to be rational buyers whose purchasedecisions are primarily driven by practical considerations. Thisis also reflected in the survey responses. When asked about
11

eLCV customers expect charging hardware as part ofthe system offering

Figure 21: Survey: What is your preferred sourcing
channel for eLCVs going to be?.

We also asked customers which additional services they would
expect in an attractive eLCV “system offering”. By system
offering, we refer to electric vehicle-related services offered by
the OEM in conjunction with their vehicles. Consistent withother survey responses, charging was their main concern.
On-premises “charging stations” were mentioned as the mostimportant element of an eLCV system offering, followed by“access to public charging networks”. More peripheral services,such as “green energy contracts” and “eLCV-specific apps andtelematics” were considered “nice to have” but not essentia

Key accountant/local dealer

Figure 20: Survey: What are the most important elementsof an eLCV system offering?

Charging station

4.0

Public charging infrastructure access

3.9

Installation service for charging hardware

3.7

e-vehicle tax and subsidy support

3.7

eLCV-specific apps and telematics

3.5

Green energy contract

3.4

eLCV driver trainings

3.4

Source: Arthur D. Little

55%

Direct online purchase27%

Online purchasing platforms

9%

Others9%

Source: Arthur D. Little

Aftersales: Fleet managers expect state-of-the-art
services for eLCVs
LCV fleet managers are used to receiving special aftersales
services as business customers, and not willing to make any
sacrifices when switching to eLCVs.
Longer and more flexible workshop opening hours, pick-up anddelivery services, and replacement vehicles for the duration ofvehicle maintenance are standard in the commercial vehicle
sector. In order to maximize their vehicles’ operating time,
fleet managers expect the same service offering from eLCV
manufacturers.
Our survey shows that all elements of a standard aftersales
offering to fleet customers are considered similarly important.

Fleet customers value their personal sales contacts
When investigating purchasing requirements of potential eLCV
customers, we also explored their affinity for new, more unusualpurchasing channels such as direct online sales platforms.
Survey results and personal interviews show that fleet
customers value their personal relationships to their key accountmanagers and/or sales reps at their local dealers.
Many fleet customers demonstrate long-lasting brand loyalty
when it comes to their LCV fleet compositions. In many cases,
loyalty even goes beyond the brand, but is, rather, related toa specific sales representative. Key account managers anddealership sales personnel are often perceived as trusted
product advisors – a relationship that online platforms cannot
deliver. Discussions with fleet managers revealed that having
a trusted personal contact in the purchasing even increases inimportance when considering buying eLCVs.
These vehicles come with new, complex technology, as well
as different maintenance, repair and operation requirements.
eLCVs require extensive product explanation, testing andconsulting. This is also true for peripheral topics such as electricvehicle subsidies and tax exemptions.
As a result, the majority of LCV fleet managers prefer to stickto their local dealers or OEM key account managers as theirpreferred sourcing channels for eLCVs.
12

Figure 22: Survey: How important are the following
aftersales offerings to you?
Replacement vehicle

3.8

Longer/flexible opening hours

3.7

Mobile maintenance/repair

3.7

Pick-up & delivery

3.6

Source: Arthur D. Little

In addition, fleet managers expect a dense service and repair
network for flexible service and repair arrangements on short
done
notice. Almost 75 percent of panelists would not accept
distance to the next workshop of more than 20 km. Thiscertainly represents a challenge for smaller eLCV manufacturers
trying to enter the market.

6. TCO comparison
In addition to leveraging eco-friendliness as a main feature in
their marketing efforts, manufacturers consistently advertise
their eLCVs’ low operating costs compared to those of
combustion engine vehicles.

nn Electricity cost: €0.14 (net)/kWhGiven their considerably higher average price tag, this operatingcost advantage of eLCVs needs to be sizable in order tocompete with diesel vehicles from a “total cost of ownership”(TCO) perspective.

Based on commercially and publicly available data, we have also
developed specific assumptions for each vehicle model withregard to

Lower operating costs of eLCVs counter the pricegap, but cannot close it
How do eLCVs perform against their diesel counterparts interms of TCO?
To address this question, Arthur D. Little has developed a TCO
model to compare vehicle models. The model includes oneoff costs (e.g., purchase price), operating costs (e.g., energy,
insurance, maintenance) and residual values.
Figure 23: TCO model

nn Diesel cost: €1.05 (net)/lnn Current purchasing subsidy: €4,000

nn Residual value
nn Insurance fees
nn Maintenance & repair cost
nn Energy consumption rates
Results of the analysis show that diesel vehicles still have a TCO
advantage over a three-year operating cycle.
Despite their significantly lower operating cost, eLCVs’ total
cost of ownership is consistently higher than that of their diesel
counterparts. The TCO gap between diesel LCVs and eLCVs
ranges from 10 to 30 percent.

Cost component

One-off
costs€ Original price

Figure 24: TCO comparison – diesel versus eLCV
(unnamed brand)

One-off subsidies
Fuel costs

LCV
TCO

Insurance costs=

Operatingcosts

Maintenance & repair§ TaxeseLCV
TCO

Recurring subsidies

Residualvalue

To make results meaningful we compared the same vehicle
models of a given OEM (diesel versus eLCV) against each otherand defined a set of main assumptions for the TCO calculation:

nn Annual mileage: 30,000 km

LCV

13.600€

Values inin thousands
thousands
Values€€17,3

1,7 0,02,3 1,8

Values in thousands€
8,1 15,0

15,9

4,1 2,1

2,6 0,4

72%

11,4 13,6

Loss in value

Source: Arthur D. Little

nn Operating cycle: three years

eLCV

15.0000€

Purch. Fuel Insur. MRO Tax Resid. TCO

Purch. Fuel Insur. MRO Tax Resid. TCO

Source: Arthur D. Little

As the exemplary calculation shows, residual values areproblematic for eLCVs in any TCO comparison to diesels. Thisis mainly due to the fast progression of battery technology andsteep degression of residual values of batteries over time.

72%

nn eLCV purchasing subsidy: €4,000
13

done

Conclusion
Interest among potential customers is high, butconcerns often prevail
Our online survey and in-depth discussions with potential
customers alike show strong interest in eLCVs among German
fleet managers. In practice, however, their lack of experience
with this new drivetrain, as well as range and reliability
concerns, still leave them reluctant. Professional buyers areless driven by a pioneering spirit than private EV buyers are,since their purchase decisions tend to be more rational. eLCV
OEMs should address these concerns in their marketing efforts.
Providing field data and real-world driving ranges, as well as
actual operating cost of their vehicles, would help significantly
in gaining the trust of potential buyers. Many of the concernsof fleet managers mentioned in our study are based on lack of
information and transparency about the pros and cons of eLCVs.
In order to address the negative myths in the market, OEMs
should also leverage positive experiences of current eLCV
operators for promotional activities.

Leverage regulation trends for your marketing andsales activities
With a growing number of low emission zones, diesel bansin major cities and governmental incentive programs for EVs,
emission regulation in Germany’s urban areas is continuously
getting restrictive. Many LCV fleet operators will need to react
soon to avoid putting their businesses at risk. Interviews haveshown that many fleet operators have not taken current dieselbans in German cities too seriously due to their small regionalor local scale. In reality, however, this may just be the beginningif emissions levels in many cities continue to exceed EU limits.
Educating customers about the potential impact of regulations
on their businesses should be part of any eLCV OEM’s sales
advice.
Interviews have also revealed that many fleet managers are
only vaguely aware of eLCV subsidy programs or don’t want todeal with the approval process. OEMs need to consult potential
customers about available subsidies and their application
formalities in order to leverage public EV incentives for their
purposes.

14

Focus on the “usability” of the vehicle
Both preconceptions of non-buyers and feedback from actual
users show that eLCVs are still lagging behind diesel vehicles
in terms of everyday usability. The major factor here is driving
range. Achieving higher driving ranges should be top priority
for upcoming vehicle-model generations in order to convince
customers to switch. On a similar note, vehicle downtime isalways a major concern of business customers. Using publiccharging stations to recharge during daily operation rarely is a
viable option nowadays because most models are only able touse low-speed A/C charging. Equipping eLCVs with D/C-readyonboard chargers could significantly contribute to extending theirusable daily driving ranges.

No compromises on aftersales services allowed
Customers’ feedback on aftersales service expectations for
eLCVs was unmistakable: fleet managers were neither willingto make any compromises nor concede a “honeymoon period”
to eLCVs. As a bare minimum, OEMs need to replicate theexperience of a conventional LCV in order to meet customers’
expectations. While larger LCV manufacturers “only” need tomake their established service and repair networks “e-ready”,
this level of expectation certainly represents a challenge for any
new entrant or smaller player.

Be creative to overcome the price gap
Our TCO analysis has shown that lower operating cost ofeLCVs only partially covers the significant purchase-pricegap in favor of diesel vehicles. In order to be competitive andfacilitate stronger market uptake, eLCV OEMs need to employ
creative and attractive financing or leasing models to reducepurchase barriers. Subsidized leasing contracts and buy-backarrangements could be options – at least in the current market
phase. With battery costs steadily decreasing, the residual-value
disadvantage of eLCVs will likely become less severe over time.

Contacts
If you would like more information or to arrange an informal discussion on the issues raised here andhow they affect your business, please contact:

Austria
Karim Tagataga.karim@adlittle.com

Japan
Hiroto Suzuki
suzuki.hiroto@adlittle.com

Singapore
Yuma Itoito.yuma@adlittle.com

Belgium
Kurt Baesbaes.kurt@adlittle.com

Korea
Kevin Lee
lee.kevin@adlittle.com

Spain
Cristobal Colon
colon.cristobal@adlittle.com

Czech Republic
Dean Brabec
brabec.dean@adlittle.com

Latin America
Rodolfo Guzman
guzman.rodolfo@adlittle.com

SwedenNiklas Brundinbrundin.niklas@adlittle.com

FranceDelphine Knabknab.delphine@adlittle.com

Middle East
Thomas Kuruvilla
kuruvilla.thomas@adlittle.com

Switzerland
Andreas Schlosser
schlosser.andreas@adlittle.com

Germany
Andreas Schlosser
schlosser.andreas@adlittle.com		

The Netherlands
Martijn Eikelenboom
eikelenboom.martijn@adlittle.com

TurkeyCoskun Baban
baban.coskun@adlittle.com

India
Srini Srinivasansrinivasan.srini@adlittle.com

NorwayLars Thurmann-Moe
thurmann-moe.lars@adlittle.com

UK
Richard Eagar
eagar.richard@adlittle.com

Italy
Giancarlo Agresti
agresti.giancarlo@adlittle.com

RussiaAlexander Ovanesov
ovanesov.alexander@adlittle.com

USA
Mitch Beaumontbeaumont.mitch@adlittle.com

The German market for battery-electric lightcommercial vehicles – The challenge ofelectrifying urban transport

Arthur D. Little
Arthur D. Little has been at the forefront of innovation since1886. We are an acknowledged thought leader in linking
strategy, innovation and transformation in technology-intensive
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