MOTABILITY OPERATIONS: Electrifying UK’s Largest Lease Fleet in Under a Decade

The company works across the middle of the automotive space with low-margin, affordable cars from the world’s top brands rather than high-end, business leasing-type vehicles. But in 2035, the sale of diesel and petrol cars will be banned in the UK and only electric vehicles will be allowed for sale. In preparation, many manufacturers have already adjusted their strategy and are manufacturing electric models at high volume. Nissan, for example, has committed to only selling electric vehicles (EVs) in Europe by 2030. The likes of DS Automobiles and Jaguar have committed to end the sale of internal combustion engine (ICE) cars by 2024 and 2025 respectively, and global companies like Smart, Polestar, and Tesla are already solely focused on the EV market as the transition to cleaner transportation accelerates aggressively.

For Motability Operations and Andrew Miller, the challenge is how to completely alter the company’s asset portfolio in just a few years, while others do the same, without interrupting the high-quality service that the company has become known for.

“The company has grown significantly in line with the number of people who get that higher rate mobility allowance from government to the extent that we are now buying 15% of all cars in the UK. The size of our fleet is round 730,000 vehicles. In the last few years, we have done very well on the back of used car values increasing, which as we don’t pay shareholder dividends means we can reinvest all profit to support our customers and sustain the scheme through the EV transition,” says Miller.

“We have significant scale to help our customers and one of the core opportunities is for us to really think about how we engage and get into the electricity and energy side of what we do as the world transitions to EVs.”

ICE CAR SHORTAGE COMING

According to the International Energy Association’s (IEA) Global EV Outlook, the total fleet of EVs (excluding two/three-wheelers) will grow from almost 30 million in 2022 to about 240 million in 2030 – an average annual growth rate of about 30%. This global shift offers up great potential for the customers of Motability Operations, and Miller is keen to instil a culture that embraces the transition as an opportunity rather than a threat.

“My biggest challenge is that I have to get 700,000 cars switched over to electric in six to nine years,” he says. “And they are cars driven by disabled people and their families, people who are quite rightly concerned about the accessibility of the EV experience, people who often don’t have alternatives and can’t jump on a train or a bus, people who we absolutely have to get this right for.

“Manufacturers are stopping production of petrol cars sooner than mandate expects and I’m not sure how many drivers realise the shift is already happening. There is a shortage of petrol cars coming and a massive growth in electric cars, and we have to make sure our customers understand what they’re getting into, and make sure they still get a vehicle that meets their needs. It’s an interesting dynamic and by accident we are at the front of the consumer dynamic moving toward electric cars. We have a choice – act like any other leasing company and just let it happen, or we try and look at opportunities so that we can help our customers.”

Miller’s expertise in business transformation was the reason for his appointment as CEO three years ago. He guided the Guardian Media Group through a digital transition, McDonalds Nordics through a shift in strategy as delivery models changed the market, and the Trader Media Group (home of Auto Trader) from print to online service.

So far, Motability Operations has added more than 35,000 EVs to its fleet and this number is constantly rising despite not forcing anyone to choose EVs over ICE. Choice is essential, says Miller, and adding on extra services that would normally be excluded from a lease is important for the company’s client base.

“We are able to use our scale to buy cars at a more competitive price. Our average customer household income is around £20,000 and therefore we have to make cars more affordable for them. We also do it on a universal basis – you pay one standard rate by exchanging your higher rate mobility allowance and you get servicing, breakdowns, and insurance included, whatever your circumstances. We know that some of our customers would not always get insurance easily. We are sorting a market failure by making cars affordable for those with disability and making available insurance for those who might struggle to get it elsewhere. It’s an invaluable scheme for people to live independent lives, and obviously also has a huge benefit to the economy and society more widely, with access to employment, education, healthcare and more.

“We do not force our customers to take electric,” he adds. “We offer the best we can, but whether we like it or not, it is coming and it’s going to be a huge challenge. It’s not something we can do at a nice slow, comfortable pace. Our maths says we should be getting another 130,000 electric cars in the fleet in the next 18 months.”

REINVESTING

Working closely with manufacturers, Motability Operations remains steadfast in its mission to serve its clients. Whether that means drumming up deals to bring cheaper electric cars to the market or by influencing design and infrastructure development to accommodate all needs, the success of the company has come through its ability to deliver and not because of a quest for profit.

“Our shareholders are the four major retail banks of the UK, and that is great,” admits Miller. “They do not take dividends and that means any money we make can be reinvested back into the scheme. As the used car market has boomed, we have done very well in the last few years. That means the money can be used to help bridge the transition to EV for our customers. It allows us to give people direct payments if they take a lease with us – they get £750 that they can use towards the upfront cost of the vehicle, we’ve installed more than 25,000 free home charge points, we invest in tech to solve the barriers and challenges our customers are always telling us about. We are here to look at supporting our customers over several generations, keeping the scheme going whatever the future looks like.”

Thinking beyond the balance sheet – where the company has around £10 billion of cars – Miller says that Motability Operations feels a big responsibility. For disabled drivers, EVs have distinctive challenges, some that he was not aware of before taking the role. It took a journey with disabled Non-Executive Director, Simon Minty, to realise some of the oversight within energy transition infrastructure.

“A journey with Simon opened my eyes to how little thought can be given to making sure getting around via public transport and infrastructure is accessible to all. Almost half of our customers don’t have off-street parking and will rely on public charging, and these charge points can be up kerbs, in narrow bays, and with no accessible facilities nearby. We have had customers call us when they have been charging their car and they sit, waiting for 30 mins or more for a charge; but someone pulls up and parks alongside and leaves no room for them to exit if they are in wheelchair. That means people can potentially be stuck for over an hour in their car. Practical aspects in design are so often overlooked. Charge points only offer limited amount of time to begin the charge after you enter your details. When you are manhandling heavy cables and trying to move between cars to and from charge points, it can be difficult, worrying, and off putting. These things that seem obvious have not been thought about in design. Unfortunately, this doesn’t surprise me as, generally, design for disability is left until the end and thought about after other elements. And that’s without even discussing that the cost of public charging can be much more expensive – prohibitively so for some of our customers – than charging at home.

“We want to make sure this is all thought about at the beginning, we have this one chance to get this right. We’re working hard with our partners to find solutions and put accessibility at the heart of the EV transition.”

Another example comes from the company’s fleet of Wheelchair Accessible Vehicles (WAVs). Specially designed with ramps and a low chassis, these vehicles are essential for people in wheelchairs to move around to and from work and leisure. But, because of the low chassis, mounting batteries on the underside of the car where they would normally be housed is not possible. “The danger is that those types of cars will not be economically viable in petrol cars for much longer and no one is thinking about design for this in electric vehicles,” says Miller. With this in mind, the Motability Foundation, which oversees the Motability Scheme, has been working to make public EV charging accessible. It has used part of the donation it receives from Motability Operations to co-sponsor a world-leading public accessible charging standard (BSI PAS 1899), which can be applied to all types of chargepoint.

Motability Operations has also teamed with Ian Callum CBE – famous for designing the Aston Martin DB7 and various Jaguar models amongst others – to come up with a solution for manufacturers and, ultimately, end users, where the batteries are mounted on the sides in a modular format and the ramp is built in and not retrofitted.

“Design aspects, whether charging points and locations, or the cars themselves, haven’t been thought about and we as a group must do more to find ways around that,” Miller reiterates.

NO REINVENTING WHEELS

Motability Operations is building a strong network of partners, all working towards a shared goal of making EV usage easier, cheaper, and more accessible. From cars to suitable charging infrastructure on the road to charging at home, and all of the ancillary services that are required, Motability Operations doesn’t want to be a Jack-of-all-trades but rather an expert leasing business within a powerful ecosystem of innovators.

“Our EV fleet, we think, is probably the biggest single electric car fleet in the UK at the moment and that means we are exposed to all the challenges that go with that on behalf of our customers,” says Miller.

“There is no point reinventing the wheel,” he adds. “We are a leasing company who supports those with disability, not an EV or electricity supply business. The way through is to find the right partners, work with them, and find a solution for our customers. We have great partnerships with the likes of Paua, who are trying to help us solve the problem of charging on the go; Osprey, who are helping us with an app to review charging points for ease of accessibility; and ev.energy who are helping us with a smart charging system that allows for cost savings. We’re also working with local authorities to share data and support placement and accessibility of public charge points.” 

Currently, Motability Operations has several ideas around parking, charging, safety, and payment convenience under review with various partners and is scouring the industry to test innovation before scaling for the benefit of its customers.

With this exciting network of companies in place, making a switch to an EV is easier than ever before. More choice, more convenience, cheaper, and always environmentally friendly, Motability Operations is paving the way forward. An important element for Miller is that the perception of EVs changes quickly, and the industry is portrayed accurately so that the public can lease or buy with confidence.

“The number one source of anxiety is perceived range, but now we are on to Gen-3 cars we are confident that 400-mile range will become standard and that will help. The second pain point is around the charging network as only around 40% of our customers can put a charger outside their home on a driveway.

“Getting to the bulk of the customers without access to a charger outside their home who are nervous about charging, is our problem,” Miller declares. “That is why we are doing several different pilots in different places, in different ways to figure out solutions. If you pilot and it works, you must then scale and accelerate to build them out even stronger.

“Our unique position is that we hear about this first hand, our customers are incredibly communicative and share their lived experience every day. And most importantly they are representative of a wider population, not just early adopters or company car schemes. We have this insight that no one else does and we are using it to influence an equitable switch to electric.”

On average, cars in the UK in 2020 released 221.4 grams of CO₂ per mile. With cars clocking on average around 7600 miles per year, that makes for an average of 1,682,383 grams of CO₂ emissions per car per year. The UK has a target of all new cars and cans to be fully zero emission at the tailpipe from 2035, as part of a vision for net zero emissions by 2050. Transport, excluding international aviation and shipping, was responsible for 27% of greenhouse gas emissions in 2019 and so the transition to EVs is a big contributor to a national-level solution.

For Motability Operations customers, the first demand for a vehicle is about complementing life – bringing access to transport that connects them with other people, places, and opportunities. The demand for EVs comes second to an affordable car, and so Miller is keen on driving positivity around the industry to ensure customers have all the information to make an informed choice.

“There is mixed messaging in the market,” he says. “The manufacturers are not waiting. The leasing companies are making changes. The government has made policy, but sometimes in the media there is a confusing message that people can or should wait. We must talk about electric cars in a more positive way. Range is less of an issue now and we are finding solutions to help with charging – and those are the two key blockers that our research suggests stops our customers making the switch.”

POWER BEYOND THE CAR

Further beyond the horizon, Miller – an embracer of change – sees Motability Operations supporting customers in all new ways, beyond just automotive. While a long-term strategy is not yet in place beyond car leasing, there are major opportunities.

“We are trying to understand the environment,” he smiles. “To me, it’s just obvious that the world of leasing, electric cars, and electricity supply will collide. We need to look at how we play in that wider space and which partners we work with to supply the best solutions. In the linear path from car to electricity generation, where does leasing company involvement start and stop?”

He says that he is excited about technology developments that will allow for bi-directional charging between home and car, with energy transferred between the two as a user travels.

“The idea of your car being a mini power plant for your house is no longer science fiction. For customers earning £20,000, having money back from your car charging your household is an amazing opportunity. This sort of innovation is where the right sort of partnerships become very important as they will be the ones who unlock this.”

In a transitional time that is as disruptive to automotive as digital was to print, online was to retail, and delivery was to quick service restaurants, the entire industry has a lot to learn, and everyone is looking for pole position. The best way to stay at the forefront is by consistently solving problems for customers, and this has been the goal of Motability Operations for 45 years.

“It’s all opportunity and electricity in cars is transformative for our customers. We are talking about managing a transition and not a fundamental problem,” Miller concludes.

In the coming years, Motability Operations has promised £300 million to help bring more EVs to the fleet, and help more customers to take advantage of the transition. The hum of the company’s batteries echoes the promise of a sustainable journey ahead – a journey where every mile counts towards a future that’s not just driven by wheels but steered by purpose. Electrification of the fleet is more than a trend; it’s a statement.

Enjoy everyday freedom. Exchange your mobility allowance for a brand-new car, wheelchair accessible vehicle, scooter or powered wheelchair through the Motability Scheme. Find out at motability.co.uk