Volvo Group has moved to using whole-life costs (WLCs) to base its inhouse fleet choice lists on, supporting work to electrify its company cars.

Volvo’s new car orders are now dominated by electrified choices, splitting two-thirds towards PHEVs and a third towards EVs

The group, which supplies commercial transport and infrastructure solutions, operates 450 cars in the UK and previously offered choice lists based on lease rentals, incorporating petrol and diesel models from Volvo and Renault.

But HR director Danny Nussbaum said pressure had been building to make fundamental changes, moving away from fossil fuel-powered company cars towards EVs and PHEVs in order to minimise drivers’ Benefit-in-Kind taxation and support the group’s emission reduction targets.

He continued: “All of this meant that it was clear that our company car policy needed a structural rethink to support electrification, especially from the point of view of choice lists and fuel reimbursement, so we asked Arval UK to oversee what turned out to be a very detailed review.”

Arval UK, which has a sole supplier arrangement with Volvo Group, said using a WLC-based methodology is essential to support a shift to EVs and PHEVs.

Shaun Sadlier, head of consultancy, explained: “When you have both electric and ICE cars on a choice list, lease rental costs can distort the position of electrified vehicles in the car grades.

“Adopting a whole life cost-based methodology, which includes elements such as business fuel and class 1A NIC, ensures that electric models are positioned correctly and comparable to, if not less costly, than petrol and diesel versions, when you include all costs to the business for the life of the car.”

The new choice lists were drawn up by Arval in consultation with Volvo Group and the leasing firm also negotiated advantageous manufacturer terms. To broaden the range of EVs available, the Polestar brand was added.

Volvo’s new car orders are now dominated by electrified choices, splitting two-thirds towards PHEVs and a third towards EVs, and the scheme has already attracted a very positive reaction from drivers.

Danny Nussbaum explained: “The impact from a Benefit-in-Kind point of view has been dramatic. Some employees have managed to slash their monthly company car tax bill from £500 to £20-30 simply by making greener choices, which clearly makes a significant difference to their pay packets. The trade-up option is also proving popular, and there is a nice bonus in the shape of a new Arval programme called ‘1 Electrified Vehicle = 1Tree’, where a tree is planted for each electrified vehicle we order.

“Overall, it’s been a very successful exercise that has orientated our fleet in the direction it needed to be heading. We now feel in good shape to face the next few years in this area of our business. My own car is due for renewal next year, and it will undoubtedly be an EV.”