Tom Rowlands, Corpay Managing Director, Global EV Solutions, explains the slowdown in EV adoption and ways Corpay is making adoption by fleets more appealing.
In this episode of "Smarter Payments by Corpay," Tom Rowlands, Managing Director of Global EV Solutions at Corpay, tells host Brennan Robison, Director of Corporate Communications at Corpay, the current state and future of electric vehicle (EV) adoption. Rowlands notes that while EV growth continues, it has slowed compared to previous years and forecasts. He attributes this to several factors, including the saturation of early EV adopters and the challenges of making EVs affordable and accessible to the broader market. Government policies, both push (mandates) and pull (incentives), play a critical role in driving adoption, though recent shifts, like the UK's delay in phasing out combustion vehicles, may have contributed to the slowdown. Rowlands also highlights Corpay's innovations in EV charging and payment solutions, particularly for fleet operators, emphasizing the importance of simplifying the EV experience to encourage wider adoption.
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Teaser bite by Tom Rowlands: EV continues to grow significantly. It's just not growing as quickly as it was, and it's also not growing as quickly as potentially the forecasts said it would.
Robison intro: Depending on the day, the adoption of electric vehicles….or EVs….is either a forgone conclusion… full steam ahead… or it’s reached a point of maturity where some question whether EVs will ever fully replace gas and diesel fueled vehicles. What isn’t a question is that EVs are being given a spin by many consumers and companies that operate fleet vehicles… and the reviews are mixed. This is Brennan Robison, Director of Corporate Communications for Corpay. On this episode of Smarter Payments by Corpay, we’re joined by Tom Rowlands, Managing Director of Global EV Solutions at Corpay, so he can unpack the complex topic of EVs, which has many players… including manufacturers, environmentalist and politicians around the World. Here’s our conversation.
Robison: Hey Tom, thanks for joining us.
Rowlands: Great to be here. Thanks for having me.
Robison: So, before we jump into the latest on EV trends, let's give the audience a chance to get to know you a little bit. If you would tell us about your career and what led you to Corpay.
Rowlands: Yeah, no worries. So, I started life at Travelx. So, that's a kind of FX payments business, which I guess is fairly akin to what Corpay does in parts of its business. So, that's where I started life. That business was then actually sold to Mastercard, which is where I met my current boss, Alan King. But then I went on to kind of go into consulting for about 10 years. So, I worked on the M&A side of consulting, which kind of gave me a good grounding in business operations and kind of how businesses operate. And then about seven years ago now, I joined what was then FLEETCOR, now Corpay, as the VP of Strategy for the European business. And clearly, a huge element of the strategy five years ago was how do we start to serve our fleet customers who are thinking about the EV transition with new products. So, at that point, I started to work on EV and how we can help our customers with EV, which then nicely morphed into an interim role leading and creating the EV organization within Corpay. So, we started out with just two of us. And then through hiring and acquiring some businesses, we've grown that organization substantially into what it is now.
Robison: Certainly, and your title, Managing Director of Global EV Solutions for Corpay. You're based in London, but you're actually at our Atlanta headquarters right now. I imagine you have a pretty busy travel schedule.
Rowlands: Yeah, so based in London, but clearly, I operate in a global role, as you said. So, we've acquired some capabilities in Europe. So, we have an office in Berlin, Helsinki, and Stockholm, because we serve a lot of our OEM clients across continental Europe. So, we actually operate across 24 countries in Europe with our charging solution. Based in London. I've always lived in London from a work perspective. But then obviously we're also trying to bring our solutions to the US market. So, we have a small team in the US starting to build out some of the solutions or similar solution sets that we have in Europe and the UK for the US market.
Robison: Plenty of frequent flyer miles. So, let's talk electric vehicles. The history of the EV goes back as far as the internal combustion engine, but they really didn't start catching on until the gas crunch in the seventies and then later environmental concerns. What factors would you say led to the acceleration of EV adoption in recent years?
Rowlands: Yeah, to your point, you know, EVs have been around for a long, long time, certainly from a kind of innovation and people who want to tinker with technology. I think the acceleration, though, was really driven by a few things. And I think the first point was the improvement in that technology to be scalable for mass adoption. So, the early EVs were not necessarily efficient or scalable, but that kind of changed in the 2010 range, I would say. So, that was obviously a key kind of turning point that we could manufacture and scale electric vehicles for mass adoption. The other point on the technology side was also the price of that technology. So, battery prices have played a huge part in the adoption of EVs. So, the declining price of a unit, a battery unit effectively has driven the ability for OEMs to create affordable or more affordable EVs. But even in the kind of early 2010, right up until almost today, EVs have been relatively expensive versus the traditional ICE vehicles. And there haven't been that many models of EV at the kind of lower end of the market, which has to date kind of hampered adoption in certain segments of the market. So, that has changed and allowed EVs to be more broadly adopted. And I think that's only going to go in one direction, right? Battery prices continue to decrease, technology continues to improve. So, you've got declining cost of batteries and improving range of those batteries, which just makes it all the more adoptable. Secondly, and very importantly as well, is government mandates and policy. So, driven, as you said, by climate goals, effectively, and clean air targets, governments around the world have put in place both what I would call push and pull factors. So, the push factors being the banning and phasing out of the sale of ICE vehicles. So, in certain markets, not necessarily the US right now, but in, for example, the UK, the government has said by 2035, OEMs will not be able to sell combustion engine vehicles. That clearly puts huge pressure on the OEMs to change their manufacturing facilities and change their strategies around what vehicles they're going to be delivering into the market. And that's been happening around the world, not just in the UK. It's different in different markets, but there's push factors in almost every market in the world, I would say now. And then governments have also put in place what I would call pull factors. So, incentivizing people to get into EVs as well. So, that comes in the forms of grants to companies to put charge points in the ground, but also for companies to put electric vehicles into their fleets, for people to install home chargers in their homes, and then tax breaks for those individuals who actually adopt the vehicles. So, again, using the UK as an example, as I drive an EV in the UK, if I lease an electric vehicle in the UK through what we call salary sacrifice, I actually get a tax break. I don't pay any tax on that lease vehicle. So, those are really the two things that have driven the acceleration in my view, the two biggest things. Obviously, there's other factors in terms of just advocates for EVs. So, in the early days, the people that really wanted to get into an EV, they were big advocates of EVs, bought EVs and got into them. I think we're past that phase now. I think anyone who was really an EV advocate and desperate to get into an EV is now obviously in an EV. And now we're moving into that phase of the broader adoption of people who are either sort of uninterested or they don't prefer an EV or an ICE vehicle moving into EVs. And then also people who simply don't want to move into an EV, they would prefer to be in an ICE vehicle, but at some point, they will be pushed into an EV.
Robison: So, in terms of bringing the cost down so that the average consumer might get into an EV, Tesla obviously the most famous global brand, but now China's getting into the market. Where is that in terms of the process of bringing the price of an EV down to an affordable level?
Rowlands: Yeah, it's a hot topic in the EV market at the minute, the kind of the Chinese brands and whether the Western countries should put tariffs on Chinese brands to try and make European brands and US brands more competitive in the EV market. I think Elon himself came out saying he was opposed to that, to putting tariffs on Chinese brands. And it's been a really interesting story from China. They invested early in the EV revolution, as it were, and they have some incredible brands that are able to produce high quality vehicles at a low cost. So, I think the most prevalent or famous is BYD, probably. And they're bringing in to now the European market and looking to the US market, really high quality SUVs and passenger vehicles at relatively low cost. Clearly, Tesla has responded by dropping its prices in many markets. And I think that will continue. We're starting to see the more traditional OEMs, the Renaults, the Nissans, the GMs, the Fords of this world bring out cheaper models off the back of that. I think the big question is, are those traditional OEMs structurally set up to be able to compete at the same price level as the Chinese brands who have set themselves up specifically for this purpose. So, I think that's the interesting thing to watch. Plus, how governments around the world respond and whether they try to implement tariffs, although that would be counterproductive on the basis that you're bringing in more affordable models, which in theory is what those governments want to allow people who can't afford the more expensive vehicles to get into an EV. So, if you start putting tariffs on them, obviously that increases the prices, which is then kind of counterproductive as well. So, it'll be really interesting to see how that plays out because we're really just at the beginning of that phase.
Robison: Sure. Let's talk about what Corpay does in relation to EVs. The ability to charge and to pay for charging is critical to the adoption of EVs by consumers and fleet operators. Where does the ability to easily, safely, and accurately pay for charging fit into the overall EV experience?
Rowlands: Yeah, it's critical, particularly for our fleet customers. So, they want really the same experience that they get with our fuel products. They don't want that to change. And clearly, a key element of our value proposition is allowing drivers to easily, safely, and accurately pay for fueling no matter what that is, whether that's gas or whether that's electric kilowatts. So, it is key, but I think the important thing to understand is that EV charging is different and it is more complicated. So, there are more, I would say, things around the payment that aren't just the payment to get to that point that we have to factor in. So, we like to think of it as search, plan and pay. So, you've got to find the charge point that you're looking for, which is not more challenging, but different to trying to find a gas station often because gas stations are large, they're at the side of the road, it's very easy to find them and we have relatively universal products as well as FLEETCOR. So, it's different, you have to find potentially just a small bank of charges often in side roads or places that are not as obvious. So, you've got to be able to find the charge point. Charging takes longer, so you need to know that that charge point is available when you get there so that you can actually plug in and there's not someone sat there already charging. And then you also need to understand the pricing because the pricing can be different because you have fast rapid charging, which is more expensive. You have AC charging, which is cheaper. So, there's just some complexity around the payment that we have to help the driver with before they get there. And then after that, we also have to make it a seamless payment experience. And the payment experience, can also be more complicated because again, with a gas station, it's relatively simple. You get your card out, you pay in the kind of traditional way. CPOs or charge points are often unmanned and there's a myriad of ways that you can pay for charging. You can pay via an app. Sometimes you can pay via contactless. Sometimes you can't pay via contactless and you have to pay via an RFID card. So, what we are trying to do is create one experience, no matter what charge point you go to, so that you can always have the same experience through our product. The two ways that we're doing that is through the app. So, a seamless app experience where you can use our app at various charge point operators and the experience of charging through our app is the same no matter where you go. And then also a card product that you can simply tap and charge in an easy and seamless way.
Robison: So, all those challenges you describe for the individual consumer, are they magnified for a fleet operator or are they actually simplified?
Rowlands: Yeah, it's a good question. I would say they're magnified because a fleet operator needs more things from a payment, right? You need the receipt, which is also, or the level three data, as we call it, so the VAT information and all of those things. And again, that's not ubiquitous in the charging world. That can come through a physical receipt, that can come through an online receipt. So, I think fleet managers have a more complicated job in the world of EV. And there's also more places that a driver might charge. So, we know that drivers charge on the road in the more traditional way that they would with an ICE vehicle, but they're also charging at their homes. And we have to think about how we help a fleet manager understand how much was charged at home, how much that cost and whether they want to reimburse the driver for that. Drivers are also charging in semi -private, semi -public charge points, potentially at work, again, which is potentially free charging. So, there's a lot more complexity in an emerging market where there's fewer standards that have been set. I think that will simplify over time as people kind of adhere to the same standards. But there's a race to get as many charge points in the ground as quickly as possible, and people are doing that in the quickest way possible, not necessarily the most standard way possible. And we've seen that, for example, with Tesla and the NACS standard. That was not the standard for every other CPO. And we've seen now that OEMs are moving to NACS in the US. But again, the US is different from Europe. We don't have the NACS standard in Europe. So, I think that will evolve and simplify over time, but at this point in time, it is a complex market for fleet managers to understand.
Robison: And you mentioned charging at home and especially in the UK, Corpay has made some innovations in terms of being the go -between between the driver and even the utility to where the driver doesn't even see the bill. Talk about that a little bit.
Rowlands: Yeah, so in the UK, we're slightly further ahead as the market is slightly further ahead. So, we've recently launched what we call ChargePass, which is our single product that allows a driver and a fleet manager to fuel no matter what the fuel. So, fuel on road, fuel EV charging on road, and home charging, all in one single solution. Effectively, if the driver signs up or activates our home charging solution, we integrate directly with the home charger that they have on their wall at home. We can see the energy consumed. We also are integrated so we can understand the tariff, i.e. the amount that they pay per kilowatt hour. And then we have integrations with all of the utility companies in the UK. So, we're able to pay that utility company directly for that charging so that the driver doesn't get an increased bill for their home utility and so that the fleet manager doesn't have to do all the work of reimbursing that driver for that home charging. So, we've really seen that be a hugely popular product amongst our drivers particularly. And actually, the drivers interestingly have become the advocates of that product. A lot of the drivers say we want this solution because we don't want to be paying for our own home charging and then having to be reimbursed for that because it can become a relatively chunky amount of money, which the driver would effectively be financing for the company for that month whilst they wait to be reimbursed.
Robison: So, back to more wider EV adoption trends, some headlines suggest that EV adoption plateaued late last year and that it continues to lag in 2024. Do you agree with that assertion and why?
Rowlands: I wouldn't say I fully agree with the assertion. I think EV is almost a victim of its own success in some ways in terms of the sort of rapid, rapid growth that we saw through to the end of 2023 effectively. EV continues to grow significantly. It's just not growing as quickly as it was, and it's also not growing as quickly as potentially the forecasts said it would. So, I would say, yes, EV adoption has underperformed versus where the forecasts were, but it does continue to grow significantly year over year. Why though has it slowed down? I think is an important thing to discuss. And there's various reasons for it. As I said, there was and is the EV advocates, all those people that were desperate to drive EVs and just really wanted to be in an EV. I think in most of the core markets were past that point. All of those people that wanted an EV have an EV, and we're now moving into the more difficult segment of the market of people who are either ambivalent, they're not bothered whether they have an EV or not, and then those people who are actually resistant. So, clearly the adoption curve will start to slow as you penetrate more deeply the kind of population of people who are less keen on EVs. There's also then just the macro environment and we talked about cost at the beginning of the kind of conversation. EVs are still not cheap and they're still not comparable necessarily to an ICE vehicle. You can get very cheap ICE vehicles, and right now, today, you don't have that many options of very, very cheap EVs, which makes it difficult for certain people to afford an EV. There's also the complexity that we talked about, and that still needs to be simplified in terms of if people don't understand how they're going to operate their vehicle, it creates barriers to them taking that vehicle, right? So, we as an industry need to educate people and continue to push for simplification in terms of how the CPOs operate, how they charge, how you find a CPO, all of those things to make it as easy as possible for people to charge their vehicle, which will make it easier or lower the barrier of entry for many of those people as well.
Robison: earlier, you talked about the push and pull aspect of public policy in terms of encouraging the adoption of EVs. What is your sense of whether the push side of it, the government mandates are really going to hold up over time? Will they get pushed back as they have been already or will the market simply move toward EVs on its own?
Rowlands: Yeah, it's a great point. And I think it's also part of the reason for the slowdown is the government did take their foot off the gas, as it were, a little bit. So, I mentioned earlier that the UK has the phasing out of the combustion vehicle sales by 2035. That was originally 2030, and that got pushed back to 2035, which has certainly slowed down adoption in the UK right now. So, I think it remains to be seen. Did the government, for example, in the UK take their foot off the gas too early there, hoping that the private sector would then pick up the rest of the slack and we'd kind of reach that tipping point? I think we will get to that point where it doesn't matter about the push factors or the pull factors anymore. But I don't think we're quite there yet. I still do think we need government support and government grants and tax breaks to push people into those those vehicles. And particularly in the US, because I think the US is not at the same level as adoption as some of the European markets at this point. So, I think the continued push and pull factors will be critical in pushing the US to adopt.
Robison: Well, Tom, we appreciate your insight on EVs today and we'll have you back in 2025 to see if your predictions were on target.
Rowlands: Thank you very much.
Robison: Tom Rowlands, Managing Director of Global EV Solutions for Corpay. Thanks, Tom.
Rowlands: Thank you.
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Robison outro: That's it for this episode of Smarter Payments. Thank you for listening. Be sure to follow the show wherever you get your podcasts so you don't miss an episode. Smarter Payments is a production of Corpay Incorporated, copyright 2024. I'm Brennan Robison. And we'll see you next time.