By Stephanie Hagen, Director of Content, Autonomy & the Urban Mobility Company

Click here to watch a recording of “Could COVID-19 Kill the Company Car?” held in partnership with EY and co-hosted by BloombergNEF.

“Covid-19: boom or bust for the company car?” After an hour of enthusiastic discussion and debate, Workshop moderator and BloombergNEF Intelligent Mobility Analyst Milo Boers posed this last principal question to the expert panel of our 17 February Workshop, Could COVID-19 Kill the Company Car?, held in partnership with EY and co-hosted by BloombergNEF. Mulling over this much-anticipated question were panel participants Martin Cardell, Global Mobility Solutions Leader at EY; Jane Hoffer, CEO of Gowithflow; Trevor Storey, CEO of Ways2Go and Pedro Homem de Gouveia,  Senior Policy Manager at POLIS. Before we reveal the final verdict, let’s take a look at the Workshop’s illuminating key takeaways – setting the scene for the panel’s ultimate conclusion.

Will the company car be another millennial “victim”?

Traditionally, company cars are provided to upper management corporates, and so serve a purpose other than  simply getting employees to and from work, but that of status symbol as well. For many, having a company car can ostensibly mean that you’ve “made it.” However, is this attitude becoming outdated? Martin pointed out that there is a clear trend towards sustainability, and it is not just the use of company cars which is being challenged, but the use of private cars all together. For many 20 or 30-somethings living in city centres, a private vehicle simply does not fit their lifestyle, whether it is because they are more environmentally conscious, or because it can be cumbersome to move around an urban zone in a car.

Jane brought up the fact that due to COVID-19, employees who are now working from home have also seen an increase in their wages, as they are no longer saddled by commuting costs. If the majority of workers get accustomed to a seemingly higher salary, upon who will the burden fall to pay this difference once employees are back in the office? Suddenly company cars being offered to the elite few seems wildly out of touch. “Mobility for All” may become the new mantra for many employees.

Mobility budgets offer flexibility, lower costs, and greater sustainability

Increasing in popularity is the mobility budget or wallet, a product that replaces a company car and allowance with a credit which can be used to pay for multimodal options (e.g., bus, metro, shared bike, e-scooter etc.) across the mobility chain. According to Trevor, the total cost of ownership of physical vehicles can be excessive for both the employer and the employee, while the fiscal benefits of mobility wallets can be huge. This is especially true for larger companies and Trevor estimated that on average, most company cars are parked outside of homes 90-95% of the time, meaning that in addition to being expensive, they are also highly inefficient. A mobility budget naturally offers more options to get around, and greater flexibility to the user.

Martin added that with both cities and their citizens seeking more sustainable mobility options, individually owned cars will hold a less and less important place in the overall mobility mix. A mobility wallet-type solution can be built around providing greener travel alternatives and satisfying new consumer trends and desires. An audience poll demonstrated the general interest in mobility budgets, as 56% of respondents said they would prefer a mobility budget over a company car, compared to 19% who preferred the contrary.

Considering inclusivity and the end-user

However, for new products such as mobility wallets to work, they ultimately need to be developed around the needs of the end-user, a point upon which all the panellists whole-heartedly agreed. The fact that many transportation systems have not been designed to accommodate all user groups was a point Pedro picked up on when he discussed the “last mile” problem. For him, this is not a problem afflicting commuters in city centres, but rather in suburban areas which have been built around car-use. Suburban commuters who do not want to drive need to walk or cycle along often dangerous roads to arrive at the nearest bus or train stop. Women may be at even greater risk, and many female commuters might not feel safe traveling alone late at night.

Martin added that due to COVID-19, the two most important criteria for many travellers choosing transport right now is safety and health. Trevor also double-downed on this point: according to research being conducted by his company, the current priority for employers when it comes to transportation is to keep their employees safe and infection-free. Effectively, if we want to have sustainable alternatives to the company car, the public and private sectors need to work together to consider these many different factors and collaborate on developing solutions that cater to the needs of all types of commuters. Of course, an increase in investment across public transportation systems will also undoubtedly be necessary.

Furthermore, fully understanding the end-user’s needs will be critical in successfully rolling out new corporate mobility options. According to Jane, “technology for technology’s sake is never beneficial”, and understanding and responding to the specific user-journey of various groups, especially those of the “typical” employee and not just executives, is especially important for getting company-wide approval. Jane highlighted the fact that COVID-19 is providing a unique opportunity for change, as employees are just now starting to come back into the office. Therefore, introducing new ways to commute will not be such a proverbial shock to the system.

The city is evolving and leaving cars in the dust

Throughout the discussion, panellists referenced the idea that sustainability has become a core value for many commuters. This is likely in no small part thanks to cities, which have been leading the charge in encouraging greener technology and building the infrastructure to support it. According to Pedro, with many cities making it difficult to access and park in the city centre, as well as converting car lanes into bike lanes, the company car may become something that people are “stuck with”. That is, it will cease to become a desirable way to get around a city. With greener, more flexible alternatives on the horizon, get ready for policymakers to get behind multi-modal solutions as companies will be pressured to consider their “mobility footprints” more than ever.

Martin gave a shout out to micro mobility, which has become increasingly popular in cities around the world over the last couple years. While micro mobility use decreased towards the beginning of the pandemic, it has since rebounded, and Martin thinks it is a trend that is here to stay – potentially shaping the infrastructure of our cities for good. Adding to Martin’s point, Milo reminded us of the recent explosion in popularity of personal e-bikes, and that it is not crazy to posit that these fast and nimble two-wheelers might become a primary alternative to the corporate car. The audience agreed with these sentiments, as a majority 55% believe that bikes and e-scooters will be the mode of transport which will experience the most usage growth in 2021.

The final verdict: COVID-19: boom or bust for the company car?

So, what’s the last word on the future of the company car? Will COVID-19 end up causing a boom or a bust? According to our panellists, the final answer is not quite so black and white. Pedro leaned heavily towards “bust”, citing the fact that the need for the company car will be much lower when people come back to the office, if they ever come back to the office. Jane does not see the situation as a “boom or bust” but rather an “awakening to the costs and the options for mobility”. Trevor spoke to COVID-19 being the ultimate catalyst for change, especially as the company car is very much a “legacy” benefit and has been built into contracts for years. He sees the pandemic as an accelerator for shifting attitudes, and we’ll be seeing far less “perk” company cars in three years. Finally, Martin believes there will be more “bust than boom”, and while the transition away from the company car will happen, it will take place over a period of years with different segments within a company adopting new mobility products at different times (e.g., a push to electric fleets may come faster than a push to mobility budgets).

Ultimately, what we can conclude is that going forward, it will not be “business as usual” for the company car and a massive change towards, greener, cheaper, and more flexible corporate mobility is already underway.

Click here to watch a recording of “Could COVID-19 Kill the Company Car?” held in partnership with EY and co-hosted by BloombergNEF.