Sustainable mobility: finance will accelerate the transition

Driven by new technology and changes in consumer behaviour, the mobility of the future will be more flexible, more focused on the environment and based on ‘usage’ rather than ‘ownership’ models. However, several major mobility challenges remain in the short- to medium-term. 

That’s where banks come in, offering financing solutions that will fill the needs of the entire value chain, argues Joachim Reinboth, Co-Head of Automotive & Mobility Services, BNP Paribas CIB. 

Mobility challenges over the next decade 

“The mobility ecosystem has shifted dramatically in recent years, and continues to undergo rapid disruption”, explains Reinboth. “End users want a cleaner, safer, and cheaper way of travelling; companies are looking at how to best respond, sharpening their ESG focus while managing their cost base post-pandemic; and we are seeing increased investor appetite for sustainable mobility solutions – because it makes sense on all fronts.” 

Electrification will enable a more tailored transport experience, along with drastic reductions in CO₂ emissions. The latest Arval Mobility Observatory Mobility and Fleet Barometer 2021 shows that across all countries and companies surveyed, 70% of companies have already implemented or are considering implementing at least one of the following technologies within the next three years: hybrid vehicles (HEVs), plug-in hybrids (PHEVs) and battery electric vehicles (BEVs). 

"We are seeing increased investor appetite for sustainable mobility solutions – because it makes sense on all fronts."

Joachim Reinboth, Co-Head of Automotive & Mobility Services, BNP Paribas CIB

However, several factors still impede this growth, from limited battery autonomy and the constraints of usage, to lack of charging infrastructure, the high price of EVs and the need for new ecosystems to support the mass deployment of electrification. 

A new mobility ecosystem 

Further collaboration is essential. Different industries, including mobility and energy players, have already started to converge to build the infrastructure required and deliver long-term sustainable profit pools.  

For instance, Engie Mobilités Electriques has teamed up with Arval and BNP Paribas Leasing Solutions to develop a global offer around electric mobility for Arcelor, one of the world’s largest steel producers. As part of the deal, Arcelor will switch its current fleet of vehicles to electric models and charging stations will be installed on the company’s site in Ghent, Belgium. 

“Arval initiated the transaction by offering Arcelor electric cars for its fleet with the charging infrastructure, explains Isabelle Loc, Chief Executive Officer at BNP Paribas Leasing Solutions. “Engie immediately got involved as Arval’s EV-charger partner in Belgium, to provide the charging points and related services. BNP Paribas Leasing Solutions was then onboarded as the financing partner for the EV chargers with the key feature of providing an off-balance solution to the end customer.”  

"BNP Paribas Leasing Solutions was then onboarded as the financing partner for the EV chargers with the key feature of providing an off-balance solution to the end customer."

Isabelle Loc, Chief Executive Officer, BNP Paribas Leasing Solutions

The €1 million project will see a total of 100 double chargers installed on the four km² Arcelor site. In parallel, Arcelor’s strategy is supported by public policies in Belgium: the country’s government will grant fiscal advantages for companies that have electric cars in their fleets from 2026 onwards.  

“The growing demand from corporates for more holistic mobility policies requires three dimensions, notes Hugo Salaun, Chief Marketing Officer at Arval. Any given solution must be inclusive, or cater for all types of employees; sustainable, with a strong focus on electric bundles that include the vehicle and recharging solutions; and flexible, with short-term options. Arval solutions offer all three; our ambition is to lease 700,000 electrified vehicles by the end of 2025.” 

"Any given solution must be inclusive […], sustainable […], and flexible […]. Arval solutions offer all three; our ambition is to lease 700,000 electrified vehicles by the end of 2025."

Hugo Salaun, Chief Marketing Officer, Arval

End-to-end solutions across the value chain 

Such collaborative initiatives to expand essential charging infrastructure go beyond individual corporates.  

In 2021 IONITY, Europe’s leading high-power charging network, announced a €700 million investment from its shareholders, comprising five global automakers, and with the entrance of BlackRock as the first non-automotive company to enter the joint venture. The fundraising, supported by BNP Paribas as exclusive financial advisor, will enable IONITY to increase the number of high-power 350kW charging points by more than four times, to reach 7,000 by 2025, and grow from 400 to more than 1,000 locations along high traffic corridors in Europe.  

Going forward, finance players will continue to play an important role in delivering end-to-end solutions across the entire EV value chain, as well as use their unique sectoral expertise and wide related ecosystems to support the expansion of distribution networks of other types of ‘greener’ energies including hydrogen and NGV (Natural Gas for Vehicles).

Green mobility solutions across the value chain

BNP Paribas CIB is a leader in the green mobility transition, by supporting corporate clients with strategic advisory and financing solutions, and connecting them with the right investors in a fast-changing landscape. 

Experts from BNP Paribas Arval, Leasing Solutions and CIB support businesses wishing to switch their corporate fleet and make new asset investments to more sustainable vehicles and machinery, such as tractors, construction equipment and trucks.  

In doing so, we deliver for clients across the whole EV value chain, including: 

• IONITY’s €700m investment (2021) 
• The world’s first hydrogen mobility financing for Hyundai Motor Group in Switzerland (2021) 
• Financing Australia’s Pilbara lithium mining to produce EV batteries (2021) 
• Northvolt’s €1 billion debt financing to support the Swedish company to build Europe’s first gigafactory powered by renewable energy to produce the world’s greenest batteries (2020) 
•  Daimler’s first green bond (2020) 
• A sustainable mobility solution integrating electric vehicle leasing, charging point installation and energy consumption with Iberdrola in Spain (2020) 

On 3 May 2022, BNP Paribas unveiled its first ‘Climate Analytics and Alignment Report’ and carbon intensity reduction targets by 2025 for three key sectors, including automotive for which the Group aims to reduce carbon emissions intensity by at least 25% by 2025 versus 2020.

BNP Paribas will continue to strengthen its financing through the issuance of sustainable bonds and loans to accelerate the electric vehicle production. Arval BNP Paribas is also committed to supporting its customers in making their mobility more sustainable by setting new target of reaching 700,000 electrified vehicles by 2025.

Building on 30 years of expertise and thanks to its inclusive, sustainable and flexible mobility approach, Arval allows customers to optimise their cost management, achieve their sustainability targets and meet the shifting expectations of new generations of employees. Some concrete examples include 360° Mobility solutions, Arval Adaptiv and Arval’s partnership with Ridecell.