29 May 23

How IKEA is electrifying its car and delivery fleets

Vehicle selection, charging infrastructure and 2025 fleet decarbonation goals for Ingka Group (IKEA). 

If the path to fleet electrification were smooth, Ingka Group (IKEA) would already have purchased its last car or van with an internal combustion engine. The group is the largest IKEA retailer, representing about 90% of IKEA retail sales, and has set itself the challenge of running a zero-emission fleet, including all company owned, leased and shared vehicles, by September 2025.

In the real, however, has faced the pressures of longer lead times for electric vehicles (due to supply chain disruption), the limited range of electric light commercial vehicles, and immature public charging infrastructure, delaying its plans to phase out vehicles with internal combustion engines.

“In some markets, the use cases mean we need vehicles with a longer range that gives us more flexibility in the daily operation,” said Zoltán Sziller, Global Category Leader – Fleet, Mobility and Travel, Ingka Group Procurement (pictured below). “Plus, with EVs we obviously have some form of dependency on the charging infrastructure.”

In 2021, the company announced it had reached its goal to provide access to EV charging stations in all stores where parking is provided.

Three Cs of transport decarbonisation

Sziller separates the group’s transport decarbonisation strategies into three Cs:

  • co-workers, including company car drivers as well as private car drivers commuting to IKEA stores and Ingka Group offices;
  • commercial vehicles that transport products to customers or customer meeting points;
  • and customers visiting IKEA stores.

Ingka has purchased electric cars in 15 countries, but its progress in FY22 (1 September 2021-31 August 2022) was limited by the lack of availability of electric vehicles. The remainder of its 2,600-strong fleet, which operates in 31 markets, is leased from legacy suppliers and will be replaced with electrified cars (mainly battery electric vehicles, but including some plug-in hybrids) when their current contracts by 2025. Currently around 30% of Ingka's lease vehicles, including passenger cars and LCVs, are BEV.

“Due to new car availability issues, we are working with most OEMs who have a product which is both fit for purpose for our needs and has the optimum total cost of ownership (TCO) to support Ingka's zero emission agenda. This ensures there are options for our drivers, so we have a mix of EVs from different OEMs on our fleet," said Sziller.  

While benefit car drivers have a choice of different EV models, the company is selecting pool cars and job need cars based on the requirements of the function for which they will be used.

And in a further move to shrink its carbon footprint, IKEA has updated its business travel policy to avoid travel for one-day meetings, minimise several people from the same team travelling to the same meeting, and even stipulating that regular internal meetings, such as boards and management teams, should be held digitally at least 40% of the time.

Net zero deliveries

But it’s impossible to ship furniture via a video conference, presenting Ingka with the major challenge of reducing the greenhouse gas emissions from its commercial transport. Product transport accounted for 4.7% of its total carbon footprint during its last financial year, while customer travel and home deliveries added up to 11.5%.
Zero emission vehicles are helping with this, alongside broader corporate strategies. Expansion in city centres (pictured below), for example, has made IKEA stores and meeting places more accessible and reduced the average journey time for customers and co-workers.

But some road transport is unavoidable, and as long ago as 2019 Ingka invited light commercial vehicle manufacturers to a presentation at one of its busiest logistics hubs to explain how it operates and outline the minimum operational requirements of any electric commercial vehicles.

“The competition is open, so OEMs that are able to satisfy our needs will potentially gain more of our business,” said Sziller. “We are working together with OEMs over the availability and technical capability of vehicles.”

IKEA Italia recently announced the acquisition of 180 Fiat e-Ducatos to provide zero emission deliveries in Italy, starting in Milan and Rome. The company’s goal is to cover its entire national network of last-mile deliveries by 2025 with electric or zero-emission vehicles.

Plans for electrifying Ingka’s medium duty and larger commercial vehicle operations are still at an exploratory stage, said Sziller, with the company working in partnership with its transport providers and OEMs.

EV ecosystem

He emphasised that none of these developments in cars, light and heavy commercial vehicles is possible without ensuring a complete EV ecosystem is in place to support the charging of batteries.

The company aims to significantly expand its EV charging networks by installing an additional 5,000 charging points by FY24, including 1,000 in Norway, Denmark and Sweden. Ingka also aims to increase the use of renewable electricity for charging while adding more EV chargers.

“Electrification is not just about giving drivers a key and a charging card. You need to understand the user groups and create the right policy for the usage of these vehicles and train drivers on the efficient use of an EV,” said Sziller.

Electrification is a company-wide challenge

As one of the pioneers of fleet electrification, Ingka has has been a vocal supporter of EV100’s call for all major fleets to commit to 100% electrification from 2030. And for fleets embarking today on electrification plans, Sziller offered this advice.

“It is important to bring all the key people together and discuss openly all the key requirements of the policy and decide who is responsible for what. The requirements and consequences of electrification have to be made clear in open discussions, without that it will be unnecessarily challenging to navigate fleet electrification towards your end goal,” he said.

“In our discussions, cost is just one consideration. Electrification requires additional resources, alongside new thinking and working, so a long-term plan is key as we look to implement the technology in our operations.

“We are on a journey to make it more convenient and accessible for the many people to travel with zero-emissions. By working together with our partners and the industry we want to play our part in a better future."

Images: IKEA

Authored by: Jonathan Manning