Battery capacity and charge times. Range and recharging points. These are all decisions you don’t need to think about with traditional petrol or diesel cars. The infrastructure and driving habits are just there, convenient and known. Electric vehicles (EVs) represent a huge step into the unknown. If your phone battery dying gives you cold chills, imagine the instinctive nightmare of a car running out of charge.
Going the distance
According to UK MOT test data, the average UK motorist drives around 20 miles a day, but business vehicles in particular will usually do far more than this. Battery technology advancements and EV ranges are steadily increasing and right now a realistic figure for many modern electric cars is a range of between 200-300 miles from a single charge, and up to 200 miles for LCVs. Outside of this range, journeys typically involve pit-stops between motorway services, where fast charging points can add a meaningful amount of range in as little as 30 minutes. The UK government has also committed a £1.6 billion fund to help make such chargers more plentiful.
This said, the question is whether you can you afford to spend 30 minutes of ‘down-time’ in an already busy schedule. If the pitstop coincides with coffee, a sausage roll from Greggs and some e-mail checking (or doom-scrolling on Facebook/Instagram/TikTok/X – whatever your poison), then yes. But, what if it doesn’t?
There can be a perceived barrier when it comes to thinking about when we will need to charge an EV. Let’s consider a couple of everyday scenarios and ask the questions:
- Do I always drive my current petrol/diesel car continuously until I’m literally running on fumes?
- Do I use my mobile until it dies before charging it up again?
The chances are the answer would be no. In both cases, we tend to top-up during our day or week. It’s a subtle psychological shift to consider that we can do the same with our EVs too. Got a meeting at the destination? Ring ahead and reserve one of the company chargers. Delivering some small deliveries in a walkable area? Put the van on charge using that kerb-side charger around the corner. There are ways and means to make the shift easier, and a little planning can go a long way.
Incentives for business
Since the government withdrew the UK plug-in car grant last year, there have been no financial incentives offered to private buyers of EVs. Meanwhile, fleet and company car buyers are offered major benefit-in-kind reimbursements if they choose an EV over a petrol or diesel alternative. This has led to a boom in EV registrations by fleet users, whilst demand for EVs amongst private buyers has fallen.
Amongst these incentives, there are:
- Capital allowances – As a limited company the purchase of a fully electric car means they can claim a first-year allowance of 100% against their corporation tax bill.
- Corporation tax and lease payments – If the vehicle is leased by the company, the monthly rentals will be included in the profit and loss account as an expense, which reduces the company’s profit and corporation tax for the year.
- Corporation tax and Hire Purchase – If the vehicle is obtained under a Hire Purchase (HP) agreement, not only will the company benefit from the 100% first-year allowance but will also make corporation tax savings on the interest on the monthly payments.
- VAT – When a company obtains an electric vehicle via outright purchase or HP, to reclaim any VAT on the purchase price of the car, it has to be driven for business use only. Commuting from home to a workplace is not business use. If the car is leased, the company can reclaim 50% of the VAT from the lease payments.
- Benefit-in-kind – As with any company car, if there is personal usage then a benefit-in-kind (BIK) will arise. The BIK rate for a fully electric car is 2% of the vehicle’s list price. This is a significant saving on the BIK for petrol and diesel cars which can be up to 37% depending on their emissions.
- Electricity expense – Electricity provided for company car drivers does not count as a benefit in kind if the journey is business use. Drivers can pay upfront for home and public charging and reclaim the costs. Alternatively, the employer can pay for everything and the driver can log private mileage (including commuting) and the costs can be deducted from their salary. The electricity expense is fully tax deductible for the company.
As well as these tax benefits of purchasing an electric car, there are also grants available on the UK Government website.
Cost
Despite these incentives, EVs are significantly more expensive than conventional vehicles, but that difference is narrowing. Looking ahead to the next decade, it’s possible that increased manufacturing volumes and competition will see this improve and prices come down. In fact, we’re already seeing increased competition in the market and new brands arriving from China that are driving down the price of EVs.
Finance options can also incentivise the flexibility and end of contract options they offer. This will be key at a time where EV technology is likely to take off as we head closer to 2035 and buyers will be able to trade up more easily.
Alternatively, the second-hand market is an option for those who don’t have the budget for new vehicles but are worried about being affected by clean-air zones. Used electric vehicles are in better supply and modern petrol and diesel models will still avoid Ultra Low Emissions Zone charges.
The long and short of it
All in all, it’s a tricky time to make decisions about vehicle ownership. Not only are there changes to what new cars will be available to buy in coming years, but other factors including the cost-of-living crisis, supply-chain issues and inflated prices, also come into play. This is where there is light at the end of the tunnel though.
The AA EV Recharge Report recently stated that it’s more expensive to drive petrol than electric, even when using ultra-rapid chargers at peak times. The average cost of charging an EV has fallen to an annual low, making it on average 3p per mile cheaper to run, even at peak rates.
With all this in mind, now is the time to upskill your teams to ensure you can make a convincing case that EV is the way to go.
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