The transition to electric vehicles (EVs) has accelerated rapidly. For the 12 months to July 2023, Europe saw a surge of 62% in EV sales, while diesel sales dropped by 9% (European Automobile Manufacturers Association (ACEA). In addition to sustainability gains, the switch to an electric fleet offers numerous benefits to businesses – yet many fleet managers still face barriers to adoption, with the cost of acquisition a major concern.
Here, we explore
The cost of investing in EV fleets for business
For many fleet managers, the cost of investing in an all-electric fleet is high on the list of barriers. However, the government’s sustainability plans include a number of financial incentives to encourage businesses to invest in electric fleets.
Capital allowances on new EVs
The capital cost of a new EV is currently more than a petrol or diesel car. However, new electric cars and zero-emission goods vehicles qualify for 100% of first-year capital allowances. In short, this means that businesses can deduct the total cost of the vehicles from their profits, reducing their overall tax bill.
Favourable company car tax for EVs
Company car tax is favourable for EVs at only 2%. It is worth noting that this is set to rise 1% each year, to a maximum of 5% in 2028. Meanwhile, however, the most polluting cars will pay 37% company car tax in 2028. This article from Car Wow explains more about how to work out the tax payable on cars with varying emissions.
Plug-in vehicle grants
- Businesses may be able to get a discount on the cost of certain vehicles through various government grants. These include:
The plug-in vehicle grant, which can reduce the initial outlay significantly. - The Workplace Charging Scheme (WCS) covers up to 75% of the total costs of the purchase and installation of EV charge points.
- The Electric Vehicle Infrastructure Grant for staff and fleets provides small and medium-sized businesses money off the cost of installing electric vehicle chargepoints and supporting infrastructure for staff and fleet vehicles.
- Some local councils offer EV grants in addition to national funding.
VED and Congestion Charge exemption for EVs
EVs are also exempt from vehicle excise duty (VED), vs the current annual flat rate of road tax of £180 for the 2023/2024 tax year. Low and no-emission vehicles are also exempt from congestion charges offering another saving for businesses that operate in cities with low-emission zones, such as Bath. Birmingham. Bradford, Bristol, Portsmouth, Sheffield, Tyneside (Newcastle and Gateshead) and of course the London Ultra Low Emissions Zone (ULEZ).
The switch to electric fleets – revolution or evolution?
There is a lot of talk about the EV revolution, suggesting that the switch to EV fleets is an all-or-nothing strategy. The reality is, for most businesses, that the changeover will be more of an evolution than a revolution – a slow and steady replacement of vehicles as they reach the end of their service life or contract.
This transition means that many businesses will have mixed fleets – some electric vehicles, and some traditional petrol or diesel. The key to a successful transition is to undertake a cost-benefit analysis and assess your business needs – tools like this cost calculator from ZapMap can help. It can also help to work with a fuel card provider like The Fuel Store, which covers both traditional fuel cards and EV charge cards, ensuring continuity of process for all drivers, regardless of their vehicle type.
EV fleets offer lower maintenance costs
Electric vehicles typically have far lower maintenance costs. Data from the comparison site Book My Garage shows that maintenance bills for EVs are up to 43% lower than those for alternatively fuelled vehicles. When compared to an internal combustion engine found in a diesel or petrol vehicle, an electric vehicle has far fewer components. Diagnostic computer reports replace manual checks, and oil filters aren’t required – reducing the overall servicing time and cost.
EV purchase costs are reducing
Some external forecasts predict that EVs could be around the same price to purchase as a petrol or diesel car by 2035. The sale of new pure-diesel cars and vans will be banned in the same year, with diesel lorries being phased out – making EVs an increasingly attractive proposition for savvy fleet managers.
EV fleet charging infrastructure
Infrastructure for EV charging is expanding rapidly. With the government focused on the transition to zero emissions, the Plan For Drivers (published Oct 2023) has been designed to support the transition to EVs. This includes:
- Accelerating the grid connections and approvals process for EV chargepoints.
- Widening eligibility of EV ChargePoint grants.
- Making private chargepoint installation cheaper and easier.
- Working with industry to myth-bust concerns about EVs.
This commitment to further improving EV charging infrastructure should help to allay any concerns about EV battery range that some may think will impact fleet management. It is also crucial that fleet managers provide users with an easy way to access an expansive charging network to pay for charging costs. An EV charge card like Paua offers extensive coverage, providing a simple way for businesses to ensure that charging is simpler for drivers.
EV fleets and ESG
One of the primary drivers behind the transition to EVs is the reduction of carbon emissions. Traditional vehicles powered by fossil fuels contribute significantly to air pollution and climate change. By opting for EVs, businesses can significantly lower their carbon footprint and contribute to a cleaner, greener future. Consumers are increasingly favouring businesses that adopt sustainability goals, with research showing that 73% experience sales and marketing benefits, while 43% see growth in production, sales or revenue.
Get in touch to find out how ourrange of Fuel Cards and fleet management solutions, including the Paua EV Charge card, can help support efficient fleet management during the transition to EV.