The costs of owning an EV are very different than those associated with conventional vehicles. Upfront capital costs (purchase price) tend to be significantly higher than for petrol and diesel models, whereas running costs (fuel, maintenance, car tax) are much lower.
For outright purchases, it is generally thought that electric vehicles are more expensive to buy than their petrol or diesel equivalents. This picture is changing with increasing competition among manufacturers as more models come to market. Prices have been high due to battery costs and the R&D investment.
To help make the car purchase offer look more attractive, some manufacturers sell the vehicle excluding the battery, which is then leased on an additional monthly contract. Make sure you include this cost in any forecasts you prepare.
Whole Life Costs
Whole life costs are already equal to or lower than petrol or diesel cars in many applications. Accelerated testing suggests that high quality traction batteries will probably have at least 80% of their initial capacity after 7-10 years. It is too early to say how an aging electric car and van fleet used on real roads will perform in a decade from now.
Fleetdrive Electric can help with whole life cost comparisons for all electric cars and vans, as well as conventional cars and vans. Please contact us to review your choices.
As electric cars and vans tend to have a high purchase price but low running costs, leasing is often a better proposition – indeed, some models (or battery packs) are only available on lease for this very reason. Also, leasing removes the uncertainty about resale value. Read more about Vehicle Leasing and Contract Hire.
Businesses looking to add electric vehicles to their fleet can benefit from our new flexi-lease, a commitment-free way to try before you buy.
Criteria to be eligible for a Plug-in Grant:
A number of government incentives are now in place for electric cars and vans aimed at reducing whole life costs. Introduced in January 2011, the Plug-in Car Grant subsidises the purchase of qualifying battery electric and plug-in hybrid cars worth 25% of the capital cost up to a maximum of £5,000. See the full list of eligible vehicles here.
Both private car buyers and fleets are eligible to receive the plug-in grant, which is administered by the Office for Low Emission Vehicles (OLEV) – no application forms are required as the dealership completes all the necessary paperwork on the buyer’s behalf and the grant is automatically deducted from the vehicle price at the point of purchase.
Other than the plug-in grant, three incentives can significantly reduce the costs of running an electric vehicle;
- Zero-rated car tax (Vehicle Excise Duty)
- Zero-rated fuel tax (electricity only attracts 5% VAT)
- Greener Vehicle Discount on the London Congestion Charge.
Electric cars and vans are exempt from Vehicle Excise Duty (‘car tax’). Owners of electric vehicles will therefore save around £130 per year compared to an average conventional petrol or diesel car (VED Band F).
Fuel & Running Costs
Fuel costs are also very low due to the competitive price of electricity (fuel duty is zero-rated) and to the high efficiency of the vehicles themselves. Fuel costs can be as low as 2p per mile (depending on tariff). For an annual mileage of around 10,000 miles per year, switching from a conventional to an electric car or van could save you around £800 in fuel costs alone.
For drivers in and around London, the other major running cost to consider is the Congestion Charge. All electric cars currently receive the full Greener Vehicle Discount on the London Congestion Charge (although vehicles need to be registered and pay an annual £10 fee). With a £10 payable daily charge, this could provide a potential annual saving of over £2,000.
- Currently 100% capital allowance against profits for corporation tax in year one for an electric vehicle (only if on approved list) purchased.
- Electric cars and vans have ZERO Road fund License
- Company car drivers benefit from ZERO benefit in kind for ZERO tailpipe emission vehicles.
The Energy Saving Trust have produced a useful animated guide to help you decide which type of vehicle would be your most practical choice for a company car. It outlines which vehicle technologies are likely to be most suitable for different daily driving routines, and also explains how choosing a suitable low emission vehicle could save you money in company car tax and fuel for private mileage.