Why aren’t you running electric vehicles yet?

You may be surprised to learn that 40% of all the vehicles ordered via KeyFleet post lockdown have been electric – at least plug-in (PHEV) or traditional hybrid. 

Electrification of vehicles just cannot be ignored anymore and in fact, considered correctly, can be a fantastic way for businesses to reduce motoring costs, potentially saving hundreds or even thousands of pounds each year.

But why the increased interest in electric? Well, this isn't an overnight sensation. Electric vehicles have been around since before Tesla boss Elon Musk was even born, but the international commitment to reducing greenhouse gas emissions and incentives through taxation for employers and employees alike, plus the development of cutting-edge technology, has allowed the electric vehicle industry to really plant a flag in the market. 

In April this year the new 0% BIK (benefit in kind) tax rate arrived with much fanfare in the industry and preceded a queue of drivers looking to convince their employer to invest in this technology to allow them to reduce their monthly company car tax bill to zero. 

Even drivers currently receiving a cash allowance, or reclaiming fuel using the AMAP rates (45/25p), should be better off by returning to a more traditional, but electrified, company car. 

New car registration figures published by the Society of Motor Manufacturers and Traders show that for the year to date up to July there has been an increase in fully electric vehicle sales of 175% over 2019. 

Electrification can save a businesses hundreds or even thousands of pounds

In addition, plug in hybrids are up by 59% and mild hybrids are up by 97% whilst petrol and diesel sales are down 47% and 61% respectively for the same period. 

In fact, Tesla was the best-selling vehicle in May (albeit in a depressed market) due to innovations around contactless delivery in addition to their growing popularity.  

At first glance, electric vehicles look more expensive than their counterparts – and that’s correct. But you must get past the acquisition cost and drill into the savings on running costs and taxation. 

Not only do drivers currently benefit from a 0% BIK rate but businesses can save 100% on NI contributions, access 100% first year write downs on ownership or 100% capital allowances on lease rentals in addition to the undeniable fuel and also maintenance cost savings.  

In our experience an expectation of £1,000pa savings for both the driver and the business for each vehicle on fleet is not unrealistic with high mileage, higher taxpayers saving even more.  

Electrification isn’t for every business or every driver, but with the undeniable potential for savings for some users what is clear that every business should at least consider making the switch – and quickly.

  • To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.