Guides | Company Cars: The Great EV Switchover

Company Cars: The Great EV Switchover

Electric and hybrid vehicles are a hot topic in the business world right now, and one of the main reasons we’re seeing for this is the current high cost of fuel.

In fact, we recently surveyed 1,000 people in business and 86% of those with a company car (or fleet) said that this was making the move to EVs a lot more appealing – even if some aren’t yet totally convinced there are savings to be had.

Around a quarter (24%) of those polled said they’d already switched some – if not all – of their fleet to EV or hybrid models already, while 15% have introduced some BEV (full battery) and PHEV (plug in hybrid) models but plan to increase this further.

EV switchover

An additional 15% are in the process of making the switch to an entirely EV or hybrid company car fleet. 

We also found that businesses in Sheffield (21%), Manchester (15%), Liverpool and London (14%) are the most likely to already have an entirely EV / hybrid fleet already, as well as those operating in the finance sector (31%). 

 

Take up of the Benefits in Kind Scheme is down overall, but up for ULEVs

 

In the most recent annual figures, there were 8% fewer vehicles provided to employees by employers under the government’s ‘Benefits in Kind’ scheme. 

However, there were 15,000 more ultra-low emission vehicles (classed as 75 g/km or below) provided under the ‘Benefit in Kind’ scheme – which was a 25% year-on-year increase. 

Benefit in Kind scheme

While tax has to be paid by the employee on any vehicle provided under the ‘Benefit in Kind’ scheme, this is just 2% for ultra-low emission vehicles – and the tax rate has been frozen until at least 2025. This in itself can be a tempting tax saving as it can make a significant difference to an individuals’ monthly take-home wages. 

However, it is worth keeping in mind that the value of EVs can be higher than petrol or diesel models, so while the tax rate is lower as a percentage the total cost may not work out as less. 

Benefit in Kind (BIK)
Vehicle CO2 (g/km)  Electric Charge Range  BIK tax 2022/2023 
0 2%
1-50 130+ 2%
1-50 70-129 5%
1-50 40-69 8%
1-50 30-39 12%
1-50 <30 14%

 

We’d recommend reviewing your options and comparing the tax brackets for EV and similar petrol/diesel models, as that can really help you to see the potential savings. 

Electric Car BIK Tax bracket  Petrol/Diesel Equivalent BIK Tax bracket BIK Tax (20%) difference EV v Petrol/Diesel 
VW ID.3  2%  VW Golf 8 Life 2.0 28% £1,287 
Nissan Leaf 40  2%  Ford Focus 1.0 31% £1,294 
Tesla Model 3 Saloon  2%  BMW 320i M Sport  35%  £2,341 
BMW i4  2%  BMW 4 Series  37%  £2,489 
Mercedes-Benz EQC  2%  Mercedes-Benz GLE  37%  £4,590 
Hyundai Ioniq 5  2%  Hyundai Tucson 1.6  37% £1,784
Skoda Enyaq iV 80  2%  Skoda Kodiaq SE 1.5  35% £1,797 
Fiat 500e  2%  Fiat 500  28%  £951 
Jaguar I-Pace  2%  Jaguar F -Pace  37%  £4,247 
Mini Electric   2%  Mini 3dr Hatch cooper S classic  29%  £1,001 
Average  2%  33%  £2,178.10 
Car keys

Barriers to switching remain 

While uptake is good, just one in seven (15%) of those we surveyed have (or had) absolutely no concerns about switching their fleet to EV / hybrid models. 

Businesses in Bristol (25%), Manchester and Cardiff (21%) are the most likely to have no concerns about switching their fleet to BEV or PHEV models, and Company Directors are the least likely to be worried about this too (8%). 

However, of those businesses with fleets, the main barriers to switching to EV / hybrid models have been or are: 

  • Concern about access to charging points (31%) 
  • Concern that insurance costs would be higher than for petrol / diesel models (25%) 
  • Concern that leasing costs would be higher for EV / hybrid models (24%) 
  • Concern that running costs would be higher for EV / hybrid models (22%) 
  • Concern that repair costs would be higher for EV / hybrid models (20%) 

Access to EV charge points is better than many may expect 

Three in ten (31%) may be worried about how easy it is to charge up an EV, but over half (53%) of those we surveyed said that they already have access to one or more charge point at their workplace. 

EV charging points

Employees in Bristol (68%) and London are the most likely to have access to at least one EV charge point at their workplace, while if we look at this on an industry-by-industry view it’s those in recruitment and HR (84%) and transport and logistics (76%) who appear to be most likely to be able to ‘power up’ an EV at their place of work. 

Employees in Glasgow (65%) are least likely to have access to a charging point at work though. 

Introducing new charge points is being encouraged too, and the government’s Workplace Charging Scheme can help with costs – it covers up to 75% of the cost for electric car charge point installation and £350 per socket for up to 40 sockets. 

We calculated that, based on average weekly mileage (115.4), a single standard EV charge point (7-22kWh) could service around 16 employees per week – and that’s assuming they only charge up at work. It’s highly likely that many would power up their EV at their local supermarket or even at home too.  

It’s easy to find a list of public EV charge points in your area using Zap Map. Their database is being regularly updated, and the website also features guidance on the average price to charge up, as well as a useful public charging cost calculator tool.

EV recharging points

Leasing EV models doesn’t have to cost more

While the cost of vehicle hire naturally varies a lot depending on the model you choose, there are some very affordable EV and hybrid options out there. 

The Nissan Leaf 40 for example can be leased for around £46 less per month than the similar Ford Focus 1.0 ecoboost, and the Mini Electric Level 2 can be least for around £30 less per month than its petrol equivalent. 

That said, due to the overall cost of ULEVs typically being higher the leasing cost can be more. When comparing popular EVs with petrol and diesel models, we estimate that at this time the average annual leasing cost could be around £679 more when choosing a low-emission options. As always, it’s worth doing your homework and asking the experts. 

Electric Car Leasing Cost Per Month  Petrol/Diesel Equivalent   Leasing Cost Per Month  Price Difference EV v P/D  % Difference EV v P/D 
VW ID.3  £354 VW Golf 8 Life 2.0  £258   £96  31% 
Nissan Leaf 40 kWH   £240   Ford Focus 1.0 ecoboost  £286   -£46  -17% 
Tesla Model 3 Saloon   £486   BMW 320i M Sport  £415   £71  16% 
BMW i4   £525   BMW 4 Series  £480   £45  9% 
Mercedes-Benz EQC   £681   Mercedes-Benz GLE  £660   £21  3% 
Hyundai Ioniq 5   £380   Hyundai Tucson 1.6  £254   £126  40% 
Skoda Enyaq iV 80  £381 Skoda Kodiaq SE 1.5  £289   £92  27% 
Fiat 500e    £232   Fiat 500  £166   £66  33% 
Jaguar I-Pace    £629   Jaguar F -Pace  £504   £125  22% 
Mini Electric Level 2  £269  Mini 3dr Hatch Cooper S Classic  £299   -£30  -11% 
Average   £418    £361    £57   15% 
Annual Average     £5,012    £4,333   £679 

Insurance for EVs is also typically only marginally more expensive 

According to the latest Car Insurance Price Index figures from Admiral, EV drivers should currently expect to spend a little extra on their insurance, with the national average price for electric cars coming in at £619 per year, which is 12% more than the average across all car types (£552.67). 

There is good news for EV drivers though, as there was an 11% decrease in the average premiums in April, which implies that this disparity in insurance prices between ULEV and petrol/diesel models will even out over time. 

There are affordable options available for EV drivers too, with the electric Fiat 500 having an average annual premium of £363. This was followed by the Volkswagen ID at £381 and the electric Mini Cooper at £419. 

We’ve compared average insurance costs for a few other popular models to give you an indication of what to expect. 

EV Annual Insurance Premium Price  Petrol/Diesel equivalent  Annual Insurance Premium Price  Difference  % Difference 
Tesla Model 3 Saloon  £865.88  BMW 320i M Sport  £639.81  £226.07  30% 
Nissan Leaf 40kWH  £491.47  Ford Focus 1.0 ecoboost  £537.31  -£45.84  -9% 
VW iD.3  £380.81 VW Golf 8 Life 2.0  £586.63  -£205.82  -43% 
Car models

EVs can often work out cheaper to run

Just 12% of those we surveyed are confident that running an EV would definitely work out as cheaper.  

Businesses in Newcastle (22%) are the most likely to think that running EV / hybrid models wouldn’t work out cheaper, while people in very senior roles (Director and Chief Office Level) are the least likely (6.3% and 4.5%) to be of this mindset. 

ev models more appealing

While fuel cards can save businesses money ‘at the pumps’ on their petrol and diesel costs, and can also make business admin easier, we’re seeing that further cost savings can be made if businesses are open to switching to EV and hybrid vehicles. 

Rising fuel costs are a concern for many, so it’s worth exploring what options could be best for you and your business, based on the models you want to run and the mileage you use. 

When looking at average annual mileage (6,000) and current fuel and energy prices, we estimate that employees and businesses alike could save as much as £904 on their annual (per vehicle) fuel costs if they swapped a petrol vehicle for a BEV (full battery), while switching from a diesel model could save £775 per year. 

Overall, using a rapid charge point costs around 7.4p per mile at this time, and a slower at home / workplace charger is around 7.6p per mile. 

In contrast, current fuel prices mean that a single mile in an (unleaded) petrol vehicle costs around 20p and it’s around 19p per mile for vehicles run on diesel. 

Fuel Type  Cost Per Mile  Fuel cost savings per mile (electric) Fuel cost savings per 200 miles (electric)  Fuel cost savings per year (electric) 
Unleaded  £0.209  £0.134  £26.70  £904 
Diesel   £0.190  £0.114  £22.84  £775.20 
Cost of charging an electric vehicle
Type of charging  Miles  Full charge cost  Cost per mile  Notes 
Home  200 £15.12  £0.076  Additional one-off installation cost (grants available). Costs are calculated based on  28p/kWh (UK average) and a usable battery (~54kWh) charged to 90%. 
Rapid charge points  175 £13  £0.074  Based on 26p/kwH (most pod point chargers), charging 50kwh 
Charging at work   Employers may install workplace chargers and offer free access 
Supermarkets  Often offer free charging while shopping (not including rapid chargers) 

Other cost-saving considerations with EVs

In addition to potentially lower leasing and running costs – depending on the model you choose, your mileage and how you opt to ‘power up’ – there are other cost-saving considerations to keep in mind with EVs and hybrid cars. 

Many electric cars are exempt from road tax, which could save you an average of £154 per year, according to AutoExpress.

Vehicle Tax 
Pure electric cars  Exempt 
Hybrid cars  £0-£135 depending on CO2 levels 
CO2 emissions below 100g/km and registered between 1/3/2001 and 31/3/ 2017
Exempt 

 

Again, when looking at other specific models the price saving on road tax alone can be even more than you may expect. 

Electric Car  Road Tax  Petrol/Diesel Equivalent   Road Tax 1st Year  Road Tax Standard 
VW ID.3  0  VW Golf 8 Life 2.0  £190  £165 
Nissan Leaf 40  0  Ford Focus 1.0  £190  £165 
Tesla Model 3 Saloon  0  BMW 320i M Sport  £230  £520 
BMW i4  0  BMW 4 Series  £575  £510 
Mercedes-Benz EQC  0  Mercedes-Benz GLE  £1,420  £520 
Hyundai Ioniq 5  0  Hyundai Tucson 1.6  £585  £165 
Skoda Enyaq iV 80  0  Skoda Kodiaq SE 1.5  £945  £165 
Fiat 500e  0  Fiat 500  £190  £165 
Jaguar I-Pace  0  Jaguar F -Pace  £585  £510 
Mini Electric Level 2   0  Mini 3dr Hatch Cooper S Classic  £190  £165 
Average   0  £510  £305 

 

ULEVs are also exempt from the central London congestion charge, which is currently set at £15 per day. 

Our conclusion

Of course, every business is unique and therefore there is no hard and fast rule about if EV or hybrid vehicles could save you money. However, our research indicates that there are cost savings to be made in some specific areas. 

When factoring in BiK tax savings, employees could save over £2,700 per year by leasing and running an EV. 

Electric Car Savings  £s Per Year 
Benefit in Kind Tax Saving (Average)  £2,178 
Fuel savings (Petrol – Average mileage)  £904 
Leasing (EV v comparable Petrol / Diesel models)  -£679 
Insurance (EV average v Petrol / Diesel average)  -£67.2 
Road Tax (Standard annual – Petrol / Diesel average)  £305 
Total £2,641 

 

Even if we remove the Benefits in Kind tax element, there is still a potential saving of over £460 per year to be found. 

Not including BiK 
Electric Car Savings  £s Per Year 
Fuel savings (Petrol – Average mileage)  £904 
Leasing (EV v comparable Petrol / Diesel models)  -£679 
Insurance (EV average v Petrol / Diesel average)  -£67.2 
Road Tax (Standard annual – Petrol / Diesel average)  £305 
Total £463 

 

If you would like advice on electric vehicle hire, vehicle insurance or even fuel cards and telematics for your fleet, please get in touch with us and we’d be happy to offer our advice on what may be the best route for you. 

Complete our contact form, or give us a call on 03301247644.

Sources & methodology