Organisations and employees who are prepared to make the change to driving electric vehicles (EVs) are poised to save some serious cash. That’s thanks to the fast pace of technological change, significantly lower electricity costs and advantageous tax breaks.
Yet cost is one of the most often cited reasons not to take up a new EV.
In this article we explore why people are stuck in the EV = expensive mindset and the advances that are about to make EVs cheaper to drive than petrol or diesel cars.
Why were electric vehicles more expensive in the past?
When the first EV drivers are Hollywood stars like Leonardo Dicaprio, you know it takes serious cash to drive one. But that was way back in the early 2000s. Today, EVs are much more financially accessible.
Previously, EV costs were high in large part due to the expense of producing batteries. However, technological developments and mass production means better batteries can now be produced for a fraction of the cost. Electric batteries also last much longer than originally thought. This means the upfront cost of an EV depreciates over a longer time, significantly lowering the vehicle's total cost of ownership.
Also, because EVs don’t have a combustion engine, these cars require fewer parts. For example, Tesla states that combustion engines with multi-speed transmissions have hundreds of moving parts which require regular maintenance. According to Marketwatch, Tesla says: “its drivetrain has about 17 moving parts compared with about 200 in a conventional internal combustion drivetrain.”
Cheaper batteries and fewer parts have resulted in tumbling EV prices. Experts predict EVs will cost less to buy than a combustion engine vehicle by 2022. Yes, slightly higher prices mean bigger P11D values which, all things being equal, would mean more tax to pay on an EV than a petrol or diesel car. However, there are lots of ways that EVs save organisations and drivers money, as we explain.
Don’t just look at P11D value - consider whole of life cost
Driving an EV isn’t just great for the planet - it’s great for your pocket too. Tusker EV drivers save an average of £750 per year on fuel. Why? Because it costs 77% less to charge a car to drive 100 miles than it does to add petrol or diesel to cover the same distance. Imagine reducing your fuel bill by 77% each year - how much could your employees save?
Now consider what this could mean for your organisation. Forget 12-22p per mile for combustion engine company cars - EV mileage rates are currently set at 4p per mile. And That’s a huge drop.
Electric cars are also more reliable than combustion engine vehicles, meaning more time at work and less time at the garage for staff .
The other major saving for EVs are the new HMRC tax rules. From April 2020 onwards, the lowest emitting vehicles will attract a BIK rate of 0%. Saving both businesses and employees significant amounts of money over the course of the lease.
Another major factor in the cost of EV company cars is the cost of the lease. Working with the UK’s leading employee benefit car scheme provider gives you lower lease prices thanks to our superior purchasing power.
If you found Part 1 helpful, please see the links below to our other chapters:
Part 2: Overcoming the barriers: Range
Part 3: Overcoming the barriers: Choice