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Company cars - the sedate movement towards electric vehicles

Are electric vehicles a viable option for fleets?
Fleet management software for fuel or electric vehicles

According to Director Magazine, the main priorities for fleet managers are sustainability and driver safety. It seems that a range of factors have brought sustainability and the effect that driving has on the environment to the fore. Climate change, growing pressure from customers, and a vehicle tax system based on how environmentally friendly the vehicle is, being the main reasons.

It’s no surprise then that electric vehicles are quickly becoming recognised as a realistic, cost efficient alternative to traditional petrol or diesel cars for many companies. Part of the reason for this is the advancement in technology since the early models. To say it has come on in leaps and bounds is an understatement.

When it comes to costs, admittedly the upfront costs of purchasing an electric vehicle are more. However, lower running costs and the many financial incentives, such as tax benefits and funding, make the idea of going electric a viable and attractive option for many businesses.

For example, on average, it costs two to four pence per mile to pay for the electricity to fuel an electric vehicle. Compare that to 10 to 14 pence per mile for a conventional petrol or diesel vehicle.

Additionally, the tax benefits for businesses who embrace electric vehicles as their company cars include:

  • exemption from fuel duty
  • vehicle excise duty
  • company car tax
  • exemption of employees and employers from income and national insurance contributions

To combat the higher upfront costs of purchasing an electric vehicle, companies can apply to the Government for a grant towards electric cars or electric vans. They can apply for 25% off the price of an electric car (maximum of £5,000) or 20% off the price of a van (maximum £8,000).

This grant is also available to companies wishing to purchase plug in hybrid electric vehicles. Plug-in hybrid electric vehicles don’t run on electricity, instead they have rechargeable batteries that can be restored to full charge by connecting a plug to an external electric powersource. With the price of electric cars coming in at around £8,000 more than a conventional vehicle, this only goes some way to covering that extra cost.

For those who still do not want the upfront costs of purchasing a whole new fleet of electric cars, then an employee’s car could be used for business and in certain scenarios there could be taxable benefits. According to HMRC, if an employer allows electric vehicles to be recharged from a vehicle charging point at work, it can be treated as taxable benefit based on cost to the employer.

The same goes if an employer pays for a vehicle charging point to be installed at the employee’s home, or if the employer pays for fuel card of £100 per year that allows employees unlimited access to local authority vehicle charging points.

So what effect will this have on company car fleet management? Well, it would appear that as a nation we are definitely seeking out new ways to appease the environment and appear to be embracing the idea of moving towards a more sustainable way of fuelling our driving habits. If the running costs remain low and incentives continue to be offered, we could see the fleet manager’s world completely revolutionised.

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