EV Myth-busting – It’s all about the money

 EV Myth-busting – It’s all about the money

There are over 1.25 million electric vehicles (EVs) on the UK roads today but, despite growing popularity, there is still significant EV misinformation in the public domain. We’re running a series of articles to fact check some common misconceptions. First up, it’s all about the cost of electric vehicles.

Are electric vehicles really more expensive?

The up front cost of an electric vehicle can be more than its internal combustion engine (ICE) counterpart but it’s not just about comparing a combustion engine Volkswagen Golf with an electric Volkswagen ID.3. New market entrants mean more choice and the EV entry price point is decreasing. The cheapest electric car on the market right now is the Dacia Spring at at £14,995 and there are other great contenders showcased by Auto Express - all under £31,000.

Plus, it’s important to remember that business users won't pay the upfront cost anyway as the vehicle will be leased. Tax incentives mean that an EV on a business lease typically provides significant cost savings - especially compared with a personal lease contract.

This can be especially evident when looking at salary sacrifice for electric vehicles, the tax-efficient employee benefit where motor insurance, servicing, tyres and maintenance are all included in the monthly cost.

Salary Sacrifice v Personal Lease

Prices taken from Gofor salary sacrifice portal October 2024. Based on 3 year term with 5k mileage. Prices are indicative and based on vehicle availability

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For a business, it is more important to assess the overall running costs of an EV fleet, instead of focusing purely on the individual EV cost.

How do running costs of an EV compare with an ICE vehicle?

Analysis from the Energy and Climate Intelligence Unit (ECIU) found that the top 10 selling petrol cars of 2023 could cost around £700 a year more to run than their EV equivalents. We take a look at some of the individual cost elements.

How do charging costs compare with petrol or diesel refuelling?

It all depends on where the electric vehicle is charged but many people who opt for an EV predominantly use cost effective home charging.  Depending on where EVs are charged, fleets can make significant fuel cost savings as reimbursement rates currently stand at 7 pence per mile for fully electric vehicles. Bear in mind that public charging can be significantly more expensive than home or workplace charging so it is critical to understand where vehicles will be charged to get an accurate picture of fleet costs.

Charging cost comparison - EV versus petrol

Source: Energy Savings TrustJuly 2024

Do EVs cost more to maintain?

EV maintenance is different to an ICE vehicle as it has significantly less moving parts - around 20 compared with over 2,000 in a conventional drivetrain. That means fewer parts to fail or be replaced which should mean reduced maintenance and downtime. Other factors to be aware of include:

●     Ongoing Service Maintenance and Repair (SMR) costs are lower for EVs  – data from SMR provider Epyx shows that the cost for an EV during its first year is £141 compared to £199 for an ICE vehicle. By year three average costs for an EV stand at £221 versus £401 for an ICE car

●     EVs typically need less frequent servicing – service schedules vary by manufacturer but are often every 2 years or 18,000 miles, plus service costs can be around 30% cheaper

●      EV tyres can be more expensive – for optimum performance, EV tyre homologation should be observed and the same tyre should be fitted on each axle. EV tyres are often more costly which needs to be factored into fleet maintenance budgets 

What financial incentives does the government offer for EVs?

The UK government has allocated £2.5 billion in grant and infrastructure funding to support the move to electric vehicles. So, what’s available to support businesses?

Low Benefit In Kind rates

The benefit in kind (BIK) rate on an EV is fixed at 2% until April 2025, from then it will rise at 1% per year up until 2028 when it will be 5%. This represents serious savings for the business driver as the BIK rate for the worst polluting cars currently stands at 37%. The low BIK also makes EVs provided through workplace salary sacrifice schemes even more tax efficient.

Charging grants

The UK government Office for Zero Emission Vehicles (OZEV) runs a number of funding schemes to support businesses with the cost of installing workplace chargepoints:  

EV infrastructure grant for staff and fleets – aimed at small to medium enterprises (SMEs). The grant gives businesses money off the cost of wider building and installation work that’s needed to install multiple chargepoint sockets. The grant covers:

●      75% of the cost of the work

●      Up to a maximum of £15,000

●      Up to £350 per charge point socket installed

●      Up to £500 per parking space enabled with supporting infrastructure

●      You can receive up to 5 grants across 5 different sites

Workplace Charging Scheme (WCS) – is open to registered businesses, charities, public sector organisations and small accommodation businesses and provides support towards the cost of installing charge point sockets. The scheme covers:

●      Up to 75% of the total costs of the purchase and installation of charge points

●      Up to £350 per socket

●      Maximum of 40 sockets across all sites

Grant for flat owners or renters - employees without a driveway can benefit from support to buy and install an EV charging socket. The grant offers either £350 or 75% off the cost of buying and installing the socket - whichever amount is lower

Grants for plug-in vans

Some vans can be sold at a 35% discount. The seller will include the reduction in the purchase price. Plug-in vehicle grants of up to £2,500 are available for small vans and up to £5,000 for large vans until at least the end of the 2024/2025 tax year.

For further information on the UK Government grants available, visit: Zero emission and electric vehicles

Exemption from congestion and emission charges

EVs are currently exempt from the London Congestion Charge (until 25 December 2025), Ultra Low Emission Zone (ULEZ) and Clean Air Zone (CAZ) charges which can add up to substantial business savings.

Want to understand more about moving to an electric vehicle fleet?

At Gofor, we have extensive experience with the transition to electric, so we can support you in every aspect. We’ll analyse your current fleet and make recommendations on what will work for your business, getting you well underway on your electric vehicle adoption journey.  

From financial incentives available to EV v ICE running cost comparisons, we’re discussing the cost-effectiveness of adopting electric cars and vans on a daily basis with our customers. Whether it’s more electric vehicles on fleet or salary sacrifice to reward company employees, cost really shouldn’t be the barrier for companies thinking about their decarbonisation plans.

Iain Bennett, Managing Director, Gofor

Looking to get started with fleet electrification? Gofor is here to help. Our friendly team of fleet experts can provide practical advice on getting started.

To find out more about decarbonising your fleet, call us on 0345 299 0450 or learn more about salary sacrifice for electric vehicles here.

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