Electric Car

Should my business buy electric vehicles?

Once a far-off twinkle in the eye of businesses’ management teams, electric vehicles are charging their way to the forefront of the automotive industry and, thanks to developments from pioneers like Tesla, are providing a more attractive prospect for commercial use.

Ulrich Spiesshofer, The CEO of ABB (the world’s largest supplier of fast-charging points), has been in the news this week warning of the strain on the UK’s electrical grid that will come with the planned improvements to the Electric Vehicle (EV) charging point infrastructure.  This is the sort of practical problem the world is starting to contend with as it moves towards a future of ‘e-mobility’ and is another clear signal that the once niche electric vehicles market is maturing.

With financial incentives galore, is it the right time for your business to invest in electric vehicles?

The pros and cons

Pros:

  • Despite a higher initial outlay, electric vehicles are cheaper to run. The average cost of charging an electric car overnight for a 100 mile journey is under £4 – considerably less than a petrol equivalent.
  • Preconceptions held about driving an electric vehicle often involve the word ‘milkfloat’. In reality, electric vehicles benefit from a better power-to-weight ratio than cars with engines and hence are genuinely quick.  Officially, fastest production car ever to reach 60mph is now the Tesla Model S P100D.  Just make sure your staff are driving safely!
  • Maintenance is much simpler for electric vehicles because their motors only consist of one major moving part: the ‘shaft’. This makes maintenance cheaper and less frequent.  Car batteries are expected to maintain performance well over 100,000 miles, until the battery loses its ability to hold charge.  Unfortunately, this can currently get very expensive to replace, but the price of doing so is on the way down as battery technology matures.
  • Owning electric vehicles should give bosses a warm, fuzzy feeling as they take a significant chunk out of the company’s direct carbon footprint. It can send the right public message about a business’ priorities when its staff drive carbon-conscious vehicles.

Cons:

  • The ever-present limited range argument. Electric vehicles actually perform better in stop-start environments from a fuel-saving perspective – the opposite of petrol cars.  A long motorway journey could be considered the EV’s Achilles heel.  This issue is slowly improving, however.  The rapid progression of the UK’s electric charging network and rising number of superchargers means that a previously perilous hop between sparse charging points is getting much easier.  Coupled with rapid advancements in battery longevity (many Teslas quote a range of over 300 miles on one charge), this long-standing objection is slowly evaporating.
  • The up-front cost of an EV is considerably more than a petrol-powered car of similar class. This is (slowly) on the way down as more options enter the market.  There is also limited variety available, with large price gaps between a mid-priced Nissan LEAF and a Tesla Model S.
  • How annoying is it when the battery on your smartphone wears down and starts to require charging every day? The same thing happens to an EV battery, albeit much slower.  This shouldn’t happen until at least the 100,000 mile mark, but the technology is still very young in the grand scheme of the industry, meaning that performance information on genuinely old electric cars being used by the public is hard to come by and difficult to apply to an average car.

Financial incentives

In the UK there are a number of attractive incentives to take advantage of, which are helping drive a traditionally expensive option into the motoring mainstream:

  • 100% First Year Allowance for business owners available until April 2021.
    • The Enhanced Capital Allowance (ECA) scheme offers 100% first-year allowance for investments in certain energy saving machinery. You can write this cost off against your year’s taxable profits.
  • UK Plug-in Car Grant of up to £4,500.
    • The government defines grant-eligible vehicles in seven categories, each of which benefits from a different level of contribution towards their costs. Popular electric vehicles such as Teslas and Nissan LEAFs qualify for 35% allowance, up to a maximum of £4,500.  See all categories here.
  • Exemption from the London congestion charge through the Ultra Low Emission Discount (ULED).
  • In Scotland, you can access an interest-free loan towards the cost of a plug-in vehicle
    • Transport Scotland funds interest-free loans up to a value of £100,000 to Scottish businesses wishing to reduce their travel costs. It is possible to claim up to £35,000 for each purchased vehicle.

Conclusion

The evolution of the EV is certainly picking up momentum in 2018.  The new iteration of the Nissan LEAF, the world’s best-selling electric car, will be released this year with vastly improved performance, taking its range comfortably over the 200 mile mark.  Meanwhile, the stunning performance numbers coming out of Tesla are suddenly stimulating demand for e-mobility.  With this comes more sales and more R&D, propelling both the innovation in the sector and improvements to charging infrastructure.  The obstacle of poor range and zig-zag journeys between charging points is quickly becoming a thing of the past, meaning your staff are less likely to get stranded on their way to a meeting any significant distance away.

Funding is currently available to aid the currently expensive initial purchase, which is another major positive.  But it is worth remembering the government’s direction changes with incentives for other carbon-reduction technologies such as the Solar PV Feed In Tariff (FIT), which dropped to a fraction of its previous level once more businesses and consumers started to install panels on their homes.

The cost of maintaining an electric fleet is cheaper than a petrol or diesel one, while it reflects well on the business which owns it, especially if the vehicles are branded up in explanatory livery.

Every business has different circumstances and EVs are certainly not right for everyone yet, but significant developments in the industry (see Jaguar Land Rover’s commitment to make only electric or hybrid vehicles from 2020) are now bridging the gap and giving businesses more options.

A cheaper-to-run fleet is also a major incentive, while the funding available at the moment should be taken advantage of while it lasts.

For the latest news and developments in the business and energy world, please visit the Great Annual Savings blog. 

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