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Is now the time for an EV company car?

  • Electric cars becoming more popular with private buyers
  • We weigh up the pros and cons for company car drivers
  • Should you choose one and how much will it cost you?

The future of motoring is all self-driving electric hover cars and strange alternative fuels, isn’t it?

Whether we’ll be driving these in the next couple of years is debatable, but the growth in popularity of the electric and hybrid car can't be refuted – 22.3% more alternative-fuel vehicles were bought between January and May 2016 than the same period in 2015, and more than 10,000 were registered in the first three months of 2016.

For an even more polarised view, no alternative-fuel vehicles were registered in the UK in 2006, compared with more than 72,000 in 2015.

This begs a question, then: if electric cars are becoming more popular with private buyers, does it make sense for company car drivers to take the plunge and opt for battery power? More to the point – will your fleet manager light up at the thought of an EV or pull the plug?

Electric cars – all you need to know

There are all kinds of names for low-emissions vehicles, so we’ll clear up any confusion – electric vehicles (EVs) run purely on electricity alone and require charging to get around. There are also plug-in hybrid electric vehicles (PHEVs), which use a conventional engine in combination with electric motors, but we’ll go into more detail on these later.

If you were to think of electric cars, the Tesla Model S and Nissan Leaf are probably the first that spring to mind, and with good reason. Nissan has sold more than 200,000 Leafs worldwide, while the Tesla has made electric cars cool with the sleek Model S and its ‘Ludicrous’ driving modes.

The sticking point with most potential electric car buyers is that the cars need charging more regularly than a petrol or diesel car needs filling up with fuel. For some, it works a treat, because you can charge it up at home overnight via a normal plug socket or dedicated wall charger, and at work if you’ve got the ability to do so.

Based on the way most of us use our cars, an EV would slip into everyday life quite well - but do they make sense for company car drivers? Read on as we weigh up the pros and cons…

Pros

The key benefit of running an electric car for company car drivers is the low running costs. Charging the car up costs significantly less than filling up with petrol or diesel, especially if you do it overnight taking advantage of off-peak energy rates. It’s an even better story for Tesla owners – they have use of the brand’s Supercharger public charging network absolutely free of charge.

Ultra-low emissions vehicles (ULEVs) are eligible for grants from the UK government based on CO2 emissions. Electric vehicles don’t emit anything, so you’ll get the full grant of £4,500 off the price of an EV if you're a private buyer, while most PHEVs are eligible for a £2,500 grant. Company car drivers pay a different price - the P11D price. 

ULEVs (less than 75g/km of CO2) also bring exemption from the London Congestion Charge, so you’ll save yourself £11.50 a day if you work within the charging zone in the capital – that’s a saving of nearly £3,000 a year if you drive to work every weekday.

Another thing working in an electric car’s favour as a potential company car is the low benefit-in-kind (BIK) tax rate it offers – electric cars sit in the lowest seven percent bracket, attracting the lowest monthly payments of any type of car.

Cons

So what are the downsides? Firstly there’s the issue of range anxiety - something that afflicts private buyers as well as potential company car drivers.

EVs like the Nissan Leaf can manage up to 155 miles on a full charge according to official claims, while the BMW i3 has recently been boosted to 195 miles, although you're likely to get much less in real world driving conditions. You’ll need something like a Tesla Model S to get more than 250 miles on a charge, so it’s clear an EV isn’t the right option if you’re sitting on the motorway eating up the miles on a daily basis. For a bit of context, the most economical versions of the Hyundai i40 and Peugeot 508 are just a couple of cars that'll go more than 1,000 miles on a single tank of diesel if you drive carefully.

This shortfall in range is supplemented by the fact you’ll need to factor in the charging time. If you use the car solely for driving in town and don’t have a long commute, an EV could make sense – you can charge it when it’s parked up so you don’t have to interrupt your journey with time-consuming charging.

An electric car has a higher price than a conventional petrol or diesel car too, meaning its P11D price is higher, but this is offset by the zero CO2 emissions rating which puts it in the lowest 7 percent company car tax band. Your fleet manager might need more convincing than you do about the extra up-front outlay, though.

 

What about plug-in hybrids?

If the issue of range anxiety is the only thing stopping you from taking the plunge, a plug-in hybrid could be the answer.

With the combination of a conventional petrol or diesel engine and battery power, you benefit from more time between fuel stops, no electric range anxiety and running costs that are far lower than pure petrol and diesel cars – at least in terms of BIK charges.

Plug-in hybrid cars like the Volkswagen Golf GTE, Audi A3 e-tron and popular Mitsubishi Outlander PHEV have higher purchase prices when compared with their diesel counterparts due to the high-tech powertrains, but these batteries and motors are the reason they, in theory, cost so little to run.

To illustrate the saving company car drivers could benefit from, we’ve put together some comparisons of conventionally-powered cars with their plug-in hybrid sister cars, which you can pore over below.

You’ve probably seen plenty of Audi A3 Sportbacks going up and down the motorway, most probably in £22,730 1.6 TDI SE Technik spec, a trim level aimed at company car drivers. This model will cost a company car driver £76* a month at the basic 20 percent rate, moving up to around £153* per month at the higher 40 percent rate.

The A3 e-tron plug-in hybrid has a list price of around £13,000 more than the 1.6 TDI, but has monthly payments of £41* and £81* for 20 percent and 40 percent tax payers respectively.

Another option is the Mitsubishi Outlander. The regular version is powered by a 2.2-litre diesel engine and, in mid-spec GX3 trim, costs £129* per month at the 20 percent rate and £258* per month at the 40 percent rate.

Go for the PHEV version in the same spec, though, and monthly payments drop dramatically to £40* and £80* respectively. There’s less of a price gulf between these two models in terms of on-the-road price compared with the Audi, too.

Then there's the ever-popular BMW 3 Series. In efficient 320ED Plus form, low CO2 emissions mean a low 19 percent BIK rate, while it costs £30,670. The plug-in hybrid 330e SE costs £33,935, but this comes down to £31,435 when the government grant is applied. This makes it a very close-run thing in terms of price, but the 7 percent BIK rate means monthly payments are half that of the diesel, at £39.50* and £79* for 20 and 40 percent tax payers respectively. 

It’s clear then that plug-in hybrid versions of cars are significantly cheaper to run for a fleet user than the petrol or diesel counterparts. How do electric cars stack up?

Nissan Leaf

In top-spec Tekna trim with the latest 30kW battery, the Leaf will cost company car drivers £37* per month and £74* per month on the 20 and 40 percent tax rates respectively.

BMW i3

Monthly costs for the distinctive BMW i3 electric car are roughly the same as the Nissan Leaf - £36* per month at the 20 percent rate and £72* at the 40 percent rate. The i3 Range Extender is only marginally more expensive, but boasts greater range thanks to the petrol-powered generator to keep the batteries topped up with juice.

Tesla Model S

You’ll need to be quite a high-flying member of staff to consider a Tesla Model S as your company car (the cheapest one costs £58,335), but we’ve included the details of monthly payments anyway – there will be plenty of people out there considering something like this as their company car. At the 20 percent rate, it costs £68* per month in entry-level 60kW form, increasing to £136* per month at the 40 percent tax rate.

For comparison, an entry-level Porsche Panamera petrol with similar performance figures and price to the Tesla will cost more than £380* per month (20 percent) and £766* per month (40 percent), but this accounts for very few company car drivers.

 

Should you get an EV company car?

It’s not quite a clear-cut answer – it depends heavily on how much you use your car and where you use it.

If you’re on the road all day travelling the length and breadth of the country, an electric car simply doesn’t have the range to make the journeys effortless. You’ll need to be stopping frequently to charge the car up and there’s no guarantee that you’ll always be able to find somewhere to plug in. A regular diesel will be a much better option for high-mileage drivers.

However, an electric car begins to make much more sense if you live and work in urban areas, have a short commute and there are charging facilities at both ends of your journey. These might sound like quite particular requirements, but it’s easier than you might think to fulfil these criteria.

Cities like London have charging stations popping up all over the place, while manufacturers are making it easier and cheaper than ever to provide some form of charging solution at your home. Not only this, it costs a fraction to fully charge an electric car compared with filling up with petrol and diesel and, providing you remember to plug it in when you get to work and when you get home, it should fit into your life pretty easily. The stumbling block that you might face is convincing your fleet manager that a more expensive electric car is worth the outlay.

If you’re mostly convinced but have concerns about range, the answer could lie with the plug-in hybrid. It provides a halfway house between fully electric and conventional combustion engines, but with the all-important low CO2 emissions that create low monthly payments for company car drivers.

They’re capable of travelling similar distances to efficient petrol and diesel cars, but with the benefit of road tax and London Congestion Charge exemption. Most will be able to travel around the city on electric power alone too, which won’t cost you a penny.

Read more on company cars here:

Top 5 plug-in hybrid company cars

Is diesel still the best option for company car drivers?

Cash vs company car debate

Company car tax: what to watch out for in 2016

*Prices correct at the time of writing for the 2016/17 tax year and assuming no optional extras