Is it really worth investing in electric vehicles (EVs) for your business?
The short answer is yes. And this is because of how much you could save on costs by switching to EVs.
EVs will cost you far less to drive and maintain than petrol or diesel cars and vans. The biggest savings will come from vehicles doing the highest mileage, and you can save even more by using low-cost charging options.
The environmental benefits of EVs will also help to boost your business case to make the switch to EVs. By lowering your carbon emissions, you’ll help meet your organisation’s sustainability goals. This could improve your business’s reputation and attract new customers and investors.
Where EVs are more expensive:
Where EVs save money:
The cost to buy or lease the EV
Servicing, repairs and maintenance
Clean air/low emission zones
The cost of buying or leasing an EV
Right now, EVs are more expensive to buy or lease than petrol or diesel vehicles.
If you did want to make the switch to EVs, you could get a discount on the cost of certain electric vans, trucks, motorbikes, mopeds and taxis through the government’s plug-in vehicle grant.
Charging an electric car is usually cheaper than refuelling with petrol or diesel.
Some charging options are cheaper than others, so you could save even more when you’re charging your EVs. These options include charging at work or at a depot using commercial electricity, or charging at drivers’ homes during off-peak hours.
You can also keep costs down by making sure your drivers know how to check the tyres and battery to make sure they’re still working well.
Switching to EVs also gives you significant tax benefits, particularly if they’re company cars.
If employees use a company car for private use, they have to pay company car tax. As the employer, you have to make Class 1A National Insurance contributions (NIC). These charges, which are based on the value of the car and its emissions, are much lower for electric cars.
For the 36 months from the start of the 2023/24 tax year through to the end of the 2025/26 tax year, an electric car would save you the following:
P11D (price of vehicle)
Employee’s tax rate
Company car tax (paid by employee)
Class 1A NIC (paid by employer)
Electric crossover SUV
Petrol crossover SUV
Data taken from Auto Trader Limited, February 2023.
This means you can deduct the total cost of the vehicles from the profits that you’d usually pay tax on.
At the moment, you don’t have pay vehicle excise duty (VED) on EVs, but you will have to pay it from 2025. The first-year rate will still be lower for EVs: it’s £10 for EVs compared to £120-£945 for petrol or diesel vehicles.
After the first year, there’ll be a standard rate of £165 per year for all vehicles, including EVs.
(VED rates are accurate as of the 2022/23 tax year.)
Clean air charges
If you’re travelling through a clean air or ultra-low emission zones, you won’t have to pay any charges. For example, if you drive into London’s ultra-low emission zone (ULEZ) twice a week, you’ll save £1,300 over the year by switching to an EV.
Residual value of EVs
The residual value of a vehicle is an estimate of how much it’ll be worth when the lease term for it is over. This is different to the market value, which is the current value of the vehicle if you were to sell it today.
Right now, EVs have a higher residual value than their petrol and diesel alternatives. However, depreciation, which is the drop in a vehicle’s value per mile driven, may be higher for an EV.
Using EVs might improve your business’s reputation and attract investors and new customers to your business.
Research shows that 73% of companies that adopt sustainability standards experience sales and marketing benefits, while 43% see growth in production, sales or revenue.
Meeting climate goals
EVs have a much lower lifetime carbon footprint than petrol or diesel vehicles. An electric car currently emits around three times less carbon dioxide (CO2) than a petrol or diesel car.
This carbon footprint will continue to get smaller as more electricity becomes generated by renewables.
See how much carbon you could save by using our tool for reference.