News

‘Are electric cars actually cheaper to run’ is a question we hear a lot. Our answer is always a resounding “yes,” since those savings really do add up over longer periods of time.

Of course, there are trade-offs. EVs tend to be more expensive up-front, for one thing. It’s also worth considering what you’ll use your car for, as you have to factor in things like range and charge time – plus the potential maintenance costs.

In this post, we’ll explore fuel expenditure for EV (electric vehicles) vs other vehicle types to paint a picture of the possible savings, and also devote some time to those additional considerations.

Are EV cars actually cheaper to run? A case study.

To illustrate the savings you can make with a full EV, we’ve put together a comparison using Zap Map’s journey cost calculator, between four popular models: a full EV, a plug-in hybrid, a diesel motor, and one running on petrol.

We’ve based these on three different journey types you might make throughout the year: a roughly average daily commute, a longer trip made once or twice a month, and the kind of longer round trip one of your drivers might take twice a year.

We calculated the below figures using an average charge-at-home cost of 28.45p per kw/h, taken from Eon Energy’s standard Next Flex tariff, and an average combustion fuel cost of 170p for petrol and 181p for diesel, as reported by Sky News on 25th May 2022.

Image credit: Tesla.com

Daily commute of a 25-mile round trip

Monthly journey of a 100-mile round trip

Twice-annual journey of a 250-mile round trip

So, in the long run are electric cars cheaper? Well, the figures above speak for themselves.

Notably the total annual costs for all three journey types in a full electric vehicle amount to £784. That’s £504 less than the daily commute cost alone for the hybrid car – which is the best value of the other three models.

In fact, totalled up, across an entire year of all three journey types in the given cars, non-EV fuel spend will be:

• Petrol hybrid: £743 more than an EV
• Diesel: £857 more
• Petrol: £1,357 more

It’s also particularly worth noting that those figures are based on the longer journey being one that your fleet drivers may not take very often. For those who regularly take longer journeys, the potential fuel savings are exponentially greater. That makes EVs an incredibly attractive option for business fleets when considered on the basis of fuel costs alone.

What about other costs?

Of course, fuel costs aren’t the only variable that makes a difference to fleets. To comprehensively answer the question “are electric cars really cheaper in the long run,” we need to consider other factors too.

Charge range and wait time

EV Database has the average range of current EVs at 204 miles – meaning for some models the 250-mile journey above may need to be broken with a top-up charge. This includes the standard Tesla Model 3, which EV Database suggests has a 235-mile battery range. So key questions to ask yourself become: how much is that extra time at a charge point worth to your business, and how many truly long journeys might your company drivers need to make in the vehicle?

For some fleets, even the sizeable fuel savings might not be worth the extra charging downtime. However, you can also expect that downtime to decrease further in coming years as average EV battery range increases with further technological advancements. So even if the downtime isn’t worth it at present, that may not be the case for too much longer.

Maintenance costs

Electric cars are generally more sophisticated and technologically advanced than petrol and diesel equivalents. So you may be surprised to know that on the whole, they cost 30% less to service and maintain. That can be attributed to the fact that due to the general lack of ICE drive trains, they need overall less maintenance. So, if you’re worried an EV leasing agreement will be written to cover exceedingly high maintenance fees, you needn’t worry on that matter. Actually, leasing an EV is likely to save you money in that area.

Up-front costs

One area where EVs are indisputably dearer is in the up-front cost of the vehicle, with outright purchase prices averaging £44,000 for a fully electric car. Of course, this higher up-front ownership cost translates to a higher leasing fee on a month-by-month basis. However, for business fleets looking into leasing company cars, that is offset by both the far lower annual fuel cost, and the significant benefit to lowering the company’s emissions – which in turn will help businesses avoid the heavy EU sanctions they would be subjected to should they fail to meet 2025’s fleet emissions targets. With that factored in, a fully electric business fleet becomes an even more attractive proposition.

So, is it worth it to get an electric car?

Where electric cars used to be an emerging technology, recent advancements in battery efficiency, coupled with government incentives for installing EV charging points, and increasingly skyrocketing combustion fuel costs, all signal that it is now very much worth getting an electric car.

With far lower fuel costs than hybrid, petrol or diesel cars, increasingly longer journey times between charges, and aggressive fleet emissions targets to hit, now is clearly the time for businesses fleets of all sizes and kinds to at least begin considering an electric future – if not making the switch outright.

Looking to go electric?

Contact our team today to see the electric models we have available.

Following on from our blog, we have created an infographic to list the pros and cons of each vehicle type.

If you’d like any more information or wish to discuss which is best for your business fleet, please call us on 01753 851 561 or email [email protected]

With businesses currently struggling to attract talent in a post-pandemic landscape where the number of available jobs vastly outweighs the number of skilled candidates, workplace benefits like car salary sacrifice have become an increasingly powerful tool in a recruiter’s arsenal.

But what exactly is a car salary sacrifice scheme? How does it work? And how can car salary sacrifice work for your employees – be they existing or prospective? Read on to find out.

Why do employers offer salary sacrifice?

Salary sacrifice lets employees pay for non-cash benefits out of their gross salary – before government deductions like tax and National Insurance are taken. That means those employees get a great deal because they save money on those deductions. Because of that, salary sacrifice benefits are an attractive prospect for employees, with perks like health insurance and company car allowances proving a big reason to choose a new company or stick around in a current role.

Additionally, employers also get to save money because by paying out lower wages, they can also pay less tax and NIC via PAYE . We’ll go into more detail on all of those benefits below.

Is a salary sacrifice car the same as a company car?

We mentioned company car there but it’s worth noting that there is a difference between a salary sacrifice car and a company car – though the line can get a little blurry.

A company car is usually a vehicle that’s either owned or leased by a company, given to an employee at least in part for business use. A salary sacrifice vehicle is leased directly through a benefits scheme by the employee and paid for out of their gross salary. However, in some cases, instead of giving an employee an owned or leased vehicle, a company will give an employee a company car allowance instead as part of their salary. In these circumstances, this allowance can be used to pay for that vehicle via salary sacrifice, thus giving the employee the same vehicle for less, thanks to the extra benefit of those tax and NI savings.

How car salary sacrifice can benefit your employees

The major advantages of car salary sacrifice for your employees are:

1. Save money on tax and NI

As mentioned above, employees taking advantage of car salary sacrifice can make big savings on the tax and NI breaks that come from paying out of their net, salary (subject to company car tax at low rates).

2. Save time on admin

Another example of how car salary sacrifice can benefit your employees is that some save them time organising things like insurance (although some schemes still ask employees to sort their own). With salary sacrifice, much of the admin is typically built into the agreement, which means your employees just need to use the vehicle, safe in the knowledge that the important paperwork was done at the start of the agreement.

3. Save effort and expense on maintenance

As part of the admin, car salary sacrifice agreements also typically stipulate that maintenance is the responsibility of the benefit provider, rather than the driver. So if a car runs into trouble and needs repair or replacement parts, the employee won’t have to fund the bill. Likewise, MOTs are usually included in the agreement, meaning the employee just needs to take the vehicle to an allotted garage at the pre-arranged time.

4. Help save the planet with EV options

With the 2030 cut-off for combustion engine car manufacture edging closer and fossil fuel prices soaring, we look at the pros and cons of each vehicle type to help you answer one simple question:

Should you get a petrol, diesel, electric or hybrid vehicle?

The move to EVs may be mandated from 2030 onwards, but with eight years to go how do the benefits of electric vehicles stack up against the more known quantity of internal combustion engine (ICE) vehicles? And what of the advantages of diesel engines over petrol engines for fleets? Read on to answer these questions and more.

Petrol cars

Advantages of petrol cars

• Lower average cost of vehicles than EVs
•  Takes much less time to refuel than EVs
• Fuel costs less than diesel
• Tried and tested: the most trusted way to get around for the UK motorist, with the widest variety of current vehicle options

Disadvantages of petrol cars

• Production and sale of new petrol vehicles ends in 2030
• BIK tax rates start at 25% cars with 100 g/km CO2 – far higher than electric vehicles’ 2% BiK cost
• Cost on average £600 more to run annually than EVs
• Petrol emissions undermine fleet efforts to go green and meet EU emission targets.
• Lower fuel economy: The average cost per 1,000 miles on a petrol engine is £202 – £23 more than diesel engine.

Summing up petrol cars

If you’re wondering “should I lease a petrol car or wait for electric?” the real question is: how much will the short-term cost of switching to an EV be, vs the longer-term cost of staying on petrol. And just as importantly, how long can fuel costs keep rising before the switch becomes the obvious choice for your fleet?

Diesel engines

Advantages of diesel engines

• Superior fuel economy to petrol vehicles makes diesel on the whole better for long distance use – particularly in large fleets with high mileage
• Diesel engines are less complex, meaning they typically need less repairs than petrol vehicles – and fleets spend lower on maintenance fees as a result
• The average cost of fuel per 1,000 miles for diesel vehicles is £179, £23 less than petrol cars over the same distance.

Disadvantages of diesel engines

• Like petrol engine vehicles, BIK rates for diesel ones also begin at 25% and go up to 37% depending on g/km CO2 – with diesel likely to trend higher overall
• Manufacture and sale of new diesel cars ends in 2030, just like petrol ones
• The harsher greenhouse gases emitted by diesel fumes will more severely affects the ability of fleets to meet fleet emission reduction targets
• Diesel vehicles also carry on average the highest Ultra Low Emission Zone charges
• Manufacturers are already moving away from diesel, meaning supply and repair parts will dry up faster in the market than petrol equivalents.

In what is the most challenging car market we’ve ever seen, vehicle lead times are longer than ever.

Here we investigate why, and what you can do about it – starting by answering the question we get asked more than any other right now…

“Why am I waiting so long for my new car?”

“In the world before Covid new car wait times averaged around 8-10 weeks,” says WVL account manager Ryan Davies. “Now the average wait for an available car is around nine months. For some manufacturers that’s even longer at around 12 months. Obviously, that carries problems for fleets in terms of how they plan their renewals.

“As a result, we’ve started to do things differently. We used to contact customers and fleet managers around three months before their leases ended to offer them options. Now we’re doing so much, much earlier.”

But what has led to this situation? Asked to explain, Ryan outlines three reasons anyone Googling ‘available car near me’ will struggle to find one anywhere at short notice.

A knock-on effect from Covid

“The first reason you’re unlikely to find a vehicle available is that we’re still seeing a knock-on effect from 2020 and 2021,” says Ryan. “During the first lockdowns there were postponements on vehicle deliveries and a lot of the factories closed for a couple of months. Production really slowed up. At the time that wasn’t felt so much because there were still stock reserves. But once everything opened back up and that stock got soaked up, it caused a bit of a backlog. It’s taken a while to really feel the long-term effects of that. The effects of the big car shortage in 2021 are still being felt here in 2022.”

The car chip shortage

“The biggest impact has undoubtedly been the global semiconductor issue,” says Ryan. “A lot of manufacturers are struggling to get hold of semiconductors needed in vehicle production, which has created a stark car microchip shortage. Some manufacturers are being hit harder than others. For example, Land Rover were one of the first to notify people of extended 9-12 month lead times.

“We’re also finding that some manufacturers forecast that wait time, but the automotive semiconductor shortage means they aren’t always able to produce that car. Sometimes they’re cancelling entire models outright. As a result we can’t guarantee 100% that if you order a particular vehicle, that at the end of the forecasted wait time you’ll have that vehicle available.”

The conflict in eastern Europe

Ukraine has around 17 factories that create wire harnesses (essentially a vehicle’s central nervous system) for the automotive industry. The country also produces a number of raw materials used in chip manufacture. On top of that, the move away from Russian factories has also had an impact on vehicle availability in some areas.

“Because of the state the market was already in with Covid and the automotive chip shortage, I think the Ukraine effect has been less publicised,” says Ryan. “It certainly didn’t help things, and certain manufacturers having specific parts produced in Ukraine caused further problems. However, by that point lead times were already at 9-12 months. So in some instances, the conflict in eastern Europe means those waits might be nearer nine months than twelve.”

Working with you to source an available vehicle