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Everyone’s had economic challenges over the past 12 months, which is why it’s more important than ever to pinpoint exactly how much it is costing to run your fleet. Looking beyond the more obvious upfront and leasing expenses will help you get the most from your budget.
These whole-life costs consider the cost of running a vehicle over the period of ownership. There are many factors to consider, from fuel consumption to the state of the market. For example, the price of electric vehicles usually come with a higher up-front cost than petrol- or diesel-fuelled vehicles – but EVs bring a range of whole-life cost savings, such as cheaper fuel (electricity) through home-charging, benefit-in-kind (BIK) tax savings and exemption from charges in congestion and low-emission zones, to name a few.
March 2023’s new car registration figures showed electric vehicles counted for one in six sales, and total sales grew by 18 per cent year-on-year.
Therefore, businesses and households are becoming more attracted to the environmental benefits of electric vehicles. And Kia – with the Niro EV, EV9, EV6, and Soul EV – has an array of tempting propositions.
An additional benefit of EVs is that fleet managers don’t have the increasing cost of fuel to reimburse. Then consider the employer’s national insurance and maintenance and the scales are tipping more in EVs’ favour. In the March Budget fuel duty was frozen until April 2024, but only an extreme optimist would believe this will be a long-term situation. Such seeming inevitability is altering perceptions when making the choice to switch to EVs.
Although fuel cards can help obtain lower petrol and diesel costs, it’s becoming clearer that switching to EVs is becoming more viable.
What’s more, the unchanged electricity price cap – even if it does increase in future – increases the attraction of electric vehicles.
Cleaner air in urban areas is a priority for local authorities, increasing numbers of whom are introducing charges for driving petrol or diesel vehicles into city or town centres. The zero tailpipe emissions of electric cars make them exempt from congestion charges in places such as London, Bath, Birmingham and Portsmouth. More low-emission zones are planned for other areas, including Bradford, Bristol and Tyneside.
Company cars attract benefit-in-kind (BIK) tax. This is based on the P11D value of the vehicle, the amount of CO2 it emits, and the income tax band of the driver. The BIK rate dictates the P11D value that will set your tax amount. For EVs, which don’t produce tailpipe emissions, that rate is set at just two per cent until the tax year 2024/25. This compares to the maximum rate of 37 per cent for an internal combustion engine (ICE) vehicle.
When you add the benefits of reduced Class 1A National Insurance contributions and 100% allowable depreciation in year 1, it makes for even more compelling purchase proposition.
Typically, an electric vehicle has fewer moving parts than one with an internal combustion engine, so there are fewer components that can become damaged or worn out. There’s also regenerative braking: as the vehicle slows down, kinetic energy is recouped and transferred to battery for later use. Another boon for EVs is they don’t require diesel particulate filters (DPFs) or AdBlue, both of which need maintaining and come with associated costs. All of which makes maintenance costs a significant consideration when choosing an EV.