Why Engineering Businesses are going electric with their fleets in 2024

Going for electric fleets in 2024-Why are engineering businesses choosing electric company cars

The good news train for EVs is very much in motion so far in 2024. Already the UK has enjoyed the commencement of the ZEV Mandate (which makes electric vehicles a legal requirement), welcoming statistics about 2023 EV sales performance for some manufacturers like BMW  plus the confirmation of nearly 315,00 UK registrations in 2023  and a continued reminder from the Government that EV policies are cemented moving forwards.

But this is not to say that the situation is yet perfect; in recent comments by Mike Hawes at SMMT, there was suggestion that more is needed in the consumer and retail market. With ideas like a reduction, or removal, of VAT for PCH, PCP and HP private customers, by promoting tax and financial incentives, this segment of the market would follow the enthusiasm of fleet and businesses. Our e-car lease team couldn’t agree more.

And many engineering companies are certainly enjoying the great advantages of electrification with their company cars, with 2020 triggering a mass-adoption of battery technology across the UK.

What you need to know about electric company cars and tax

In a post-COVID era of uncertainty and fragility, the confirmation by HMRC that companies will enjoy robust tax advantages was very much appreciated by SMEs. For a limited company engaged in design, construction or engineering, there is a focus on detail and cost-base solutions.

Applying this same logic to the fleet is somewhat sensible if the owners/shareholders and the drivers are to benefit. For contract hire (an operating lease / usership product), the company can reclaim 100% of the monthly rentals against Corporation Tax, compared to the 85% Lease Rental Restriction on combustion options.

The same percentages applies to VAT, which is up to 50% on the finance element and 100% on the maintenance element (but subject to the emissions again). Plus the addition of more all-electric solutions to the fleet is also creating a noticeable decrease in Whole of Life and running costs.

Many BEVs have more limited servicing requirements compared to petrol or diesel equivalents and the cost of the actual service is lower too. However, because of vehicle weights, the cost of tyres can be a little more in the case of an EV.

Running costs also apply to the “fuel” situation too. When comparing is it cheaper to use petrol/diesel v electric, you need to take into account key aspects like the real world range and the cost to charge.

This calculation will provide you with a cost per mile and therefore a numeric comparison for working out the best fuel choices. For EV customers, just use the e-car lease “living with your” analysis, or our innovative EVC™, to work out this value pretty quickly.

If a company, or the driver, can access a good electricity rate (shown as pence/kWh), then this will often mean a surprisingly low cost per mile where an efficient vehicle is selected. Using the Fisker shown here, if you can utilise a supported rate of around 10 pence, then your charge cost would be just £10. At an equivalent of 3.28 pence per mile, this would be circa 10 pence per mile cheaper than a combustion option!

Of course, the Fisker Ocean is one of the better range vehicles, with a combined 100% range of over 300 miles. Please note, that private fuel tax on a company car only applies to petrol and diesel; electricity is not yet considered a “fuel” for taxation purposes. Another cost-saving for the driver.

Many companies in turning to electric are setting standards for their industry and investing into their Corporate Social Responsibility programmes, not to mention enhancing their image with customers. Investments like charge point infrastructure at the office, are full expensing for capital allowances.

Not only does this make the employees/drivers EV lifestyle more practical, this is becoming a more cost-effective exercise and is completely tax deductible. Providing engineering staff with great electric cars will also enhance their experience with you and promote staff retention and happiness long-term.

For the staff / drivers, there is the obvious company car tax savings. Using a company car (or salary sacrifice arrangement) is not a free benefit. Where an employee receives such a benefit, the Benefit in Kind (BiK) must be calculated and submitted to HMRC by the HR team. While our e-car website provides clear annual / monthly costings for tax, this is actually a simple calculation. For drivers and fleet managers just review:

•  The P11d of the vehicle - being the list price plus VAT, car tax, options and any delivery charges;
•  Apply the Appropriate Percentage - the CO2 of the vehicle will determine the percentage applied to the P11d value. The more polluting the vehicle, the higher the vehicle tax will be. For tax year 2024/2025 this is 2% for an EV as it is zero-emitting (0g/m); and
• • Apply the Income Tax - use the employee’s tax banding and apply this to the figure above. As employees there will be a Standard Rate (20%), Higher Rate (40%) and Additional Rate (45%).

In summary, the cheaper and greener a vehicle is, the more cost-effective it will be for the employee AND the employer. As the employer also pays Class 1A NICs on the value of the taxable benefit, the figures do matter. Again using the Fisker shown here, please note the tax computations below on standard car:

•  Standard Rate - £234 per annum OR £19.56 per month;
•  Higher Rate - £469 per annum OR £39.12 per month;
•  Additional Rate - £528 per annum OR £44.01 per month; 

Set to be one of the best-selling pure electric options of 2024, the Fisker Ocean is an exciting SUV which started to be delivered throughout mid-late 2023. Having launched as an AWD and long range model, the current product line-up is now more robust with the Extreme model now supported by the Ultra and Sport options (which are slightly cheaper). If you do want a lease price on your new Fisker, simply configure your bespoke model at  Fisker  or browse your stock Fisker SUV here. 

In terms of the car shown, the Fisker Ocean Estate 415KW Extreme 113KWH Hyper Range 5dr AWD (Auto), this is based on the following configuration:

•  Blue Planet Metallic paint
•  Eco leather alcantara - Sea salt with white
•  22"" F5a AirGlider Alloy wheel
•  Notes  Mode 3 / Type 2 Charging Cable (Public Charging & home wallbox charger – Fast charging) 

Available from just over £60,000  the AWD SUV will have a 106.5 kWh usable battery which will offer 0 – 62 times of 3.9 seconds, 127 mph top speeds and 420 kW (or 563 hp). Expect a combined winter range of 275 miles with warmer weather allowing for 365 miles.

On charging, the 11 kW AC max will allow 11 hours and 30 min 0 – 100% charging times with the 250 kW DC maximum allowing 35 minute 10 – 80% times. A cargo volume of 476L is available with this car. It has a vehicle fuel equivalent of 123 mpg. This option can tow 1820kg (braked). This EV will have no Bidirectional charging.