The message from the government is that electric vehicles are in and petrol and diesel vehicles are out. Under their current plans, the sale of new petrol and diesel cars will be banned from 2030, albeit with some hybrid cars being given an extension of 5 years to 2035.
Currently, there are roughly 675,000 plug-in cars in the UK – a drop in the ocean when compared to the remaining 38 million cars on UK roads. Change does appear to be on the horizon. Last month, 22,000 pure electric vehicles were registered, more than double the 10,345 registered in the same month last year, as the share of total sales accounted for by battery-powered electric vehicles climbed to 19%. Whilst this is excellent news for our progress towards net zero, there is still some way to go in encouraging drivers and businesses to make the switch to electric.
How do we continue to cultivate this increase in EV sales and ramp it up over the next 9 years? Many of the tech enthusiasts and early adopters of EVs purchased these cars because of the environmental benefits and this too has previously been the government’s focus. But to capture the pragmatists and more conservative adopters perhaps there are some other benefits – economic benefits – that deserve the spotlight.
Benefits for drivers
For drivers it’s all about savings and convenience. As more charge points are rolled out and councils and businesses look to incentivise EV use, drivers can expect a raft of benefits coming their way. Let’s take a look at the main benefits being experienced by current electric vehicle drivers.
Lower running costs
One of the huge advantages of EVs is that they are cheap to run and maintain compared to internal combustion engine vehicles. Annual running costs average out to be around £1,742 or £33.50 per week for an electric car, which is 21% cheaper than the running costs of a comparable petrol fuelled car at £2,205 per year or £42.40 per week.
Lots of councils and workplaces offer free or low cost charging. This means that there are opportunities for drivers to refuel their vehicles for free in many instances.
In the short term, pure electric cars benefit from zero road tax whilst some plug-in hybrids receive a £10 annual discount.
Longer term, electric vehicles have less moving parts meaning less maintenance and servicing is much simpler. Faster, simpler servicing means cost savings for drivers who require a lot less parts replacing and a lot less time spent sitting in garages.
ULEZ and Clean Air Zones
Towns and cities around the UK are introducing Clean Air Zones with charges designed to discourage polluting vehicles from entering certain areas. A key benefit of an EV is being exempt from these charges.
EV drivers in London for example can travel in both the congestion zone and the Ultra Low Emission Zone for free. For some drivers this could result in a huge cost saving. The Ultra Low Emission Zone currently costs £12.50 a day for cars. In a normal working year that could save a motorist as much as £2,875 on top of any fuel savings.
More town centres will be introducing similar clean air initiatives so the switch to electric will become beneficial right across the UK.
Free and convenient parking
Many car parks have begun prioritising electric vehicles and have dedicated parking bays that are positioned in convenient locations. Often bays are free, priority or dedicated to EVs only. Many also have charging facilities available.
Many supermarkets for example, offer dedicated EV parking with free charging available, this means drivers can save on charging and charge while they shop, you can’t get more convenient than that!
Home charging incentives
If the above couldn’t tempt you and you still have your reservations about EVs, the government also offers funding towards installing an electric or plug-in hybrid car charger at home, so stress no more about access to charging! The Electric Vehicle Homecharge Scheme (EVHS) provides a grant of up to 75 percent – or up to £350 – towards the cost of installing an EV charge point at your home.
To claim, you must own, lease or have ordered a qualifying vehicle, and have dedicated off-street parking at home. More than one charge point can be applied for if you have more than one EV. An approved EHVS installer must install the charge point, and will apply for the discount on your behalf. The final cost will have the EHVS grant deducted.
Benefits for business
Businesses, in particular fleets or those with company cars, can access all of the same benefits as private EV owners. They also have access to a number of unique benefits as the government seeks to encourage the commercial use of electric vehicles.
Business owners choosing electric vehicles can enjoy zero tax through Benefit in Kind if the vehicle is owned by the business. There’s also the bonus of 100% of capital allowances in the first year, so if an organisation purchases an electric car for business purposes, they can deduct the full cost from their pre-tax profits.
As mentioned previously road tax costs are zero for EVs as this cost is based on CO2 emissions. Hybrid vehicles come with some road tax due to them still using some petrol or diesel, but the bill will be substantially lower compared to when driving a traditional vehicle.
The only exception is if the vehicle was purchased for £40,000 or more, as all cars in this price bracket come with an additional road tax bill. However, rather than the normal £475 it will only be £325 a year for the first five years. Many of the best electric cars on the market cost a lot less than £40k, so for most businesses this will not be a concern.
Lower fuel costs
Businesses still have to pay 20% tax on the electricity that’s used to charge their vehicle but the benefit here is that there’s no fuel duty tax, which is currently 58p a litre and really adds up if vehicles are driven regularly for business purposes, as would be the case for fleet vehicles.
Car and van grants
Looking to super charge (pun intended) the uptake of EVs, the UK government has created a grant for the purchase of new electric vehicles. Businesses can get a discount on brand new low-emission vehicles through a grant the government gives to vehicle dealerships and manufacturers. Organisations do not need to do anything to access the grant if they want to buy one of these vehicles – the dealer will include the value of the grant in the vehicle’s price.
The maximum grant available for vehicles is £2,500 and the grant can be applied to any of the following of the vehicles as long as they qualify for government scheme; cars, motorcycles, mopeds, small vans, large vans, taxis, trucks.
Charging savings and revenue
Working in a similar way to the Homecharge scheme, The Workplace Charging Scheme (WCS) offers EV charge point funding support to eligible businesses, charities and public sector organisations. Businesses can apply for up to 40 charge points per company, with a cap set at £350 per socket.
Electric vehicle charging points should not be viewed as just a cost to the business, but also a potential source of revenue too. Indirectly, implementing charging infrastructure can enable consumer-facing businesses – particularly retailers and leisure companies – to monetize their EV facilities to create a new income stream. In addition, research shows that on-site charging is also likely to encourage customers to spend longer in-store as they wait for their car to recharge, resulting in higher per-customer spends.
Whether you’re looking to purchase your first electric vehicle or wanting to make the business case for electrification, grants, reductions and tax benefits will not be around forever, there really is no better time like the present to purchase an EV.