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Understanding the impact of today’s EV financial incentives

Despite a lot of attention being paid to it, the electric vehicle market is still relatively small – pure EVs had a 6.6% market share in 2020, some 10% lower than diesel – and while the market share is only going to grow in the coming years, the Government is at the moment offering generous support to help increase the uptake of EVs, especially in the fleet market.

The Government is currently offering a £2,500 subsidy on every new electric car.  This is of course,  subject to them emitting less than 50g/km of CO2 and being able to travel at least 70 miles without emitting anything – thus exempting plug-in hybrids and mild-hybrids – as long as the vehicle costs less than £35,000.

It can be hard to keep up with the number of new vehicles arriving in showrooms but a good place to keep track of eligible vehicles can be found on the Government’s website – https://www.gov.uk/plug-in-car-van-grants.

As well as providing a grant to help fleets take on EVs, the Government also subsidises the cost of installing charging points. The Electric Vehicle Home Charge Scheme provides £350 towards the cost of a home charging point, while the Workplace Charging Scheme provides £350 per plug (up to a maximum of 40) per company.

Under the terms of the Workplace Charging Scheme, the charge points can only be used by employees – rather than customers – however, the Zero Carbon World charity gives away charging points to businesses for free that can be used by customers.

Crucially, in February this year, the Government expanded the Workplace Charging Scheme to cover SMEs and charities, while those living in rental or leased properties can also apply for the Home Charge Scheme.

Fleets based in Scotland meanwhile, can receive additional help. Funded through Transport Scotland, the Energy Saving Trust offers an interest-free loan of up to £120,000 “to help lower their transport and travel costs” and it can be used to help companies procure electric cars and vans (up to £28,000 per vehicle), telematics and video conferencing tools. The loans can be repaid over six years, and as well as helping businesses pay for the vehicles on an outright basis, it can be used to fund down payments for leases.  Transport Scotland also offers £300 on top of the £350 UK Government grant to help EV owners install home charging points.

The Scottish Government also has two schemes which can help drivers that aren’t able to procure a company car in the normal way – such as a grey fleet user. The first is an interest-free loan of up to £28,000 (with a six-year repayment term), which helps motorists fund the cost of a new EV, while the second scheme offers drivers an interest-loan of up to £20,000 (again with a six-year repayment term) to help motorists take on a second-hand EV.

As well as the various grants and loans available, EVs attract preferential Benefit-in-Kind rates; in the 2021/22 financial year EVs are placed in the 1% Benefit-in-Kind tax bracket, while from 2022/23 through to 2024/25, EVs fall into the 2% bracket. By comparison, a driver of a relatively low-emission petrol or diesel car (for instance, one that emits 100g/km of CO2) will be put into the 25% bracket from 2022/23. Comparing a Tesla Model 3 against a BMW 520d which emits 110g/km of CO2, the American vehicle manufacturer has calculated a company car driver can save £300 a month in Benefit-in-Kind payments.

Subsidies and tax benefits aside, EV fleets can also save costs longer term on service, maintenance and repair.  According to data from cap hpi, over three years and 60,000 miles, it costs 23% less to service and maintain an electric vehicle when compared with a petrol variant. But running costs are another subject for another day, in the meantime, it’s fair to say the potential savings by switching to an EV can be huge.


Author: Alison Bell, Marketing Director of Venson Automotive Solutions

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