Company car drivers making the switch to electric power after April 2020 could see their Total Cost of Ownership bill reduce by 95%, according to analysis by accounting giant Deloitte.
The savings are based on 40% tax payers and illustrate the benefits of the forthcoming 0% EV BIK rate (down from the current 16% band). A higher rate taxpayer receiving a diesel hatchback company car with a list price of £30,000 can currently expect to pay just over £18,000 in tax and fuel costs over a 48-month period. By comparison, for a comparable electric vehicle, the total cost of ownership reduces to £916, a saving of 95%, Deloitte said.
It added that if a 900-strong fleet were to switch away from petrol and diesel power to electric propulsion it can expect to save £1.9 million a year.
Michael Woodward, UK automotive lead at Deloitte, said: “For those thinking about making the switch, the tax changes for company cars from 6 April 2020 are certainly a strong incentive. With a surge in demand likely, the question remains whether both manufacturers and businesses are ready. Over the next three years, car manufacturers will need to review the scale of their production to accommodate growth and assess supply levels into the UK. Fleet sales will drive the majority of demand and manufacturers will be keen to prevent missing out on sales due to lack of supply.”
He added: “For many businesses, there are operational, employee and environmental benefits in transitioning to EVs. However, the suitability of electric must make sense before making the switch. For some, EVs will already be a viable option given their fleet journey patterns, and next steps may simply be building a robust policy and plan to support wider EV adoption. For others, long-distance travel demands or knowing how and where to charge EVs will need more consideration. Businesses upgrading from diesel or petrol fleets may also require investment for on-site charge points.”