As a business owner, you may have been wondering whether or not to switch to electric. While electric isn't suitable for everyone, yet, it is suitable for most people and most fleets. Electric vehicles are always thought to be more expensive. Not only is that not true, in the long run, as a business you will see smoother running of operations, reduced operating and maintenance costs, and you can significantly reduce your carbon emissions with electric transport.
We'll go through a breakdown of the various aspects of owning electric vehicles and a final case study to illustrate how it would affect you and your business on the whole. Note that in this guide, we're focussing on fully-electric vehicles, as opposed to plug-in hybrid vehicles as the latter still entails significant tailpipe emissions.
Electric Vehicles Basics
Electric vehicles (or EVs for short) are slated to take over petrol/diesel vehicles due to government ban on sales of new petrol & diesel cars from 2030.
There are two main types of electric vehicles: fully electric or battery-electric vehicles (BEV) or plug-in hybrid electric vehicles (PHEV).
BEVs emit 0 g/km of CO2 from their tailpipe whereas PHEV emit 0 g/km for a limited range (between 40 miles or 60 km) and increase significantly when the hybrid mode kicks in once the battery has depleted. Additionally, PHEVs are not usually eligible for government grants or tax relief based on this fact.
The range of PHEV is considerably larger than BEVs but only when its hybrid mode kicks in. On pure electric power, BEVs can travel between 100 to 300 miles on a single charge, whereas the PHEV can only travel 40 to 60 miles. Battery size is rated in kilowatt-hour (kWh).
With an EV, you can charge your vehicle on AC charging (22kW/11kW/7kW)i.e., from a dedicated EV chargepoint which utilises the vehicle's onboard AC to DC converter or your can charge your vehicle on DC (>40kW) i.e., with the onboard converter in the EV chargepoint resulting in much faster speeds.
Most homes and commercial locations can only install AC chargepoints whereas DC chargepoints require a much larger supply load and are considerably more expensive.
There has also been countless false advertisement on 22kW fast AC charging. Drivers should know that with the exception of one or two vehicles on the road, most vehicles do not accept 22kW fast charging. Most vehicle onboard converters will only allow vehicles to charge at 3.7kW or 7.4kW and sometimes 11kW. Therefore, having a higher rated EV chargepoint would not charge your vehicle any faster than a lower rated one.
An average vehicle with a battery size of 40kWh would take around 3-4 hours to charge from 20-80% with a 7kW AC chargepoint. At the 80% mark, charging speed drops significantly due to trickle charging. A DC chargepoint at 150kW would charge the vehicle in about 10 minutes, significantly faster than AC charging. The caveat: frequent DC charging dramatically degrades the lifetime of the battery.
Extended use of DC charging means the usable battery capacity drops and the overall range of the vehicle drops. Destination charging at 7kW should be the de facto charging speed for most vehicles.
Most vehicles on the road have a Type 2 port by default and most AC chargepoints are Type 2 compatible. AC chargepoints would either come with a cable attached (tethered) or a socket (untethered). DC chargepoints require special cables as the connectors are different but are provided by DC chargepoints as tethered options.
Home and fleet charging are best suited with tethered cables, due to the simplicity and convenience. Commercial charging should be untethered due to the public nature of the venue. This prevents damage from drivers to the cable by running it over or damaging the connector head.
Price (Direct Purchase)
One of the biggest friction points is the price tag of electric vehicles. It is generally true that the upfront cost can be higher but with lower fleet downtime, lower operating and maintenance costs, the overall cost you would be paying would be less than a petrol or diesel vehicle. There are available government grants to help offset the higher costs ("plug-in grant"). The plug-in grant discounts the purchase of your vehicle with varying amounts based on the vehicle type.
The grant value ranges from £2,500 for cars to about £25,000 for large trucks and this value is projected to decrease in the coming years as electric vehicle uptake becomes mainstream. Read here to find out more about the grants.
It may not make the upfront cost a lot cheaper than a comparable electric but it does help the bottom line if going electric is the organisation's direction.
Why you should switch to electric now: government grants to subsidise purchase costs of electric vehicles are reducing and may be gone completely in the next few years.
Lease (Salary Sacrifice or Personal)
Your employees have the option of leasing their EVs under their personal name or under the company as a salary sacrifice scheme. If your employees are given vehicles to use for business and personal reasons under any of these schemes:
Given the option of a company car (not car allowance).
Then they are subject to BIK tax. However, BEVs with 0 g/km eCO2 incur a significantly lower tax rate of 2% per year until 2024. The benefits of salary sacrifice scheme is your employees would not have to pay VED, MOT, servicing, breakdown costs and the vehicle can be used for both personal and business.
The only real operating cost for electric vehicles is the charging cost. This will depend on your home's business premises' current electricity tariff. This can range from 15-30p per kWh. You may even be able to have time-of-use (TOU) tariffs that provide dynamic pricing. With the recent rise in petrol and diesel, many are finding it more economical and less volatile when driving electric.
With an electric vehicle, you would still need an MOT which entails regular checks like a normal petrol or diesel vehicle, save fuel and emissions tests. For electric cars, this is capped at £54.85.
Apart from that, maintaining an electric vehicle is significantly easier and cheaper as many parts will not require servicing or checks such as oil-change, engines, tailpipe emissions. Ultimately, this translates to shorter downtimes and maintenance costs.
You will also be exempt from paying the LEZ charge if you drive an electric truck. The LEZ includes HGVs, lorries, vans, buses/minibuses, coaches and specialist heavy vehicles such as:
Lorry, van or specialist heavy vehicle over 3.5 tonnes gross vehicle weight (GVW)
Bus/minibus or coach over 5 tonnes GVW
Vehicle Excise Duty / Tax
With a BEV, not a PHEV which uses a combination of petrol/diesel and a larger battery to complement short distance travelling, there is £0 to pay on vehicle tax. This is because vehicle tax is based on tailpipe emissions and a BEV emits 0g/km of CO2.
Capital Tax Allowance
As a business, going electric may seem expensive but you are able to claim tax allowances for certain clean technology assets purchased for the business. You can claim capital allowance on zero-emission business vehicles and zero-emission goods vehicles as part of enhanced capital allowances:
This reduces your overall taxable profit as you can deduct 100% of the costs from the above from your profits before tax. Note that you are also able to claim the purchase of EV charging points for your business under first year allowance.
First year allowance is also not included in your annual investment allowance (AIA). We recommend speaking to your accountant to clarify what you can and cannot claim under AIA.
Whereas if you opted for a non-zero-emission vehicle, your allowance rate for business cars drops to the Main rate or Special rate. This means that you could be making tens of thousands of savings in tax relief if you switch to electric.
While it's not a major stopping point for most people, insuring an electric car does get more expensive than petrol or diesel variants. This is simply because it's still a relatively immature market. As more data becomes available with the increase in electric vehicles on the road, expect to see premiums drop.
In 2019, the yearly premium is £842 on average which dropped by about £150 to £704 in 2021. Petrol and diesel cars on the other hand cost around £600 to £650 on average. There are EV-specific insurers out there such as: LV=.
As insurance can be incredibly specific to circumstances, it is advisable to speak to your insurer for a more accurate cost. You can also look at marketplace aggregators such as MoneySuperMarket for a full comparison.
One of the largest driving factors for switching to electric is the environmental impact from saving tailpipe emissions. The current average tailpipe emission is about 141 g/km while a BEV is 0 g/km. You should be aware that having a hybrid vehicle does not have the same degree of zero emissions over a longer distance as their battery capacity is much lower than a BEV. If your primary emission comes from transport, then switching to BEV would certainly cut emissions down to 0 g/km.
A PHEV would range between 50 to 300g/km. Choosing a hybrid with a lower CO2 tailpipe emission is crucial in lowering your organisation's transport emissions and ensuring that the bulk of transport is done within its 0 g/km emission range (usually 40-60 miles).
Environmental & Social Governance (ESG)
Consumers and businesses alike are increasingly looking for other businesses that have ESG in place as it shows their commitment to society and environment as a whole. By switching to electric, you will be making demonstrable and measurable effort in your commitment and greater corporate responsibility.
If your business premises have parking facilities, then installing a car chargepoint can be beneficial for many reasons.
The average tailpipe emission in the U.K. is 141 g/km. This means that for every 1 km travelled, 141 g of CO2 is emitted. For every hour a car is charged at your business venue, you would be saving about 4-7 kg of eCO2 (this is based on current average range efficiency which ranges from 2.8 to 4.5 miles per kWh).
If we assume that your staff takes 5 km to travel to and from their original location everyday, the simple act of having a chargepoint would enable savings of about 0.7 kg of eCO2 per day and savings of 200 - 255 kg of eCO2 per year, per vehicle. Assuming one customer with a BEV travels to your venue every week, this amounts to about 36 kg of eCO2 saved.
Did you know: VoltShare ensures 200 - 400 kg of eCO2 are re-captured, for each chargepoint we install, through reforestation projects. This further adds to your sustainability impact and ESG.
Charge your vehicles
Your employees will be able to charge their vehicles for free or at reduced costs that are entirely up to you. For most business premises/venues, having multiple 7kW chargepoints would be far more useful than having a single 22kW chargepoint for the simple fact that only a single car in the U.K. accepts 22kW AC charging. While majority of vehicles only accept 3.7kW and 7.4kW AC charging.
In general, having 22kW AC chargepoints would be an unnecessary cost and load on your electricity supply. If your business deploys a fleet of long-range transport and last-mile delivery, then having rapid charging at your premises would also be a boon.
If you own a consumer-centric business with footfall and traffic, providing convenience to your fellow patrons is incredibly important. Almost all electric car drivers filter their destination locations by places with electric vehicle chargepoints. Not only will you generate additional income for monetising your chargepoints, you will be attracting and retaining a much larger demographic. VoltShare's chargepoints and solution have resulted in an approximate 10-20% increase in guest attraction/booking for accommodation businesses.
According a recent government study, destination charging i.e. charging at your final destination spot is second most popular among electric car drivers, after charging at home. However, for those who are unable to charge at home (due to a lack of private parking), then charging at destination (e.g. hotels, restaurants, workplaces) will be crucial.
Let's take an example of a restaurant chain that has 10 sites across the country. On their net-zero journey, they're looking to swap all 10 of their diesel vans to electric and install one electric chargepoint for each site. Additionally, they're looking to help their employees reduce their overall transport emissions by helping them switch to electric.
What are the costs and benefits to them? We take a look at a like-for-like comparison.
Their employees are provided with a salary sacrifice scheme to help them transition to electric. How much does it actually cost and is it more cost effective than leasing themselves or making an outright purchase?
*Based on annual salary of £30,000 (before taxes and NI).
**Compared to personal lease. All values include taxes and NI.
Based on capital costs, the diesel van has the lower upfront expenditure but marginally so. With the added factors of maintenance, breakdowns, and repair costs, staying with diesel or petrol may not be that cost-effective after all.
Assuming each van travels an average of 3000 miles a year, the average running costs are calculated below. The electric variant costs £350 cheaper to run, per year, than its diesel counterpart. Based on conservative estimates, the break even period where it would be cheaper to continue operating the electric van is about 5 years. However, this does not take into account any potential repairs or maintenance required for your non-electric van.
As explained earlier, the only parts that need regular maintenance in an electric van are the tyres, windshields, lights, and auxiliary electronics; similar to that of the non-electric variant. Over time, you will find it more financially cost-effective to own a BEV.
If your business operates within Central London, then Congestion, ULEZ, and LEZ charges can rack up significantly.
*Yearly running costs = Fuel Costs (for 3000 miles) + VED + MOT
eCO2 Saved (Fleet)
One of the most important benefit of having a BEV is its zero tailpipe emissions. Your eCO2 will be reduced to zero with a BEV and a PHEV will have a higher eCO2 depending on the distance travelled and the exact vehicle used.
Read here to find out how our client, The Hare and Hounds (a premium coaching inn in Newbury) have achieved success with our community EV charging within just one week.
eCO2 Saved (EV Charging)
Once you join VoltShare's community network in providing your customers with EV charging as a service, you would be developing, first hand, the country's EV charging network. As a tech for good business, we're also re-investing in carbon capture for every chargepoint we install.
*Conservative values. Based on total yearly consumption of 2912 kWh (104 charging sessionsa year per chargepoint) x 3.5 miles per kWh (average efficiency) x 141 g per mile (average tailpipe emissions).
**Based on total yearly consumption of 5600 kWh (200 charging sessions a year per chargepoint) x 3.5 miles per kWh (average efficiency) x 141 g per mile (average tailpipe emissions).
EV Charging Costs/Income
There are two types of EV charging for customers: charging as a service or charging for free. As BEV have batteries that are significantly larger, it will cost significantly more to charge than a plug-in hybrid. Therefore, as the vehicle population transitions to BEV, it may not be financially viable for most to offer free EV charging.
The following calculations are based on a charging tariff (paid by customers) of £0.50 per kWh (market rate) and parking rate of £0.00 per hour with an average of 104 charging sessions per chargepoint per year. An average charging session consuming 28kWh of energy from your supply, at a supply tariff of £0.20 per kWh.
Note that if you only intend to use the chargepoints for staff/fleet, you can use the same capital expenditure values for your estimation.
Furthermore, on a case by case basis, your business venue will be far more visible to the wider population. Therefore, while it's difficult to quantify the level of impact having an EV charging would have on your business, our clients have reported significant increase in guest retention and especially attracting new guests/patrons.
Community EV Charging
We are pioneers of community EV Charging (which simply means that you share out your chargepoints to other drivers in need, who are likely not your staff or friends).
Did you know that if you have parking facilities, you can still share out your chargepoints with our platform to the wider community, at times when your chargepoints are not being used?
Not only will you be solving one of the country's biggest problems of chargepoint availability but you will be working towards one of the major SDG 11: Sustainable cities and communities and generating additional income.
While having an electric fleet may not be suitable for all businesses at such an early stage, it is most definitely worth considering as government grants available to subsidise the electrification of transport are due to expire within a few years when electric vehicles become mainstream.
If you are interested in switching to electric, we work with a select few partners that help businesses and employees switch to electric. Our end-to-end, cost-effective solution, allows you to not only significantly reduce your CO2 emissions to zero, but increase your business' standing as a true champion of social and environmental impact. Read here to find out how aligning yourselves with a pioneer of community-EV charging can bring you social and environmental value.
VoltShare are an EV charging technology provider for the hospitality industry that simplifies management, payments collection, and technology integration. We empower small to large-sized venues to futureproof themselves, while ensuring they remain resource-efficient and profitable.