Is an electric car a good business decision?

With the government’s target of 2040 to phase out the sale of all new petrol and diesel cars, and for the majority of cars to be zero emissions by 2050 - questions surrounding electric cars are rifer than ever. In a business context, there are even more questions. How much will an electric car be as a company car? Are there any benefits? What’s the best option in the long-term?

So, we’ve put together a simple comparison guide to see which car might be the best company car for your business.

*includes vehicle tax and fuel costs
Note - Car models chosen based on being best sellers in their respective fields and on similar specs, and calculations based on a 20% tax band.

From this, we can see that the petrol car is cheaper to purchase out right, which confirms what the general consensus is on electric cars – that it’s cheaper to get a fuel-based car than it is to get an electric one. And the Ford Focus would give you an overall saving of £5720.

However, electric cars have gotten cheaper over the years since they first came onto the mass market, and this trend will only continue as battery technology advances and more companies join the electric car market. Plus, the government does provide a significant grant towards the cost of an electric car.

But when you look at the estimated running costs, the electric car seems the more attractive choice due to its multiple tax reductions and benefits. It is £2380 cheaper per year to run an electric car than it is to run a petrol car.

This figure will soon be reduced to around £333 though (excluding insurance costs) as the government is getting rid of company car tax for zero emission cars next year. Therefore, it would actually take you more towards 2.5 years to get a return on the electric car!

The government also offers a £500 grant to install electric charging points at your workplace. So, if it’s the time and charging power that is steering you away from electric cars, installing charging points at work could do a lot to resolve this. Especially due to the fact that they can just be left to charge overnight, when they are unlikely to be used.

The range of the electric car is lower than a petrol car – with the Nissan Leaf capable of 168 miles, whereas the Ford Focus can do around 600 miles. For now, the electric car might be better suited to companies who use cars for more urban/city driving rather than regular long-distance driving.

For companies who are thinking of making the switch to electric for environmental reasons, then the electric car is a no brainer really!

And although the electricity that the car would be using from the grid does not come from entirely clean energy (yet), it would still not be contributing as many emissions as its counterparts.

Plus, the government is pushing for clean renewable energy a lot more in recent years, and with the 2050 target for zero emissions on roads, it will only continue to do so.

It seems to make a lot of sense to consider the electric counterparts as potential company cars.

The difference between a petrol car and an electric becomes even more distinct when looking at typical ‘high earner’ cars. Again, the electric car (Tesla model) is more expensive to purchase - £12,300 more expensive.

However, it incurs drastically lower running costs. For example – for a director on the 45% tax band, it would be £19,867 cheaper to run an electric car than a petrol one. With this difference becoming even wider when company car tax is reduced to zero next year.

Therefore, the car that is going to give you the most savings is the Tesla, even when taking into the fact that it has the more expensive price tag.

Directors, and those in high earning roles, may want to seriously take into consideration investing in their own electric company car, as it is significantly cheaper to do so.

But also, it allows for the potential of a culture change in a company when it comes to the environment, especially when employees see that those in higher management are doing their bit for the environment. It could even encourage more people to invest in electric cars!

Overall, the electric car is the more expensive purchase but definitely the cheapest to run. And this becomes even more apparent with executive level cars. As the government continues to push towards zero emissions, now may be the time to think about making that investment in an electric company car.

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Written by: Shahed Ezaydi

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