Changing your fleet of business vehicles to electric can seem like a huge undertaking – but regardless of whether you’re changing just one vehicle or the whole fleet to EV, it can bring so many benefits that it’s worth taking time to consider carefully.
By switching to electric or hybrid, your business will likely reduce its running costs, improve its social responsibility and work towards meeting any environmental targets you’ve set for your company. Yes, a switch away from petrol or diesel and a fleet of conventional carbon fuel vehicles to fully electric might seem like a huge change both operationally and financially, it can be achieved if you plan out the phasing of the switch, especially if you link the change to your normal lease renewal dates.
Going green with your business vehicles
There’s a very compelling environmental case for moving away from petrol or diesel vehicles since the highest proportion of the UK’s harmful emissions are generated by transport; and as a signal, the UK government is phasing out the purchase of new carbon-fuel vehicles by 2030, brought forward from 2040.
What are the tangible benefits to a business owner in switching to clean power? Here’s our take on the top five benefits for a small business:
- Significantly reduced fuel costs – for example, running costs are typically £4 per mile for a fully electric vehicle compared to £14 per mile for carbon fuel vehicles (over a 100-mile journey)
- Electricity is not classified as transport fuel and so a lower rate of VAT – especially useful if you’re not VAT-registered and can’t claim back VAT
- Lower maintenance bills as electric vehicles normally have fewer moving parts compared to a traditional combustion engine
- Lower tax from lower benefit-in-kind taxation as electric cars quality for a lower rate of tax under a salary sacrifice scheme
- Battery electric cars get a discount from the Congestion Charge in London (this was previously called ULED) and lasts till 2025; if your vehicles are older, they might also mean you have to pay fees attached to Ultra-Low Emission Zones (ULEZ) in inner cities
How to plan a change
To help you start the process and work out a transition plan for your business, you need to begin with a thorough assessment of your requirements. There are three main areas to assess:
- Assess your current fleet requirements
- Assess your charging requirements
- Plan how to communicate and bring your staff along with you on the transition
Let’s cover these three steps in more detail:
Assessing the current fleet
When assessing the viability of changing your fleet of vehicles from carbon-fuel to electric technology, the best place to start is with an assessment of the current cars and vans and the type of journeys they undertake.
One of the biggest concerns about EVs is their range, not a problem if your business vehicles undertake lots of short journeys, but certainly a concern amongst employees who regularly drive long distance.
So start your assessment with an analysis of your current travel patterns across your vehicles, including length of journey times and how frequently the vehicles are used – this will involve an assessment of each driver/employee and whether their current fleet vehicle usage could be comfortably performed in an EV.
From a financial point of view, you should also look to keep track of government incentives and grants to help fund any change to EVs – see our guide to EV purchasing options and grants and tax benefits.
And from an employee view, check your employee entitlements which may alter if you are considering company car benefits rather than a pure commercial fleet of say delivery vans or light goods vehicles.
When you’re reviewing your fleet and the potential leasing arrangements, fleet grades are often based around rental bands so it might be worth considering a Whole Life Value over the entire leasing period. The Whole Life Cost considers all the costs factors involved in the lease lifecycle of a fleet car rather than just the base rental cost and this makes comparing different cars more accurate. If the Whole Life Cost of an EV is still looking excessive for the driver grade, then some fleet management companies offer what is described as a ‘blended solution’ which balances the Whole Life Cost against the benefit in kind driver savings – this can get around the problem of high EV purchase/lease costs relative to the staff grading structure
Assess your charging requirements
From the first step above you’ll now have a better idea of your business needs based on the types of vehicles, the typical length of trips and some basic route planning. For electric vehicles, this now leads to assessing your charging requirements – which will vary a lot depending on the type of vehicle, length of a typical journey, if the journey is in a city or rural, and staffing.
Here are some key factors to consider when assessing your requirements:
- The speed of re-charging an EV and accessibility to charge points, whether you plan to have charge points on site or at the employees’ home, or both. It may be the case that some of the fleet vehicles can be fully electric whereas others may need to be hybrid technology, a plug-in electric vehicle or PHEV
- Are you intending to support staff with the installation of an EV charger at their home? They will need off-street parking and not every staff member will live in a property which has this. There is a grant available to help with the costs of installation called the OLEV grant or the Electric Vehicle Homecharge Scheme but there are criteria which need to be satisfied in order to claim some funds towards the installation cost. This is typically up to 75% and limited to £350 as against a total installation of charge of somewhere between £800 and £1,000
- Installing EVs at work will encourage uptake amongst the staff if you run a fleet of company cars and is essential if your business relies on vans or light goods vehicles. The government offers a similar scheme to domestic installation called the Workplace Charging Scheme which offers employers up to 75% of the purchase and installation cost subject to a maximum of £350 per socket with a total installation permitted of up to 40 sockets at any workplace
- Businesses will need to have a conversation with their local Distribution Network Operator to determine how much electricity supply will be required on site and what the current capacity is as an upgrade could be needed
Setting up a communication plan for a move to electric vehicles will help across your team but also as you communicate with customers. It’s a great message for any business to be proactively changing to help improve its environmental credentials and worth planning how best to explain this to customers.
On the staff communication, some of your drivers might be concerned about a move to EVs and have questions about re-training requirements or practical questions on how it might impact their driving patterns and routes – all can be addressed with a clear communication plan.
When to change
If you have more than one business vehicle, you have probably agreed leases at different times as your company has grown. This plays to your advantage when thinking about a change to EVs since perhaps the simplest time to change is when vehicle leases come up for renewal; this has the added benefit of introducing the technology more slowly, allowing both the business and their staff to get used to the change and fix any teething problems in a gradual rollout.
Planning ahead is crucial as there are some long lead in times on EV delivery. There are plenty of fleet management companies able to help with the switch to new technology from the initial current fleet assessment right through to the delivery of new cars so it could also be time to shop around and make sure you are using the best in the market for your needs. And lastly, keep your staff informed with the changes you plan and discuss if this should be the start of a general move to cleaner, greener strategy for your business.