David Thornton Discusses Electric Vehicles
Why do I need to think about Electric Vehicles now?
Everyone is taking this time to do some self-appraisal and self-analysis over what their individual and business needs are. If you are thinking through what cost efficiencies could be made in your business, then think about the dramatic impact that switching your company car(s) to electric could have. There are 2 key reasons for this….
Firstly, company car tax changes. From April 1st just gone, no tax to pay on pure electric company cars for either the employee or the company from the April. Then for each following year it will just go up by 1% each year, so 1% tax 2021-22, 2% tax 2022-23, etc.
Secondly, the cost of running an electric vehicle. Take the elements that add up to the overall cost of keeping a business vehicle on the road: Cost of ownership, servicing, tax and fuel. If you opted to lease a vehicle – such as the Renault Kangoo van at only £220 per month and costing £4 to charge for a true range of 110 miles – you may well be better off by just keeping your current van off the road! The same goes for executive cars such as the Nissan Leaf. £350 per month and £5 to charge. If that’s a company car, we project it would cost you around £11380 to run that vehicle over 3 years. How does that compare with your current vehicle costs over 3 years?
Added to this are government incentives around EV charge points. There is a £350 grant for each charge point put into a business under the Workplace Charge Scheme. Plus, charging at work is no longer a benefit in kind.
Save your business on its running costs straight away – switch to electric.
Charge Points And Income
Electric vehicle charging will rapidly become a key revenue stream around the hospitality, accommodation and car parking sectors. It will be seen as a feature that is needed to be had – like a new equivalent of WiFi – or risk losing trade to elsewhere, and for others it will be a lucrative new revenue steam. To make the most of opportunity, getting on board is key.
Why will you lose custom without having EV charging facilities? If you are in the tourist sector, then I’ve heard from top Island hotels about lost income for not having charging points already installed for clients. They are fixing that. The Coronavirus has made us all appreciate our liberty and environment. Expect there to be a boom in zero carbon vehicles. People are enjoying feeling good about fresh air, they will want to do more about that. This adds to the fact that company car tax changes which came into force last week, means that neither a company car driver nor a business owning a zero-carbon vehicle have any tax to pay. That is amazing. So, expect the Island to see more electric vehicles and quickly.
Even before this crisis, and before the Prime Minster announced an ending of the sale of petrol diesel and hybrid vehicles in 2035, for the Isle of Wight the industry projection for the take up of EVs was already amazing. Currently, only 0.24% of cars on the Island are pure electric. The projection is that in just over 10 years-time, so by 2032, the figure will rise to 48%! That means some rapid growth soon. The trend is reflected nationally, hence more EVs coming our way soon.
So how can you make money out of investing in charge points? Well, if you’re in the tourist sector you will provide it as a paid for service. That could mean either adding the cost to your normal tariff, so to be inclusive of providing charging – or actually charging as a bolt on service. It would cost around £5 to provide electricity to charge a standard small car. An expected charge to customer for that service would be £15. It’s very possible that a charger gets used daily, becoming more frequent as EV volumes build. So, the profit could reasonably be £70 per week. One option with charge points is to lease them, rather than buy outright, and this makes the return on investment model even more appealing. The cost of leasing a suitable charge point over 5 years is around £50 per month, so the return on investment arguments stack up well.
There are lots of different cost models for those seeing EV charging as a revenue stream, with the customer paying for the service.
For those businesses that see it as a social responsibility to be encouraging their business to invest in commercial, executive or family sized EVs and provide charging as a service for colleagues, the government is supporting with grants of £350 per charge point. Remember also that this is now treated as a benefit in kind for work colleagues, so businesses who invest in workplace charge points are delivering a major assistance to employees. The government will find with grants of £350 per charge point for up to 20 points. These installs can even be phased in, as long as the grant scheme is in operation. But a word of warning, this grant level was reduced in the last budget, dropping from £500, so the writing is on the wall that this will also reduce over time. Don’t miss the cost saving opportunity.
EV charging is set to grow dramatically in the coming months. Probably now is the very best tine to look to get on board.