Is making the move to an electric fleet that expensive?

At the start of 2024 the UK hit a major milestone by selling its millionth electric car. The EV market continues to grow in the UK with a 21% increase in registrations compared to the year prior. 

This impressive surge in growth is largely down to the fleet market. According to the Society of Motor Manufacturers and Traders (SMMT), fleet and company cars accounted for more than three-quarters (77%) of new battery electric vehicle registrations last year. 

A study by Drax Electric Vehicles also found that almost half (48%) of businesses have already installed EV charging infrastructure – a further third (33%) plan to do so within the next 12 months.

Despite this promising outlook in a separate study 25% of respondents cited ‘cost’ as the number one barrier to EV investment and over half listed it in their top three blockers.

But is moving to an electric fleet as expensive as everyone thinks? Will your ICE vehicles end up costing you more in the long-term?

Let’s get plugged in…

When looking at the expense involved in making the switch to an electric fleet we can’t just look at the upfront sticker price of a vehicle, we need to factor in total cost of ownership, legislative changes, and the importance of future-proofing your business. 

Total cost of ownership (TCO)

The transition to electric has made total cost of ownership calculations slightly more complicated, but never fear Electroverse is here to help!

TCO in a nutshell is the sum of all the costs associated with purchasing and running a vehicle over its entire lifespan. It will include things like:

• Interest rates (if financing was used to purchase the vehicle)

• Money lost to depreciation 

• Electricity or fuel costs

• Insurance

• Road tax and tolls 

• Servicing and maintenance costs

When weighing up the total cost of ownership it can tip either way between ICE and EV, but which comes out on top

Purchase Cost 

It's not a secret that an electric vehicle will cost more upfront than an ICE vehicle. In 2024 the average EV will cost between £26k-£33k, whereas the average ICE vehicle will come in at £22k to £36. However, the gap in cost between electric vehicles and standard ICE vehicles is closing and is expected to continue to do so. 

An alternative to the high purchase costs is to go down the used route. According to research published by the AA the prices for their top 20 searched used EVs have fallen by almost 6%. They have attributed this to more models and manufacturers entering the new car market, so more are becoming available second-hand. 

Depreciation

An area where EVs triumph over their ICE counterparts is with depreciation. Depreciation is the loss in value of an item over time, something that ICE owners understand all too well with most vehicles losing 15-35% of their value in the first 12 months of ownership. 

AutoTrader has painted a much sunnier picture for EVs as they lose just 12% of their value in the first year on average. As used EVs continue to rise in popularity their residual value has also increased.

“Fuel” Costs

We know that energy is not as cheap as it once was but even so EVs come out looking very favourable in comparison to petrol or diesel when it comes to annual ‘fuel’ costs. 

According to RAC data from April 2024 the average cost to fill your petrol vehicle ranged from close to £60 to over £95. Diesel was even higher with a range from £62 to £101, depending on the size of your vehicle. 

Assuming an average mileage of 7,400 miles a year, this could cost between £740 to over £1,500 annually. 

Comparatively charging an electric vehicle at home results in much lower costs. Depending on the size of the car, and in-line with the April 2024 price cap, it would cost between £7.90 to £23 to fully charge your EV.

What about public charging? 

If you travel long distances or like to keep your vehicle topped up you may need to charge on the public network which can work out more expensive than home charging. 

The cost of public charging can vary depending on speed or network operator but the average cost with charging on the go is £26, much cheaper than filling with petrol or diesel!

Insurance, servicing and maintenance costs

Insurance rates across all vehicle types are up significantly since 2019- the average annual cost going from £625 to £941- but for electric vehicles 

Fleets managers have been outspoken about the high costs for electric fleet insurance with the Association of Fleet Professionals putting pressure on insurance companies to better understand the fleet risk around electric vehicles. 

But it's not all doom and gloom! The high insurance costs can be offset by the fact that EVs require very little ongoing maintenance, especially compared to their ICE counterparts. This is in part because EVs have less moving parts so less chances for things to break down. 

EVs still need some maintenance. Regularly check brakes, tires, and other parts per the manufacturers guide. However, thanks to regenerative braking, these checks are less frequent!

Taxes and tolls 

Currently until April 1st 2025 electric vehicles do not have to pay road tax- otherwise known as Vehicle Excise Duty (VED). This is because for vehicles registered from April 2017 first year VED costs depend on  their CO2 emissions when brand-new. 

As electric vehicles are zero-emission they have so far enjoyed an equally zero level of road tax, but all is not lost. While EV’s will be required to pay VED from 2025, the first year rate will amount to just £10! Meaning the sooner you transition to an electric fleet, the sooner you can make the most of the low rate. 

There are also tax benefits if you choose to purchase your electric vehicle rather than lease it. If you purchase rather than lease, you can claim 100% of a new EVs cost in its first year, rather than having to amortise it. 

Lastly, having an electric fleet means that you will be exempt from Low Emission Zones (LEZ) and Ultra Low Emission Zones (ULEZ). This is thanks to the fact EVs don’t produce any tailpipe emissions! 

So let’s revisit our opening question: is making the move to an electric fleet that expensive?  

It can seem expensive due to the upfront costs but factoring in running costs, the rise in the second-hand EV market, lower tax and less maintenance, EVs come out on top as a winner when looking at expense!

You have the electric fleet, now how do you manage it? 

Luckily for you Electroverse for Business launched at the beginning of 2024 and has been helping fleet admins manage their electric fleets with ease ever since!

As an admin you get access to:

• A straightforward web platform and company analytics dashboard

• Customiseable reporting

• Easy billing with one monthly consolidated invoice - no more time consuming expenses

Drivers benefit too! They will get access to over 900,000 chargers globally and can find them with ease using the Electroverse app. To pay for charging all drivers need to do is start a charge with the app, or tap their RFID, and that's it! No more claiming back expenses.

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