Are there savings to be made by switching to an EV fleet?

WITH capital allowances on business cars changing, CBVC Vehicle Management has crunched some numbers and found that business fleets can save money by leasing and take advantage of significant whole life costs savings.

For executives choosing a Tesla Model 3, the leasing route could result in a business saving in excess of £5,200, or nearly £8,000 for a BMW X5 xDrive45e over the term of the lease when compared with purchasing the same vehicle.

Within these significant allowance changes, which come into force in April, the 100% first-year allowance continues for cars with zero emissions until 2024/25 tax year.

However, cars qualifying for the main rate of 18% will now only benefit if they achieve CO2 emissions of 1-50g/km, while cars with CO2 emissions above 50g/km will be subject to a write-down allowance on a continuing balance basis of just 6%.

With the SMMT suggesting that the average CO2 emissions of the cars in the UK is 124.5g/km, this leaves a significant number of cars subject to the highest writing down allowance pool.

Following the government’s Road to Zero plan, it is a crucial time for fleet decision-makers who need to determine whether it is more cost-effective to buy or lease zero-emission vehicles.

Mike Manners, managing director of CBVC Vehicle Management, said: “The changes to legislation concerning business car allowances, which are primarily designed to encourage fleets and businesses to move to zero-emission vehicles, plus the benefit in kind taxation and consequently Class 1A National Insurance changes, are significant for both fleets and drivers.

“When you consider all the relevant costs, including discounted cash flow, leasing works out more favourably. I would strongly encourage business fleets to reconsider their policies in light of these changes and take advantage of the bottom-line savings offered by a fully serviced lease.