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Mercia: control costs with EV subscription

Short-term programmes way to mitigate post-Budget cost increase.
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19 November 2024

Businesses facing rising costs following the Budget in October could help their fleet expenses in control with electric vehicle (EV) subscriptions, according to a leading fleet management specialist.

According to Mercia Fleet Management  ‘flexing’ to EVs via subscription could help introduce an element of control at this inflationary time.

Most businesses are facing a rise in employers’ National Insurance Contributions and the Minimum Living Wage from next April, plus increased fleet costs due to rises in Vehicle Excise Duty (VED) which will increase the tax burden for most vehicles.

Hybrid vehicles and more expensive EVs will be most hit by the rises – new electric vehicles with a list price of over £40,000 will from 1st April 2025 have to pay the expensive car supplement of £390 a year from the second tax payment onwards– which some experts believes will raise leasing costs for such cars by £50 a month.

Mercia, the fleet management division of EV salary sacrifice specialist Fleet Evolution is suggesting that flexibly introducing EVs on subscription rather than long-term leases could help control costs, especially for businesses with seasonal or contractual requirements.

Research by Mercia amongst clients in the professional services and construction sectors concluded that, in many cases, company cars were often deployed for contracts of only three months to meet short-term or seasonal needs and were often not required longer term.

According to Mercia head Andrew Leech, while short-term subscriptions are more expensive than long-term leasing, they are more cost effective than resorting to daily rental, arguing that current short-term hire costs for EVs are at prohibitive levels – a typical Tesla Model 3 from a conventional daily hire company can cost in the region of £2,000 per month.

“For clients with seasonal, short-term needs or new employees on probation, we have been able to reduce costs by up to 40% by putting in place three month subscriptions for EVs,” Leech said.

“This has meant that the MG4, our most popular EV (pictured above), can cost as little as £25 per day, while the Tesla Y on subscription could cost just £40 a day including insurance.”

Mercia recently launched Subscribe Electric, an EV subscription service giving corporate customers a taste of going electric at affordable prices while meeting short-term business needs. It is available on most makes or models on the market which are provided fully expensed, including all servicing, breakdown, tyres and insurance costs.

“The ability to ‘flex’ a fleet based on demand is vital in the current market for the very many businesses who face rising costs following the Budget. And these will become even more expensive due to initiatives such as the increases in VED on new product,” Leach said.

“Short-term EVs can be highly attractive from a cost point of view at a time of rising costs for most businesses following the Budget. They can also play a role in helping businesses meet their corporate sustainability targets at the same time.

“We are increasingly talking to businesses that want to find ways of mitigating their costs, especially after what most believe was a bad Budget for business.”

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Andrew Charman

Andrew Charman has been a motoring journalist for more than 30 years, writing about vehicles, technology and the industry. He is a Guild of Motoring Writers committee member and has won several awards including for his business coverage.

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