Are EVs really more expensive to run than a petrol car? Or should your IT company be leasing electric cars instead?

Should your IT company be leasing electric cars instead of petrol cars - are they more expensive to run?

The running and operating costs of a vehicle seems to be a far more pertinent observation since the onset of electric vehicles in 2020/2021. Until the growth of lithium-ion, many personal and business customers would blindly operate their vehicles, with little thought as to their fuelling, servicing and insurance costs.

Even after high-profile CO2 and MPG scandals, many UK leasing customers just didn’t recognise this as a potential issue for them. However, it is now firmly accepted that EVs are held to higher standards than their combustion counterparts, with some media and automotive press suggesting that there should be some concern surrounding this.

In an effort to fightback against some of the misleading comments about BEVs a new group - the Electric Vehicles UK - is looking to sanitise some of the conjecture and provide a more balanced argument on moving electric with your next new car.

Only last week, the Yahoo Finance team posted an article on electric cars being “more expensive” than a combustion alternative. Indeed, the key argument is that charging your EV on rapid and ultra-rapid chargers will incur 80 pence per kilowatt charges for your vehicle.

And based on evidence from The Times, in that a “typical” EV will need 1 kWh of energy per each 3.3 miles it covers, this could result in a 24 pence per mile cost, which is almost double to that of the petrol option. The article is making the point that increased efficiencies in petrol / diesel options coupled with falling oil prices is making the combustion a more palatable proposition and this may be a reason as to why electric vehicles seem to face sale barriers. But is this really accurate?

Every PCH and BCH customer at e-car is provided with a balanced analysis for their preferred vehicle; and no we don’t think that all-electric cars are perfect! Much of this is based on considering the full facts and requirements of the individual or company leasing the vehicles and matching this to the vehicle.

Charging / fuel costs is something which is often raised and this will clearly impact the decision process. Charging your EV will take place at home / work / public domain but each with its relevant costs and practical considerations such as speed, convenience and costs.

Quite correctly, the underlying point of the article is that the charging costs impact the Whole of Life costs and, if not properly managed, this will result in a more expensive situation on your vehicle than what you were preparing for.

For drivers using a home / residential charge point, unless you use a dedicated charging tariff from your electricity company, your cost of electricity will be controlled by the energy price cap.

From 1 October 2024 the price cap will be 24.50 pence per kWh. However, it is probably worth providing you with some examples of just how the cost of electricity will impact your charging / cost per mile analysis. For many IT companies, who may now be providing employees with the option of an all-electric car, this will be important for those who are more diligent about their Whole of Life and fleet reviews.

This is even more pertinent to those IT companies who provide outbound and onsite services, with many of their drivers likely to cover higher-mileages. So how does charging your EV work (and how does it really compare to a petrol or diesel)?

•  Dedicated EV Tariff - most of the major electricity and utility companies will offer customers some form of charging tariff. This will effectively allow a customer to charge their vehicle at off-peak hours (usually 12am - 5am) for a discounted rate. The rate offered will vary from company to company but will often be around 7 pence to 9 pence per kWh. Taking the Audi Q6 Performance as an example, with a 100 kWh battery and real-world range of 285 miles, if you were to charge this EV from 0 - 100% at 8 pence per kWh, this would cost £7.59 for a “full tank”. This would mean a cost per mile price of 2.66 pence;                       
•  Standard Domestic Tariff - for those customers charging at home, but without a dedicated tariff, they will incur the standard tariff of 24.5 pence per kWh (as per Ofgem). Using the Audi Q6 as an example again, if you were to charge this EV from 0 - 100% this would cost £23.25 for a “full tank”. This would mean a cost per mile price of 8.16 pence;
• Slow / Fast Charging  - for those customers charging on the public network, but using sub 50kW AC or DC connections, the team over at Zap Map (https://www.zap-map.com/ev-stats/charging-price-index) suggest you would be paying around 56 pence per kWh for August 2024. Using the Audi Q6 as an example again, if you were to charge this EV from 0 - 100% this would cost £53.14 for a “full tank”. This would mean a cost per mile price of 18.65 pence; and

•  Rapid / Ultra Rapid Charging - for those customers charging on the public network, but using 50kW DC connections (and above), the team over at Zap Map suggest you would be paying around 80 pence per kWh for August 2024. Using the Audi Q6 as an example again, if you were to charge this EV from 0 - 100% this would cost £75.92 for a “full tank”. This would mean a cost per mile price of 26.64 pence.

So where you charge, and when you charge, your EV is clearly impactive on the running costs of your vehicle. While the latter analysis for ultra-rapid is somewhat shocking, it is crucial that your consider how often this will be used as the solution for your company’s fleet.

However, many software and hardware computer companies will clearly impart the same level of logic to their vehicle fleet as they do with their own customers. In many situations, your staff will have access to a home charge point and, with the right education, will be able to utilise a dedicated EV tariff which allows for cheaper charging which is well below what a petrol or diesel would allow.

With a suitable vehicle choice, in terms of the EV for your mileage requirements, public charging can be limited to those situations  where it is entirely necessary. In any event, the charging session being performed should be limited to what you need to achieve your journey home as opposed to fuelling this from 0 - 100%.

For those IT companies who have a dedicated HQ or office, there is always the ability to install charging facilities. Charging facilities for your employees and customers is a great addition and will help future-proof your business with the onset of more EVs on the road.

In addition, the costs incurred as part of this investment are wholly tax deductible under full expensing / Capital Allowances. This means that you can offset the cost of this investment against Corporation Tax. If you are allowing your staff to charge at work, for free, then do note that they can do so without any tax implications as electricity is not considered as fuel as per petrol or diesel.

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