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0800 027 3923 Here to chat: Mon-Friday 9am - 8pm Electric vans are becoming increasingly common across UK businesses. Rising fuel prices, government incentives, and advances in battery technology have encouraged many companies to explore electric vehicles as an alternative to traditional diesel or petrol vans. Long-term policy changes, including the planned 2035 petrol and diesel vehicle ban, have also encouraged many businesses to begin thinking about the future of their fleets.
While the environmental benefits of electric vehicles are widely discussed, many businesses are more interested in the financial case for going electric. Lower running costs, tax incentives, and reduced maintenance requirements can make electric vans attractive for certain types of business operations.
However, like any technology, electric vans come with both advantages and limitations. In this guide, we look at the main financial benefits of going electric, along with some considerations businesses should be aware of before making the switch.
A financial advantage of electric vans is the cost of energy compared with diesel fuel.
Electric vehicles convert energy much more efficiently than internal combustion engines. While internal combustion engines lose a large portion of their energy as heat (up to 60% loss), electric motors convert a much greater share (between 70-85%) of electrical energy into motion.
As a result, the cost per mile can be significantly lower.
| Vehicle Type | Approximate Cost Per Mile |
|---|---|
| Electric van | 6–8p per mile |
| Diesel van | 15–18p per mile |
These figures will vary depending on electricity prices, driving style, and vehicle size, but businesses operating predictable routes can often see meaningful fuel savings over time.
Companies that charge vehicles overnight at their premises may benefit even further from lower off-peak electricity tariffs.
However, it is also worth noting that although internal combustion engines are less efficient at converting fuel into motion, diesel fuel has a far higher energy density than batteries. In fact, diesel contains roughly 13 times more usable energy per kilogram than lithium-ion batteries. This means a relatively small amount of fuel can store a large amount of energy.
By comparison, electric vans require large battery packs to achieve comparable driving ranges. These battery systems can weigh 600–700kg or more, which reduces available payload capacity. For some businesses, this may result in carrying smaller loads per trip, potentially increasing the number of journeys required.
Electric vans also have fewer mechanical components compared to traditional diesel vehicles.
A conventional engine includes many moving parts such as pistons, fuel injection systems, exhaust systems, and gearboxes. These components require regular servicing and are subject to wear over time.
Electric vans, by contrast, typically have:
This can lead to lower servicing costs over the lifespan of the vehicle.
Brake wear may also be reduced thanks to regenerative braking, which slows the vehicle while recovering energy to recharge the battery.
However, some costs may be higher in certain situations. Electric vans are typically heavier due to their battery packs, which reduces the available payload capacity compared with equivalent diesel models. While the vehicle’s payload rating already accounts for this weight, electric vehicles can still experience increased tyre wear due the instant torque delivered by electric motors.
Repairs following accidents may also be more expensive due to high-voltage components, and diagnostic work may require specialised technicians. Battery packs are designed to last many years and are usually covered by long warranties, although replacement outside warranty can be costly.
Electric vans can also offer several tax advantages for businesses, particularly when used as company vehicles.
One of the most notable benefits is the 100% first-year capital allowance available for qualifying electric vans. This allows businesses to offset the full cost of the vehicle against taxable profits in the year it is purchased.
For many businesses, this can significantly reduce their corporation tax liability.
Tax treatment can vary depending on the vehicle structure, leasing arrangements, and business use, so professional accounting advice is always recommended.
If you are considering leasing a van, capital allowances do not apply. However, businesses may still benefit from other tax advantages, such as deducting lease payments as a business expense, reclaiming VAT, and potentially paying 0% Benefit-in-Kind (BiK) on fully electric vans until April 2026 when used for personal use.
Our dedicated team would be happy to explain these tax benefits in more detail and help you find the right leasing solution. Please get in touch to find out more.
To encourage the adoption of electric vehicles, the UK government has introduced a number of support schemes.
One of the main incentives for businesses purchasing electric vans is the Plug-in Van Grant.
Currently, this grant can provide:
The grant is usually applied automatically by the dealer or lessor, reducing the purchase price of eligible vehicles.
The Plug-in Van Grant applies only to fully electric vans. While the scheme was originally scheduled to run until April 2026, the UK government has confirmed it will be extended until at least 2027.
Electric vans may also benefit from reduced charges in certain urban zones. In London, for example, zero-emission vehicles have now been replaced with a tiered discount system, meaning electric vehicles may still receive reduced charges, but they no longer automatically avoid the Congestion Charge entirely. The discounted charge is only available for electric vehicles on Auto Pay.
Under the new system, electric vehicles registered for Auto Pay may still receive discounted daily charges. Electric cars receive a 25% discount on the daily charge, reducing the fee from £18 to £13.50. Electric vans, HGVs and quadricycles receive a larger 50% discount, meaning the daily charge is reduced to £9 instead of £18.
For businesses operating regularly in city centres, these savings can accumulate over time. However, as the number of eligible electric vehicles increases, the level of discount may be reduced in the future.
Because charging rules vary between cities, it is important for businesses to check whether their vehicles are subject to any local emissions charges before entering certain areas.
The UK government provides an official Clean Air Zone vehicle checker, which allows businesses to see whether a vehicle will be charged when driving in designated zones. By entering a vehicle registration number, the tool will confirm whether the vehicle is compliant and whether any daily charges apply.
Despite the financial advantages, electric vans may not be suitable for every type of operation.
Some limitations include:
2. Charging time
Refuelling a diesel van typically takes only a few minutes, while charging an electric van can take significantly longer depending on the charger type and battery size. Using a rapid charger, it can take around 30 minutes to recharge a battery to approximately 80%.
3. Payload limitations
Large battery packs add weight to electric vans, which can reduce the available payload capacity compared with equivalent diesel models.
4. Upfront purchase cost
Although running costs may be lower, electric vans still tend to have higher upfront prices than equivalent diesel models. Whether they deliver a financial advantage often depends on how long the vehicle is kept and whether the lower operating costs offset the higher initial cost over time.
For businesses covering long motorway distances or requiring maximum payload capacity, diesel vans may still be more practical
5. Road Tax
Electric vehicles historically benefited from exemption from Vehicle Excise Duty (VED), commonly referred to as road tax. However, changes introduced in April 2025 mean electric vehicles are no longer fully exempt from this charge.
Electric vans fall under the Light Goods Vehicle (LGV) tax category and according to current UK government guidance, this is typically around £345 per year for vans under 3,500kg.
When assessing the financial benefits of electric vans, businesses should look beyond the initial purchase price and consider the total cost of ownership over the life of the vehicle, or the total cost of leasing across the duration of the agreement.
In many cases, electric vans can offer meaningful long-term savings due to lower energy costs and reduced maintenance compared with diesel vehicles. However, the financial advantages will often depend on how the vehicle is used.
Depreciation is another factor worth considering. Traditionally, diesel vans have held their value well in the used vehicle market, while electric vans are still a relatively new segment. However, as electric vehicle adoption continues to grow and emissions regulations tighten, demand for zero-emission vehicles is expected to increase. This could help support stronger residual values over time. For businesses choosing to lease electric vans, depreciation risk is typically absorbed by the leasing provider, meaning companies benefit from predictable monthly payments without needing to worry about the vehicle’s resale value.
Charging arrangements can also influence the financial case for electric vans. Businesses that can charge vehicles overnight at their premises often benefit from lower electricity tariffs, helping reduce overall running costs. However, vehicles that rely heavily on public rapid charging may experience higher energy costs compared with depot charging. As charging infrastructure continues to expand across the UK, many businesses are also installing workplace charging points to maximise potential savings.
Ultimately, the financial advantages of electric vans will depend on how the vehicle is used. Electric vans can be particularly cost-effective for businesses that:
For these types of operations, businesses are often best positioned to benefit from the lower energy costs and reduced servicing requirements associated with electric vehicles. For others, particularly those covering long motorway distances or requiring maximum payload capacity, diesel vans may still be more practical in certain situations.