What are the Financial Benefits of Going Electric?

There is no doubt the use of electric vans and cars is on the rise. Whether you like them or loathe them, it appears they are here to stay.

Our job is not to convince our readers to convert to electric vans, but rather point out some of the tax benefits, along with other advantages, that come with these new generation vehicles that run on electricity.

Like any new technology, it comes with advantages and disadvantages, and we always like to get the bad news out of the way first!

What are some disadvantages of using an electric van?

1. Driving range limitations: Electric vans generally have a shorter driving range than their petrol or diesel counterparts. This mileage limitation may hinder their usefulness for long-distance travel or for heavy-load work applications.
2. Limited stock availability: Electric vans are still somewhat uncommon in the trade market. Due to supply and demand, availability can be limited depending on location and the model you are looking for.
3. Higher upfront cost: Electric vans tend to be more expensive than their petrol or diesel cousins. This makes them less affordable.
4. The inconvenience of recharging time: Electric vans take longer to recharge than it takes to refuel a fueled vehicle. Fast charging up to 80% can even take up to 30 minutes.
5. Few public charging stations: There are fewer locations for public charging points compared to petrol stations.
6. Weight and size restrictions: Electric van batteries and electrical systems add weight and take up space. This will limit the payload capacity and cargo space, making it less than ideal for business purposes.
7. Maintenance & repair issues: There are fewer mechanics experienced or trained to work on electric vans. As a result, this will inevitably make repairs more expensive.
8. Adjusting driving habits: Drivers may find it difficult to adjust their driving habits. This is because EVs handle differently. For example, they are far more responsive, and overtaking requires a different technique than with their internal combustion counterparts.

Advantage of Electric Van for Your Business

Now for the good news! Let us look at the information regarding owning an electric van and the tax reliefs and advantages offered as a result!

Lower overall fuel costs 

The energy required to power electric vans is considerably less than fuel-powered vans. Mile for mile, this results in lower fuel costs for business journeys. On average, electric vans are over 80% more energy efficient than an internal combustion engine. This is because an internal combustion engine loses a substantial amount of energy through heat.

Zero emissions

Strictly speaking, this statement isn’t completely accurate. The electricity that is used to power up the batteries may be generated from fossil fuels. This would result in emissions at the power plant level.

However, in this case, EVs are still more climate-friendly. This is because EVs can convert about 60-70% of the electrical energy from the grid into motor power used to move the vehicle.

Whereas internal combustion engines are approximately 40% efficient (at the high end), meaning at least 60% of that energy is lost as heat.

Lower insurance rates

Potentially, electric vehicles cost less to insure. There are several reasons that contribute to these lower insurance premiums. Here are some examples of why insurance companies generally consider EVs less risky to insure:

• EVs are less likely to be stolen than traditional vehicles.
• Lower fire risk is a major concern for insurance companies.
• Many insurance companies offer EV policy holders a discount or an incentive to encourage more sustainable commuting.
• EVs have fewer moving parts and are less likely to be involved in accidents.
• Improved driver comfort: Electric vans benefit from smooth and quiet rides. This leads to improved driver comfort and reduced driving fatigue and accidents.
• Government grants and incentives: The UK government supports individuals and businesses driving EVs by offering tax relief incentives (these are expanded a little further in the article). As a result, more people getting EVs means an increase in demand for insurance coverage, which can further drive down insurance costs.

Government Incentives & Tax Benefits of Electric Vans

People still need the incentive to go electric. There’s still plenty of work that needs to be done to convince people to go down this route.

One way the government is tackling this is by offering tax advantages. This support for individuals and services will ultimately help a lot with reductions in business costs.

Let us take a look at the tax benefits offered by the UK government for having an EV:

1. Company car tax: Electric vans are exempt from company car tax. This is a significant saving for businesses.
2. Zero Vehicle Excise Duty (VED), aka “road tax” for electric vans. As well as for vans that emit less than 75g/km of CO2 emissions.
3. The Plug-in Van Grant offers a grant of up to 20% off the purchase price of a new electric van (up to a maximum of £16,000). These figures will depend on the gross vehicle weight and whether the van can travel 60 miles in zero-emission mode.
4. Company car tax exemptions for electric vans. Businesses can claim 100% first-year capital allowances for electric vans, which means that the entire cost of the van can be offset against taxable profits in the first year of ownership.
5. Exemption from London Congestion Charge.

Closing thoughts

The decision to own an electric van would depend on several factors. Is the model you like available? Are your driving habits suited for an EV van? Can the vehicle handle your business requirements?

As a whole, electric vans offer several benefits over traditional counterparts, such as lower running costs, benefits to the environment, and some enticing tax benefits and government incentives.

Having said that, there are also limitations that can impact the running of a business, such as limited driving range, long charging times, limited charging facilities, and higher upfront costs.

Ultimately, it would appear there is still a bit to go before EVs become the norm. It would appear the public still needs a little more convincing, at least until range and charging times improve.