Business Contract Hire
The UK Government announced on the 20th September 2023 that from 2035 onwards the sale of new petrol and diesel cars will be banned. Plug-in hybrids have a five-year stay of execution, with the sale of new ones no longer an option after 2035. This has huge implications for any business, large or small, that has a vehicle fleet and a Business Contract Hire (BCH) agreement. Fleet managers expect electric vehicles (EVs) to make up more than half of the UK’s vehicle fleets in the next two years, and three quarters of them by the 2035 deadline. Introducing an electric fleet – whether cars, commercial vehicles or both – will help you future-proof your business.
Transitioning to an all-electric or partially electric fleet might seem a daunting proposition, so it’s important to look at what this might entail.
Firstly, the existing petrol and diesel vehicles in a fleet can be returned in a process of “natural wastage” as the contract for each one comes to an end, so it’s not a matter of going electric overnight, electric could be phased in.
Developments in battery technology mean there will be a gradual improvement to the range of cars as they come onto the market.
Switching to electric vehicles will help to boost your business’ sustainability credentials. Sustainability scores are taken seriously by investors, shareholders and regulatory bodies, and compliance criteria such as carbon footprint is likely to become better defined over the next decade. Going electric makes a firm statement about your business’ commitment to the future of the environment.
You will also save money. Leasing electric cars works out significantly cheaper than buying them, with the high purchase price and all the depreciation that entails. Electric vehicle mileage rates can be as cheap as 3p per mile (as at March 2023) if your employees can charge at home on an EV-friendly, off-peak tariff. Electrifying your fleet will eliminate your reliance on fossil fuels and possibly lessen your company’s risk to hikes in fuel prices. You and your employees will save on tax too, with Benefit-in-Kind (BIK) tax fixed at 2% until 2025. It will then increase by 1% per year until 2028, when the figure will be reviewed.
If you think your company is ready to consider going electric, you may want to canvas employee opinions by running a short survey to understand how attractive driving electric cars might be. So here’s a quick summary:
- How many fleet cars do you currently have? Calculate the potential savings over the entire lease period.
- Consider how you will charge and insure cars?
- How will you phase in the transition to electric company cars?
- How will you promote the switch to employees?
- How will you measure your sustainability credentials?
ElectriX and CBVC can help with advice on all aspects of making the switch to electric. Find out more about the range of cars we have available for your electric car Business Contract Hire scheme.