Cost-of-living crisis boosts interest in EV salary sacrifice schemes

Increasing numbers of households are opting for salary sacrifice schemes on electric vehicles (EVs) as the cost-of-living crisis starts to bite, according to Fleet Alliance. The Glasgow-based fleet management and leasing specialist says financial savings, as well as the chance to reduce carbon footprint, are driving greater EV take-up.

Since its launch at the start of this year, some 54 companies and over 4,000 employees have taken advantage of the Fleet Alliance salary sacrifice scheme, which has been aimed primarily at SMEs but which is available to businesses of all sizes.

The company says a salary sacrifice EV can also deliver a fuel cost saving of around £2,000 per annum compared to a fossil-fuelled equivalent.

Running costs

To illustrate the point, Fleet Alliance looked at the running costs of an all-electric Mercedes-Benz EQC Estate 400 300kW Sport 80kWh 5dr Auto obtained through its salary sacrifice scheme, compared to the same car under a PCH agreement.

The full monthly price under the salary sacrifice arrangement was £681, including all servicing, maintenance – such as new tyres – and insurance. The price also took into account savings in income tax and national insurance achieved from the reduction in gross pay before tax, while there is a negligible benefit-in-kind (BIK) tax charge to pay, currently 2% for zero emission vehicles.

However, the same vehicle under a PCH arrangement, based on three years/10,000 miles per annum, no deposit, one payment in advance, fully maintained and including insurance, would cost £1,354 per month – almost twice as much as the salary sacrifice vehicle.

It really is a no-brainer,” said Fleet Alliance CEO, Andy Bruce. “Over a three-year deal, the savings under our salary sacrifice scheme for the electric car add up to a massive £24,000 – a huge boost for any household with inflation currently at 9% and fuel prices at record levels.

“There is little wonder we are seeing such a huge interest in our salary sacrifice scheme when British household incomes are under cost pressure like never before.”

Fuel prices

Bruce also pointed out that record fuel prices are also prompting consumers to switch from an ICE vehicle to an EV. To illustrate the point, Fleet Alliance used the same Mercedes EQC all-electric Estate, but this time compared it against a petrol-driven Audi Q5 Estate 45 TFSI Quattro Sport 5dr S Tronic.

Based on an average 192 miles driven each month for both vehicles, Fleet Alliance calculated the cost of the Mercedes at 2.8m/kWh, the electric equivalent of mpg and using electricity at a widely available cost of 14.4p/kWh.

For the Audi, Fleet Alliance based its figures on an average mpg of 32.5 at a cost of for unleaded petrol at 185p per litre.

The savings were considerable. The Mercedes EQC had an electricity cost of £9.87 per week compared to the weekly petrol cost of the Audi Q5 at £48.68 – a saving of up to £39 a week or £2,000 a year.

“In reality, the savings will probably be higher still, since the Mercedes EQC’s average mileage per kWh is highly conservative and, if EV off-peak charging is used, the cost per kWh could drop to as little as 4p. Meanwhile, the Audi is unlikely to hit its average mpg is real usage.

“Nevertheless, the comparison shows how much money you could be saving by switching from fuel pump to electric charger. Over three years, that’s a £6,000 fuel cost saving which could help motorists to budget more efficiently and save money, despite the rising cost of living,” Bruce maintained.

Bruce said he was not surprised by the upsurge in interest in the Fleet Alliance salary sacrifice scheme.

“A salary sacrifice scheme takes maximum advantage of prevailing tax regimes and the growing movement to electric cars. And it provides an excellent opportunity to reduce a business’s carbon footprint while providing employees with a brand-new electric vehicle at minimal BIK impact.

“In short, given the current economic circumstances, there has never been a better time to acquire a brand-new all-electric car through a salary sacrifice scheme, like ours, than now,” he added.