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Electric vehicles could reshape UK fleet market and create new remarketing challenges

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Hundreds of thousands of employees who have opted to take cash instead of a company car could switch back to employer-provided schemes as they choose electric vehicles.

The move could reverse years of reductions in the number of company car drivers in the UK after the mass adoption of cash for car schemes in the face of rising benefit-in-kind taxes and limited choice lists.

New government tax breaks are a key factor in the change of attitude; from April, zero-emission company cars will incur 0% company car tax, rising to 1% in 2021/22 and 2% in 2022/23.

The potential savings for drivers are significant, particularly perk car users who are most likely to have taken the cash option. Compared to a premium diesel SUV, the electric alternative could slash a driver’s company car tax bill by more than £15,000 over a three-year period.

A survey from electric vehicle leasing company Drive Electric found that 80% of cash-takers said they are ‘likely’ or ‘very likely’ to move back to company cars to take up the electric option.

Mike Potter, managing director of DriveElectric, said: “As long as incentives remain, the government’s target of all new car sales to be electric by 2035 is achievable, and in addition private buyers will benefit from an increased supply of two-to-four-year-old used electric cars, spreading the benefit of this investment.”

DriveElectric’s order book is 95% battery electric vehicles.

However, as a growing number of zero-emission vehicles return to the used car market, experts warn it could create a ‘charging crisis’.

A key concern is the amount of power needed at storage and auction sites when handling large numbers of plug-in vehicles that all need to be kept charged.

Sam Watkins, chairman of the Vehicle Remarketing Association, which represents businesses that handle, sell, inspect, transport or manage more than 1.5 million used cars and vans every year, said: “We have some members who process tens of thousands of vehicles every month. Currently, it is just a question of ensuring that there is enough fuel in the tank of each but looking ahead, a large proportion will be EVs, especially following the Government’s 2035 commitment.

“Those remarketing companies will need to make sure that EVs are charged to a useable degree simply to move them around and comply to best practise for storage scenarios.”

Once an EV has a flat battery, it must be handled in line with correct safety protocols which differ from internal combustion engines.

Watkins added: “The only way at present to ensure that they will all have sufficient power is to install hundreds of chargers on some large sites that are used for storage by manufacturers and leasing companies.

“This could potentially place huge demands on local electricity supplies, especially as we see more power-hungry superchargers being introduced.”

He said major remarketing operations are planning new sites partly based on the availability of power infrastructure.

Watkins added: “Even a medium-sized dealership might need a dozen chargers on-site until new charging solutions are evolved.

“As things stand, however, there is certainly potential for what you might call a charging crisis.”

During January, the market for zero-emission capable cars was nearly equivalent to diesel, as the market.

Diesel demand has slumped after years of negative publicity and tax penalties for company car drivers.

More than 4,000 battery-electric vehicles were sold during January in the UK, a rise of more than 200% year-on-year.

Overall, alternative fuels accounted for nearly 19% of the market, compared to 20% for diesel.