Growing popularity of salary sacrifice prompts EV “explosion”

Salary sacrifice schemes are providing a strong boost to electric vehicle (EV) adoption according to research by Arval UK, which says it has seen 280% growth in the number of vehicles it operates under its Ignition product during the last 12 months, with the top 15 cars chosen now all EVs.

Richard Cox, consultant at the fleet and mobility specialist, explained that the growth showed both the burgeoning popularity of “sal-sac” and how quickly EV adoption could happen in the “right conditions” – with an appropriate combination of supportive tax incentives, increased vehicle choice and firm employer commitment.

“The introduction of zero and very low rate benefit-in-kind taxation rates on EVs has made these schemes very attractive and led to this rapid expansion in Ignition. The latest, most advanced and environmentally-friendly cars can be offered to employees at extremely attractive monthly rates, supported by more choice in the electric car marketplace which means that there’s an option for every budget and lifestyle need.

“We are finding that salary sacrifice fits not just the needs of people who would like a company car and do not currently qualify for one, but also employees who have taken a cash allowance option and are looking for alternative car provision.

“The level of interest being shown across companies with which we are working is ever-growing. These schemes provide a range of genuine advantages to employers and employees, with no real downsides or compromises,” Cox said.

Arval has reported a 129% increase in the number of individual companies taking part in “sal-sac” schemes.

Cox pointed out that rapid EV adoption is a critical issue from a corporate point of view, given the government’s 2030 electrification deadline. Other factors driving the changeover include the reluctance of employees to return to using public transport in the wake of the pandemic and a desire for companies to enhance employee benefits in an increasingly competitive recruitment market. “In this way, a mobility role is being established for EV-based salary sacrifice as a key element in a wave of new benefits initiatives that are designed to bring innovative options and ideas into play for employees, with only a very limited investment required by their employer.

“Earlier this year, we released some figures showing that almost nine out of 10 cars leased through Ignition were now EVs, an increase over the last two years from just four out of 10. That very clearly illustrates the dramatic rate of change,” Cox said.