Businesses have never faced as many challenges as they do with 2022 approaching. Quite apart from the usual competitive marketplace, the ‘unknowns’ presented by Brexit and the COVID pandemic have created an economic outlook like nothing anyone has ever seen. At the best of times businesses have to keep a close eye on the bottom line and manage finances with a short, medium and long term vision, but that is particularly the case at the moment, which is why fleet management is one of many costs under close scrutiny. But there is a way you can manage fleet costs effectively, while also reducing the carbon footprint of the organisation.
Sales of electric vehicles (EVs) increased by 160% in the first half of 2021, which represented 26% of new car sales globally. It is clear that there is a growing collective effort on the road to net zero, and increasingly businesses are seeing the benefits in switching their fleet to EVs, which is in addition to leasing fleet vehicles rather than buying them, and the various cost advantages that presents.
Why EV leasing is cost-effective
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Vehicle leasing enables businesses to manage fleet costs much more easily, because you are paying a fixed amount each month and for a fixed period. This is more affordable than paying off a loan or other form of finance to buy a vehicle, because you are only paying for the depreciation the lease company will experience with the vehicle, and this cost includes service and maintenance and road tax also. Furthermore, because you are always driving a brand new EV, you will only ever be liable for MOT costs if you lease a vehicle for longer than 36 months. Not having a depreciating asset on the books is a big bonus for the business, so this money can be spent elsewhere and fleet costs therefore become a manageable operating cost. Also, there are no issues with disposal of the vehicle, as it is simply returned to the leasing company.
The business can also add the benefits of driving EVs, where it is considerably cheaper to charge a vehicle than fill it with petrol or diesel. A Tesla Model S with a 100 kWh battery, for example, can be fully charged for £35 and offer around a 260-mile range. A comparable vehicle with a full tank of traditional fuel could cost around £70-£100 to fill the tank. Add to this the exemption from road tax for zero-emission vehicles and Government grants available for installing charging points, and making the change to EVs enables cost-effective fleet management for the business, particularly if they also introduce a salary sacrifice scheme.
Since April 2017, businesses have been able to include zero emission EVs in salary sacrifice schemes, which means that the employee is able to remove a portion of their salary each month, before tax, in exchange for a lease deal on an EV. Pink Salary Exchange have designed what we believe to be the next generation of salary sacrifice schemes, using our extensive knowledge of over 20 years working within this industry.
Flexible next generation salary sacrifice schemes
The trusted relationships we have built with vehicle manufacturers means we can now offer lease deals where expert funders can guarantee the best rates for new vehicles. Our multi-bid funding allows us to find the best deal for you, and also on a flexible basis. The lease deal is low-risk to employees because we can factor in an early termination protection. This means that if an employee leaves the business, they are not tied to the lease deal and can return the vehicle with no ongoing financial liability. In addition, we can offer flexible lease terms which very few in the industry can match. These can span from 12 months to 48 months, giving employees plenty of scope for finding a deal which suits their circumstances.
Going into 2022 it is clear that there is an increased focus on sustainable motoring, with a better national infrastructure of public charging points and more financial incentives to encourage businesses and motorists to make the switch to EVs. Furthermore, EV technology is still very much a developing industry, so the range and efficiency of vehicles will only improve from this point, making EV-driving easily the most cost-efficient form of motoring, so if you combine EVs with lease deals and salary sacrifice schemes, you have a golden ticket to long term affordable motoring and manageable fleet costs. Get in touch with Pink Salary Exchange today, and we can put you on the road to net zero and on the road to flexible EV lease deals and cost savings all round.