It would be fair to describe plug-in vehicles as expensive in terms of purchase price. With cars, in particular, if they were seen as accessible, there would be no reason for the Government to subsidise their purchase by up to £5,000 with the plug-in car grant.
The grant is currently in place until April 2012, but it is possible that the Government will want to continue with this incentive until the number of electric cars on the road is greater as well as a more substantial public recharging infrastructure.
But perhaps the most significant distinguishing factor comparing electric vehicles with conventional ones is the cost of fuel versus recharging.
At current prices, it costs around £2.50 to recharge a car like the Nissan Leaf to travel about 100 miles – around 2.5p per mile. The cost per mile of travelling in the Volkswagen Golf 1.6 TDI, based on its official combined fuel consumption of 68.9mpg and a fuel cost of £1.40 per litre, is around 9p – more than three times higher than the Leaf.
This can be offset against the considerably higher capital cost of the Leaf against a mid-grade Golf, but the results in pence per mile terms, even excluding the £5,000 discount currently available, are surprising.
Looking purely at depreciation, SMR and fuel costs, the Leaf and the Golf are evenly matched, with a slim advantage for the Leaf over four years/40,000 miles.
The Leaf loses £6,500 more in depreciation (but the £5,000 plug-in car grant would cover most of this), but is significantly less costly in fuel and SMR.
For driver costs, there is currently a BIK tax holiday on electric vehicles (which will end in 2015/16), so a 20% taxpayer could save £2,429 in BIK tax payments compared with the Golf, or even more if optional equipment is chosen for the car.
For outright purchase fleets, both cars would be subject to the 100% first year writing down allowance, with the threshold currently set at 110g/km. However, the Leaf would not incur Class 1A NIC because it is based on cars’ BIK tax bands.
Where the heavier depreciation of the Leaf would really hurt it is in leasing
rates. The purchaser of the vehicle, in this case the leasing company, would benefit from the £5,000 discount. Using comparecontracthire.com, the lowest monthly lease rate for the Leaf over four years/10,000 miles with maintenance is £356, more than £100 higher than the lowest we found for the Golf at £247.
For fleets that operate in London regularly, an electric vehicle such as the Leaf would benefit from a full discount. The Golf 1.6 TDI wouldn’t, but a customer choosing the Golf Bluemotion would also be able to register for the full discount.
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