As businesses move toward greener operations, electric vehicles (EVs) are becoming a popular choice for company fleets. Switching to EVs not only reduces your carbon footprint but can also bring long-term cost savings. This guide explores the options for financing EVs, including grants, leasing, and loans.
Why Consider Electric Vehicles for Your Fleet?
- Environmental impact: EVs produce zero tailpipe emissions, helping your business meet sustainability targets and improve corporate social responsibility.
- Lower running costs: Electricity is often cheaper than diesel or petrol, and EVs typically have fewer moving parts, reducing maintenance costs.
- Government incentives: Businesses may qualify for grants such as the Plug-in Van Grant (PIVG) or Enhanced Capital Allowances for zero-emission vehicles.
- Brand reputation: Using EVs signals environmental responsibility, which can enhance your brand image and attract eco-conscious customers.
Financing Options for EV Fleets
1. Lease Finance
How it works: Your business rents the EVs for a set term, typically with the option to upgrade to newer models at the end.
Benefits:
- Lower upfront costs
- Off-balance-sheet option
- Easy to scale or swap vehicles as technology improves
- No risk of loss of value in the vehicle over time
- Services maintenance & vehicle tax finance can be included
Considerations:
- You don’t own the vehicles at the end
- Total cost may be higher over the long term
2. Hire Purchase (HP)
How it works: You pay monthly instalments to eventually own the EVs.
Benefits:
- You own the vehicles at the end of the term
- Fixed monthly payments aid budgeting
- Eligible for capital allowances to reduce taxable profits
Considerations:
- Larger initial deposit than leasing
- Asset remains on your balance sheet
- Assets value risk is yours if future values fall away
3. Business Loans
How it works: Borrow a lump sum to buy the EVs outright.
Benefits:
- Full ownership immediately
- Flexible use of funds for multiple fleet vehicles
- Can negotiate better purchase deals
Considerations:
- Interest may be higher than structured lease or HP options
- Large upfront payment can affect cash flow
- No balloon/ residential value payments to reduce monthly payments
Grants and Incentives to Reduce Costs
- Plug-in Van Grant (PIVG): Reduces the cost of eligible electric vans.
- Enhanced Capital Allowances: Allows businesses to claim 100% first-year tax relief on qualifying EVs.
- Zero Emission Vehicle (ZEV) infrastructure funding: Some local schemes fund charging stations for business fleets.
These incentives can significantly reduce the cost of upgrading to electric vehicles.
Tips for Choosing the Right EV Financing Option
- Assess your cash flow, leasing can reduce upfront costs, while HP or loans give ownership.
- Factor in vehicle lifespan and technology, leasing may be ideal if you want to upgrade as EV technology evolves.
- Explore grant eligibility early, some incentives are limited by date or vehicle type.
- Consider maintenance packages, EV servicing requirements are different, and some finance deals include maintenance.
Get Expert Advice
Upgrading your business fleet to electric vehicles is an investment in the future. At Causon Business Finance, we work with a panel of lenders to find flexible financing solutions for your EV fleet, helping you take advantage of grants and minimise costs.
Call 01455 250 690 or email info@causonbusinessfinance.co.uk to explore your options today.
