Jim Saker: Electric company cars need a balance between incentives and practicality

The future growth in electric cars provided as a benefit to employees relies on a balance between the hype, the incentives and the practicality. With the government announcement of the 2030/35 ban on the sale of conventional petrol and diesel cars, most of the manufacturers have trumpeted the arrival of new electric models. This has been backed up by a very generous benefit-in-kind package that only rises in single-digit increments up until 2022.

In addition, from April 2021 it is only pure electric vehicles (EVs) and not hybrid that it is possible for an employer to claim 100% first year capital allowances. So with the hype plus the incentives in place it could be expected that electric company cars are the way forward.

The challenge, however, comes with the practicality for the company employee and the nature of the employer’s business. Whereas historically an employee with a driving license could reasonably be expected to be given the keys and drive off, the challenge with EVs is that there are pre-requisites. The employee needs to live in a location where the car can be charged overnight. If they live in a terraced house or a block of flats without car park charging units there is a major challenge. Although the charging point availability is growing it is by no means consistent across the country.

Depending on the nature of the business and the distances to be travelled, a further challenge will be the number of charging points available at hotels. If the provision does not match the demand on any one night there could be delayed or missed calls. The other side of the equation is the non-business use: is the electric option suitable as a recreational/holiday vehicle? Benefit-in-kind only works when there is an all-round benefit.

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In reality at the moment hybrid technology is probably a more practical but less incentivised option. The problem is that the government is setting the agenda for what technology should be used, something which happened with diesel under the Blair government and has subsequently been condemned. The government should encourage other technologies, such as those based around hydrogen ,which are available now and will be more practical in the long run.

Professor Jim Saker is Director of the Centre for Automotive Management in the Business School at Loughborough University