How will electric driving impact your fleet budget?
To make the transition to an electric fleet, you need to set aside a budget. Electric cars are still more expensive than comparable fuel cars. However, in addition to sustainability, there are also financial advantages to an electric fleet.
The purchase price is expected to drop further in the coming years. More and more cheaper models are already being launched on the market.
Electric cars retain their value. After five years, an EV is still worth almost half of the purchase price. A petrol car is worth about 40% and a diesel car 30% (Source: ANWB, 2020).
The maintenance costs for an electric car are considerably lower than those for a fuel car. This is because an EV consists of fewer moving parts than a car fitted with an internal combustion engine. The brakes are also put under less strain thanks to automatic regenerative braking (Source: ANWB, 2020).
The biggest saving to be made is in the fuel costs. Electricity is cheaper per kilometre than petrol. A mid-range car uses about 17 kWh per 100 kilometres on average. Just as you pay per litre at a petrol pump, you usually pay per kWh at a charging point. However, the price of a kWh can vary considerably. If you buy and install a charging point on your own company premises, you will benefit from the cheapest prices per kWh. You then pay the kilowatt-hour price directly to your own energy supplier. Companies often benefit from a wholesale energy tariff (approx. € 0.06/kWh). If your employees charge their car at home, this costs about €0.23/kWh on average. Charging at a public charging point can cost as much as €0.35/kWh. Fast charging is the most expensive way to charge: this costs an average of €0.66/kWh (Source: ANWB, 2020). There are several possibilities for reimbursing charging costs. Visit the Initiatives for your employment conditions and car scheme page for more information.
Tax arrangements and subsidies
To stimulate the purchase and use of electric cars, there are various tax arrangements and subsidies which make electric driving more attractive:
- Environmental Investment Deduction (MIA, Milieu-investeringsaftrek) When you purchase a fully electric car, you can receive a subsidy in the form of an extra deduction from your company's profits. In 2020, the MIA amounts to a maximum of 13.5% for an electric car costing up to €40,000.
- Arbitrary Depreciation of Investment in Environmental Equipment (VAMIL, Willekeurige afschrijving milieu-investeringen): The VAMIL allows you to deduct 75% of the investment costs when you want, and provides a liquidity and interest advantage.
- No taxation on passenger cars and motorcycles (BMP) and no road tax (MRB) Electric drivers are exempt from tax on passenger cars and motorcycles (BMP) and road tax (MRB) up to and including 2024.
- Lower additional tax rate. In 2020, business drivers will benefit from an additional tax rate of 8% instead of 22%, up to a maximum of €45,000. For fully electric cars, the additional tax rate will slowly increase in the coming years, to 22% in 2026 (Source: ANWB, 2020).
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Fully electric (EV)
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- Purchase subsidy. From 1 July 2020, private individuals will be eligible for a subsidy of €4,000 when leasing or purchasing a new electric car. The subsidy for a second-hand electric car is €2,000. This applies to cars with an original catalogue value between €12,000 and €45,000 and a minimum range of 120 kilometres. For more information, please visit the Dutch Government's website.
Cost of charging facilities
If you want to transition to an electric fleet, you will most likely also need to invest in charging infrastructure. For example, you might want to install one or more charging points on your company premises for employees, visitors, and company car-pooling vehicles.
The cost of a charging point very much depends on the charging capacity. The installation costs are largely based on the number of metres of drilling and excavation work required and any modifications to the current power connection. The purchase and installation costs or the periodic lease costs, if you decide to lease a charging point, are deductible. You can also have a charging point installed at an employee’s home. You can reimburse the purchase and installation costs tax-free if they have a company car.
Charging points have a quick return on investment, often as short as five years, due to the difference in the wholesale rate employers pay for electricity and the rate charged to users. On average, you will start generating additional income with your company charging points after five years.
If the investment exceeds €2,500, you may be eligible for a subsidy as part of the Environmental Investment Allowance (MIA). In some cases, this subsidy can amount to 36% of the investment amount, on top of your standard investment allowance. The Arbitrary Depreciation of Investment in Environmental Equipment (VAMIL) allows you to deduct 75% of the investment costs.
Although electric cars are currently still more expensive to buy than comparable fuel cars, the Total Cost of Ownership (TCO), i.e. the cost of the car over the entire period that you use it – including things like maintenance, depreciation, and running costs – is usually lower for an electric car.
The 2019 Electric Driving Monitor calculated that a fully electric car (when used for four years and with an annual mileage of 15,000 kilometres) costs an average of 56 cents per kilometre, whereas a comparable petrol car costs 54.8 cents.
If your annual electric mileage is higher than that, you will benefit even more.