Fleet & business

Fuel savings

Companies and their employees can potentially save thousands of pounds on fuel by going electric

Costs for running electric vehicles can be up to 90% less than for a conventional vehicle, returning significant savings for your business.

Key points:

  • Plug-in vehicles can be driven from as little as 2p per mile*
  • Best cost-savings are made by driving in electric mode
  • Experts say 2.5p-3p per mile for reimbursing private electricity use is acceptable

Electric savings can stack-up

100% electric vehicles can be fueled from as little as 2p per mile, potentially saving your business thousands of pounds per year. Employees who pay for fuel used privately could also make significant financial savings by choosing an electric vehicle as a company car.

When considering an electric car for your fleet, or as a user chooser, it’s best to consider the vehicle’s whole life costs. This approach considers fuel costs as well as all other operating costs, resulting in the most rounded picture to compare a plug-in car or van with its petrol or diesel equivalent. There’s more detail on whole life costs here.

This is good news for workplace charging because it removes any issues around employees charging their company cars at work, and whether that is a taxable benefit akin to paying fuel for a petrol or diesel model.

Reimbursement for employees

Advisory Fuel Rates (AFR) can also have some bearing on the savings on offer – if you have a petrol-hybrid car, you can use AFR petrol rates; if you have a diesel-hybrid car, you can use AFR diesel rates. Advisory Fuel Rates for plug-in hybrids and range-extended electric vehicles are based on the size of the car’s petrol or diesel-fuelled engine.

As electricity is not classed as a fuel by HM Revenue and Customs (HMRC) there is no AFR equivalent for pure electric vehicles.

Experts (see box out) have established a figure of 2.5p-3p as an acceptable reimbursement rate on pure electric vehicles, which is a huge saving for companies versus the government’s 7p-20p Advisory Fuel Rates for petrol or diesel models, depending on engine size.

Plug-in hybrid models are reimbursed as if all the miles were driven on the internal combustion engine, giving your drivers an extra incentive to charge the vehicle in order to claim back at a higher mileage rate than it has actually cost them.

A word of warning – plug-in hybrid cars not correctly deployed, like doing too many miles on the petrol or diesel engine before being recharged, won’t necessarily return big savings.

Expert view:

Fleets should reimburse ‘fuel’ used by EVs at a pence per mile rate calculated to closely reflect actual cost using available data: manufacturers’ figures for miles per kilowatt (kW) and electricity cost data.

For example, a car with a 25kWh battery and a typical range of 85 miles returns 3.4 miles per kWh. Using an average cost of 10p per kWh – assuming the vehicle is primarily charged at home overnight, the cost per mile is 2.94p. That should be the mileage reimbursement rate.

This approach enables the company to agree a pence per mile rate for an electric car based on known parameters: car’s battery capacity, range in real world conditions and the average cost of electricity from typical sources – home, workplace, and public chargepoint.

Paul Hollick, The Miles Consultancy

* Electric pence per mile figures include journey fuel (electricity) costs only, calculated using official NEDC economy figures and assuming overnight home charging with a 3kwh home charging unit off-peak electricity priced at the ‘average variable night unit price’ of 8p/kWh (source: Dept for Business, Energy & Industrial Strategy average annual Economy 7 domestic energy price statistics 22 December 2017). Individual tariffs and off-peak hours may vary – please consult your electricity supplier. 2p per mile applies to calculation for the following models: Hyundai IONIQ electric; Nissan LEAF; Renault Zoe ZE40, VW e-Golf and VW e-Up!. Charging times and range per full charge vary. Costs are based on official NEDC economy and range figures, which are obtained from official EU test data, are intended for comparisons between vehicles and may not reflect real driving results.

Share this page

  • Journey Cost Savings Calculator

    Journey Cost Savings Calculator

    Discover how much you could save in 3 easy steps

    Start calculator

  • Home Charging Tool

    Home Charging Tool

    Find out how easy and how little it costs to charge at home

    Start calculator

  • Journey Range Calculator

    Journey Range Calculator

    Find out just how far a 100% electric vehicle or plug-in hybrid (PHEV) can travel

    Start calculator

  • Car Tax Calculator

    Car Tax Calculator

    Find out how much you could save by driving a 100% electric vehicle or plug-in hybrid (PHEV)

    Start calculator

  • EV Car Selector

    EV Car Selector

    Find your perfect electric vehicle with our Car Selector

    Choose an EV

  • Charging Point Map

    Charging Point Map

    Find your nearest charge point with our map

    View map

Watch our latest videos

Watch the latest selection of Go Ultra Low videos and discover how even the most sceptic of drivers are being persuaded that they have an electric future.
Sign-up to our newsletter

The SMMT has a legitimate interest in communicating with you in relation to sending periodic newsletters and contacting you about Go Ultra Low activities. Your information will be kept secure and will not be used for any other purpose without your permission. To find out more about how SMMT looks after personal data, your rights, and how to contact our data protection officer, please read our Privacy Policy.