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Is now the time to switch to an EV fleet?
22 June 2020
In the past few months or even years, with growing environmental concerns and more options on the market, you may have started to think of switching to an Electrical Vehicle (EV) fleet. However, you may not have realised the financial benefits of investing in an EV fleet and now may be the ideal opportunity to switch to a more cost-effective fleet.
In April 2020, the Government made several changes to Benefit in Kind (BIK) rates. The most significant of these was a 0% BIK rate for EV cars. However, research by Go Ultra Low, found that 32% of fleet managers did not know that BIK rates had dropped to 0% for fully electric vehicle.
Therefore, we wanted to remind everyone that EV fleets are becoming a much more cost-effective option as well as minimising your company’s environmental impact. Please find below our full guide on all the changes introduced by the Government in April 2020.
Worldwide Light vehicle Test Procedure (WLTP) & CO2
Worldwide Light vehicle Test Procedure (WLTP) was first introduced in September 2018. This standard of testing on all new cars and light commercial vehicles is more comprehensive than the previous NEDC test that remained unchanged for over 20 years. The new tests provide a more realistic and reliable figure for CO2 and MPG based on different driving habits and criteria. It was also discovered that adding options to a vehicle can increase the weight and subsequently affect these figures. The initial tests found a very high increase in CO2, resulting in the manufacturers using a formula to convert the new CO2 values backwards, in line with the old NEDC test to create an ‘NEDC correlated figure’. The industry has been using this figure ever since and the net result of this was that CO2 values rose by an average of 20%.
Benefit in Kind (BIK)
In line with the introduction of the full WLTP CO2 data, the government has released proposed guidance for BIK rates from April 6 2020. These include the Government’s desire to encourage an increased take up of electrified vehicles, which will see cars emitting between 1g/km and 50g/km of CO2 now taxed on the electric only range of the vehicle (these will mostly cover plug-in hybrid PHEV cars). Any company driver choosing a fully electric car (BEV) will attract 0% BIK in the first tax year 2020/21, rising to 1% and 2% in subsequent years.
Real Driving Emissions (RDE)
Real Driving Emissions (RDE) is the test that must now be used by vehicle manufacturers to test the emissions a car produces under real driving conditions (i.e. not in a laboratory). RDE is split into two categories Step 1 (RDE1) and Step 2 (RDE2). RDE2 testing allows cars to emit 1.5 times the amount of NOx during RDE testing and will become the mandatory test for 2021.
What this means in relation to BIK rates is any diesel car that meets RDE2 standards will be exempt from the additional 4% surcharge on their applicable BIK % factor. Currently there are a handful of RDE2 compliant diesels available including:
• BMW 116d / 216d Active and Gran Tourer
• Jaguar XE and E-Pace 2.0d 150
• Jaguar XF 2.0d 180
• Land Rover Discovery Sport/Range Rover Evoque D150
• Mercedes A-Class/B-Class/CLA/GLB 200d and 220d
• Mercedes C-Class/GLC 220d and 300d
• Mercedes E-Class 220d/350d/400d
• Mercedes GLE 300d/350d/400d
• Mercedes GLS 400d
• Vauxhall Astra 1.5 Turbo D 105PS and 122PS.
Please view a table here which shows the BIK percentage figures based on CO2 emissions and electric only range. These figures do not include the 4% supercharge that is applied to non-RDE2 compliant diesel cars.
We have also put together three worked BIK examples to show how the above figures are applied to vehicles. Please find these here.
We hope you have found this guide useful, if you are interested in the possibility of switching to an EV fleet, then please be sure to contact our team at newbusiness@marshall-leasing.co.uk or on 01480 414541 and we will be happy to assist.
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