Is it time to switch to an electric van?

From tax hikes to charging points, what do you need to consider before going electric?

The shift from petrol and especially diesel motors and vans towards electric vehicles (EVs) has been seemingly on the cards for a long, long time. This is hardly surprising given the environmental impact of fossil fuels, coupled with the fact that any switchover requires substantial changes in the way we drive and do business.

However, over the past year or so the pace of change has quickened and we’ve seen an increase in pressure on motorists and producers to go electric. Measures have included punitive taxes on diesel vehicles, including London’s T-charge and the Autumn Budget tax increases, as well as the extension of plug-in van grants to larger vehicles.

But how do you know when the time is right for your business to switch?

For every van-based business, the tipping point for switching will be slightly different. Factors like the nature of your work, location of your customers and the policies of your local council all have a part to play, and you’ll need to assess them rationally before making any decisions.

Here, we take a look at some of these key areas which may have an impact or your business. So, is it time to ask yourself: should I switch to an electric van?

Tax Hikes

Currently, 82% of the UK public support green energy, and electric vehicle usage is rising. A large part of this trend comes from concerns over air quality, and particularly the particulates released by diesel engines. This change in attitude was noted by the government, and reflected in new measures in the Autumn Budget, but they aren’t all incentives. Diesel cars currently face higher VED tax banding and Company Car Tax. Vans may be exempt for now, but for how long?

Individual cities are introducing charges that affect vans. London’s T-Charge levies £10 on every diesel entering central London, and similar measures are being planned for at least 30 more city centres. Many areas are also considering higher parking charges for diesel vehicles to reduce the number of polluting vehicles in highly populated areas. In Marylebone, London, there’s already a diesel parking surcharge of 50%, so we could begin to see other places following suit.

For businesses like yours this means that hanging on to your existing diesel van could become more expensive, particularly if you regularly travel in and out of congested town centres.

Price

If you think the time is right for your business to switch from diesel, the first step is to consider if an electric van makes financial sense. In the short term, this is about whether the initial outlay is affordable, how much of that cost your business will have to cover and if you can take advantage of incentives to scrap your current diesel or petrol van.

These grants can come from central government, local government, industry interest groups and specific business initiatives. There’s no one-stop-shop to find them all, so it pays to do a thorough search. You may find these schemes are more valuable for sole traders than for businesses upgrading a whole fleet.

Here are the main grants available at the time of writing:

Plug-in van grant

Government grant covering up to 20% of the cost of a new electric van in vehicle categories N2 and N3.

Enhanced capital allowances

Zero-emission vans are eligible for 100% write-downs on your tax return in the first year of ownership.

Workplace charging scheme

Government grant that provides financial support of up to £300 per socket for the up-front costs of installing a charge-point at workplaces.

Diesel scrappage schemes

Several major manufacturers, including Toyota and Ford, are offering extra financial incentives for scrapping vans with a diesel engine and buying a new vehicle.

Charging

So that your business can keep moving with an electric van, you’ll need to ensure there are plenty of charge points in your areas of operation. Sites like Zap Map track the progress of the charger network, and their latest count puts EV chargers at over 5,000 locations. For now, most of these are near cities. They are also distributed unevenly across the country, with some regions proving better than others in adopting charge points.

Top 5 UK regions:

  • Greater London
  • Scotland
  • South East
  • South West
  • North West


Bottom 5 UK regions:

  • North East
  • Yorkshire and the Humber
  • East Midlands
  • Northern Ireland
  • Wales

However, the number is rising and there have been major developments over the past year. Shell has committed to adding charge points to forecourts, and the government has promised £200 million in funding towards a new £400 million Charging Investment Infrastructure Fund.

Business considerations

The next step is to work out whether electric van designs have advanced enough to meet the needs of your business. Currently, the perceived market leaders remain Nissan’s e-NV200 and the Renault Kangoo ZE, and they offer similar statistics:

  • Range Up to 106 miles on a full charge
  • Charge time 4-8 hours, or 80% charge in 30 minutes with fast-charge
  • Payload 650kg (Kangoo), 770kg (e-NV200)

Businesses operating in urban areas will find it much easier to stay charged than those covering large distances across the country. You should also remember that the range is reduced with heavier payloads, so if you regularly carry heavy hauls you’ll need to recharge much more often.

You also need to research how going electric affects the essentials of running a van. Check that your insurer can cover all of your business activities in your new EV, find out if your nearest repair centre can handle the vehicle, and ask about the cost of common maintenance issues.

Short term versus long term

Cost of operation is a complex calculation for a big switch like this. The price per mile travelled is a big part, and as a rough rule of thumb you can assume:

  • 100 miles worth of charge (average): £2-4
  • 100 miles worth of diesel/petrol (average): £12-15

However, you’ll need to think about business-specific extras. Urban businesses will have to deal with those fresh charges like the T-charge and parking premiums. Check with local councils for specific charges.

In the long run, these changing incentives will also affect the value of your business investment. Motor industry experts are concerned about the impact of recent punitive charges on the value of used diesel vehicles. Buying a new diesel now could mean giving up on any meaningful resale value. If your business refreshes its fleet regularly, this could become a major additional cost.

Things to consider before going electric

If you’re still mulling it over, our checklist below could help. Review the key factors and seeing if you can tick them off one by one will help you decide whether the benefits outweigh the costs of going electric.

  • Punitive diesel charges are costing us more
  • There’s an electric van model that meets our needs
  • We can take advantage of incentive schemes to scrap our current van
  • We can apply for government grants towards the cost of an EV
  • We can cover, or access funds for, the initial outlay on charge points
  • There are enough additional charge points on our main routes
  • Insurance is available for our preferred electric van
  • Insurance policies cover key business areas involving an electric van
  • Running costs won’t be increased by going electric
  • Local garages can repair EVs

You can find out more about the challenges and advantages of switching to an electric van on the website of the government’s new Office for Low Emission Vehicles.

Keep your van moving – no matter what

Making changes to your business fleet, like switching to electric, could throw up some unexpected bumps in the road. That’s why at AXA, we want to make sure protecting your van, and keeping your business moving, is as simple as possible.

Take a look at our help and advice for van drivers, and when you have the information you need, find out more about business van insurance from AXA, or get a quote today and save 10% when you buy online.