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Does this scene ring any bells?
MD: I want us to get electric cars for the business. We’re going to have to change eventually, so let’s get our Green Fleet Policy into action and set an example.
FD: Yeah, but they’re just so bloody expensive. Why not get a nice 5 series diesel Beemer instead?
Site Manager: Yeah, and we don’t need to bother installing charging points either. Get that diesel Beemer. There are some cracking lease deals on the internet.
And that’s usually where the conversation finishes. Someone looks at the monthly rental cost of an electric car and directly compares it to an equivalent diesel rental cost. The electric one is more expensive to lease, and that’s the only factor anyone thinks about. All your best intentions for running a greener fleet go out of the window because of Brian in accounts. But Brian is wrong. Dead wrong, in fact.
When you’re looking at leasing an electric car for your business, there’s more to consider than the monthly lease cost. You’ve got to look at the Wholelife Cost (also known as the Total Cost of Ownership). Only then can you get an accurate picture of what that car is going to cost your business and the driver.
Wholelife Cost (WLC) doesn’t only look at the monthly lease cost. It’s a calculation that considers a range of other factors, such as Benefit in Kind tax, fuel type, emissions, servicing, maintenance etc. To be honest, it’s a pretty in-depth calculation to attempt. Brian won’t thank you for making him do it, even if he knows how. When you do it properly, you can quickly see how knowing the WLC figure can lead you to a very different decision about the car you’re considering. Incidentally, you don’t need to start Googling things like “How to calculate Wholelife Cost”. We can do it all for you as part of our complete service.
Let’s look at a diesel BMW 520d M Sport and an electric Tesla Model 3. They both have similar P11D values of £43,540 and £43,435.
The monthly rental of the BMW is only £469 compared to £520 for the Tesla. It’s £51 per month less for the BMW, so the usual decision would be to head that way.
But, when you look at the CO2 emissions, the BMW is 129g/km, and the Tesla is zero. When you bring in all the other factors, the BMW’s real cost to your business is £751 per month, compared to only £631 for the Tesla.
That monthly rental difference of £51 is blown out of the water by the actual cost difference of £120.
However, the real difference is in the Benefit-in-Kind tax payable by the employee. For the BMW they would be taxed £421 per month in BiK. Because of the tax breaks for electric vehicles, the Tesla would only create £14 per month.
It’s a whopping £407 per month less for the Tesla.
If your company was to pay that employee to compensate for the BiK they’d incur, you’d be paying £1172 per month for the BMW but only £645 for the Tesla.
It’s nearly half the cost! You could almost get two Teslas for the same monthly cost as one BMW. Brian would need a cold shower.
And that’s the power of using the Wholelife Cost calculation. Now, imagine what would happen if you applied that calculation across your fleet? How much could you be saving?
At KeyFleet, we don’t just lease vehicles. Many other companies only do that, and it always turns into a race to the bottom on the monthly rental cost. If you hunt around the internet long enough, you’ll find someone who’ll do the same car a few quid cheaper. And good luck to you. Your “Brian” will justify their employment for another year.
We prefer to help our clients make the best decisions not just on a rental cost, but as part of a strategy for their whole fleet. Our WLC calculator will show you the true cost of your fleet, help you plan for the future, and develop your Green Fleet Policy. Our account managers will consider all your entire fleet needs, from funding to management, then help you select the most suitable and cost-effective options. Finally, they’ll structure the best funding type and contract to fit your budget.
Best of all, we’ll give you our Keys software which will take away all the headaches and time you spend every month trying to keep track of your fleet. Maintenance, servicing, and all your compliance needs are taken care of in one software package.
For more information on how KeyFleet can help you start a green revolution in your business (or at least save you some money) call one of our Fleet Specialists now on 01772 73 73 83.
Key Finance and Leasing Ltd, t/a KeyFleet are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 714978
Registered in England & Wales with company number : 06530494 | Data Protection No : Z1262047 | VAT No : 928956956
Registered Office : KeyFleet, 12 Conference Centre Offices, Brockhall Village, Old Langho, Blackburn, Lancashire, BB6 8AY
Disclaimer: All vehicle images and descriptions are for illustration and reference purposes only, all vehicle leases are subject to credit approval and subject to change at any time. E&OE.
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