It’s no surprise that electric vehicles are gaining in popularity, they’re environmentally friendly and emit no exhaust fumes, meaning cleaner air and less of an impact on our environment. Whether you have a small fleet of vehicles or own a larger company, business vehicles contribute heavily to carbon emissions, so it’s strongly advised to consider the switch sooner rather than later.
There is a big cost implication attached to switching to an all-electric or gas fleet and most businesses don’t have the cash upfront to make such a big move. This is where business financing can really benefit and particularly as a business finance broker in the alternative financing industry, we can offer flexible, faster to access and competitive options for your business.
Why should you consider switching to electric vehicles in your business?
Better for the environment.
First and foremost, electric vehicles are better for the environment. They emit no exhaust fumes, therefore their impact on the environment is very low. Unlike fuel-operated vehicles, which contributed to 24% of the UK’s total emissions back in 2020 and remain the largest emitting sector in the UK today. In over a year, just one electric car on the road can save an average of 1.5 million grams of CO2, the equivalent of 4 return flights from London to Barcelona.
Increase in the range of electric vehicles available.
Both cars and vans are becoming much more widely available for both personal and business use, making it easier to acquire a vehicle to suit your business needs. Vans such as the Citroen e-Dispatch and the Mercedes-Benz eVito are just a couple of examples of a wide variety of EVs to choose from.
Charging points around the UK increased.
There has been a big increase in the amount of charging points in the UK, with new ones being added daily. Between 2016 and 2020 there was a 220% increase in the number of public chargers at supermarkets and service stations, including rapid chargers, where vehicles can charge in as little as 30 minutes.
Phasing out of new, non-zero emission HGVs.
A heavy goods vehicle weighing 26 tonnes and under will be phased out by 2035 and all heavy goods vehicles sold in the UK will be zero-emissions by 2040, so it’s a good idea to get the ball rolling with switching now.
Exempt from clean air zone charges.
A big cost to transport businesses is the routes through clean air zones. If a vehicle passes through a clean air zone and exceeds the emission standards set, then this vehicle will incur a charge. For a company with a large fleet, these costs could mount up, or result in the loss of valuable time having to plan routes around these zones to avoid charges.
Overall cheaper to acquire and run.
Although changing your entire fleet to electric vehicles is an investment, research shows that EVs are 49% cheaper than petrol and diesel cars, based on average annual running costs. After the initial investment is made, this could be a huge cost saving for your business.
What costs are involved in switching to electric vehicles?
There’s no denying that there is a significant cost involved in switching your fleet to EVs, as with everything in business, the cost needs to be seriously considered before entering any kind of investment and there are several points to be thought of, in and around the workplace, before committing to the switch, such as:
- Making space for charging gantries – small or larger-scale renovations may need to take place to make space for the installation of charging stations for cars and vans.
- Installing the charging points in the workplace, for both fleet and personal use vehicles – this may include paying for an external company to install the charging stations and it may be that you need more than one type of charging point, including rapid charge stations for vehicles that need a quick turnaround. There may be a need for delivery vehicle charging points and for employee cars owned by the business.
- Installing charging stations in colleagues’ homes – another factor to think about is charging employees’ cars that are owned by the business, they will need charging stations fitted at home also.
How business finance can help in acquiring EVs.
Even though making a big step in the right direction to help protect the planet can be daunting, there are options for business finance available to help you make your way to a greener business future. Let’s have a look at some of the business finance options available for your business.
Asset Finance
This is a business finance option which is used by acquiring the EVs you need without having to pay upfront. Waiting until you have enough cash upfront can slow your business down so instead, you can pay regular amounts to use the asset over an agreed period, allowing your business to retain its cash and pay for the electric vehicles it needs over time in smaller, affordable payments.
There are several options available if you’re considering asset finance –
Hire Purchase
Hire purchase asset finance means that the vehicle is hired for a set period and title transfers with the final payment.
This option helps you manage your cash flow by spreading your payments regularly over a set period.
Lease Finance
Leasing is probably the most flexible asset financing option. Leasing allows you to acquire new vehicles and upgrade them much more frequently.
Contract Hire
This method of asset financing allows you to acquire a vehicle, with the finance company owning the vehicle and hiring it out to you. The benefit of this is that you get to use the latest vehicles but avoid the risks and associated costs like depreciation and maintenance expenses. Maintenance costs are fixed for the period of the agreement and collected equally with each monthly payment.
Business Loans
A business loan is a form of business finance whereby a sum of money is issued to a business owner exclusively for use in their business and is repaid – with interest – over a set period. A business loan can range from £5,000 up to several million pounds, so a good source of business finance when it comes to switching your fleet to electric vehicles.
A finance option that allows the current assets within your business to work harder for you. You can use your current assets as collateral to open up cash flow for your business. This involves selling an asset to your financing company for a price that is based on the current value. You then repay the loaned amount in instalments over a set amount of time. Very similar to a secured loan where you also offer assets as collateral.
How PMD can help find the best type of Asset finance for your business.
Asset finance is possibly your most helpful form of finance when it comes to a big investment such as switching your fleet of cars to all-electric vehicles or other sustainable energy options. As mentioned above, Asset finance will allow you to purchase the vehicles and equipment you need to operate without having to buy the asset outright. You will instead pay regular instalments to use the asset over an agreed period, allowing you to obtain what you need – in this case EVs and the equipment needed to run them – without having to wait and put a strain on your cash flow.
At PMD we help you to make the changes you need within your business by working with over 150 lenders of Asset finance, giving us flexible, independent, and competitive funding lines to drive your business forward. We take the hard work out of securing the business finance you need by liaising with funders on your behalf and securing the best possible terms, leaving you free to focus on the growth of your business.
If you’re considering asset finance for your business, get in touch today and see how we can help.