Is it still worth leasing a diesel van or is it time to plug in?

Is it still worth leasing a diesel van or is it time to plug in?

21 September 2021 | Kate Kozlowska | 10 min read

The transition from petrol and diesel engines to electric vehicles (EVs) has been in the making for a longer time, possibly longer than most of us realize. Given both, the environmental impact of fossil fuels and the fact that any switchover will require significant changes in how we drive and conduct business, this is hardly surprising.  A variety of measures have been adopted, including sanctioning diesel vehicles via London's T-charge introduced in 2017, which was then replaced by the new Ultra Low Emission Zone (ULEZ) in April 2019, and other tax increases, as well as introducing grants for plug-in vans to encourage drivers to choose greener vehicles. 

It may be that such factors have you considering leasing an electric or plug-in hybrid van and eliminating diesel altogether.

Is 2021 the right time for your business to switch to e-van?

In the past year or so, the pace of change has sped up as manufacturers and motorists began to feel the pressure to go electric leaving you wondering if it wouldn't be time to get an electric van and eliminate diesel altogether.

There is nothing standard about determining the tipping point for switching to an EV for commercial vehicle drivers. It is important to analyze factors like the nature and location of your business, the location of your clients, and the local government policies before making any decisions. 

What should you consider before leasing an electric van? 

Raising Taxes

Drivers of older diesel vehicles face extra parking fees, emissions surcharges, and tax increases.  There will be a series of low emission zones implemented across the country, primarily targeting drivers of older diesel vehicles - who are believed to emit more pollutants than petrol cars and vans. In 2021, individual cities in the UK began imposing charges by introducing Clean Air Zones (CAZ) which are currently active in two cities: Bath and Birmingham. Several other cities plan to join CAZ by the end of the year, with others following in 2022. The London ULEZ will also expand to cover a larger area of the capital in October 2021. Furthermore, many councils are imposing diesel parking surcharges of up to 50% and increased cost of parking permits for diesel owners.

Diesel owners are finding their wallets hit hard by these government-led campaigns to combat UK air pollution. With the sale of new petrol and diesel vehicles set to be phased out by 2030, the diesel crackdown is part of the government's plan to improve air quality, which is failing to meet legal thresholds in a number of local authority areas.  These government-led campaigns hit diesel owners' wallets the most. Holding on to an existing diesel van could be very costly for many businesses, especially if they frequently travel in limited emission zones.

Initial cost

Consider whether an electric van makes financial sense for your business if you think it's time to switch from diesel. It's about determining whether you can afford the initial expenses, what percentage of those costs your business will be responsible for, and whether you can take advantage of incentive programs to scrap your old van. 

Depending on the initiative, these grants may be issued by the central government, local government, industry groups, or specific businesses. If you're interested in an EV grant, we advise that you do a thorough search on what's currently available and there isn't a place where you can find all the information you're looking for. These EV schemes may be more beneficial for sole traders rather than businesses upgrading their entire fleets though.

Below are the electric van grants available as of September 2021:

Plug-in van grant

  • Small vans with a gross vehicle weight of less than 2,500 kilograms (kg),  CO2 emissions of less than 50 grams per kilometre, and able to travel 60 miles without generating any emissions qualify for the electric van grant of 35% of the purchase price and up to a maximum of £3,000.
  • Large vans with a gross vehicle weight of 2,500kg-3,500kg, CO2 emissions lower than 50g/km and capable of driving at least 60 miles without producing any emissions will receive an EV grant of up to 35% of the purchase price but no more than 6,000.

Charging scheme

  • Electric Vehicle Homecharge Scheme - you can get up to £350 (including VAT) off of the cost of installing a charger at home.
  • Workplace Charging Scheme (WCS) - up to £14,000 can be saved when companies install charge points for electric vehicles at their business premises. Up to 40 chargepoint sockets per applicant qualify for the WCS grant.

One of the easiest ways of switching to an EV is leasing an electric van as it does not require a large upfront payment. You choose a vehicle, pay an initial rental or payment, then equal monthly rentals or payments for an agreed number of years (usually 2 to 5). It is much more affordable to switch from diesel to electric van by leasing it.

Charging

It is important to have plenty of charge points available in your areas of operation if you plan on using an electric van for your business Apps like  Zap Map track the electric vehicle charger network and they counted over 41,900 EV charge point connectors across more than 15,500 sites as of June 2021. Most of them are near cities at the moment though and some regions are adopting them more successfully than others. 

Chart: Distribution of UK charging points by geographical area

Business needs

In the next step, you will need to assess whether modern electric vans are advanced enough to meet the demands of your business. In urban areas, businesses can stay charged much more easily than those operating across large distances. Additionally, keep in mind that the range decreases with heavier payloads, so if you regularly haul heavy loads, you'll have to recharge more frequently. As you explore going electric, you also need to consider the practical side of running a commercial EV. You should verify that your insurer will cover all of your business activities in your new EV, find out if the vehicle can be repaired locally, and ask about maintenance costs.

Short and long terms costs

For a big switch like this, the cost of operation can be complicated. A major factor is the price per mile travelled, of course.

You'll also need to consider extras that are specific to your business. Businesses in urban areas will have to deal with extra charges, such as the ULEZ charges and parking premium. You should check with the local council for specific charges.

Your business investment will also be affected by these changing incentives in the long run. In the motor industry, experts are concerned that recent penal charges will lead to a decrease in diesel vehicle values. You might lose any meaningful resale value if you buy a new diesel now and could incur a major additional cost if your business continually updates its fleet.

Before you go electric, there are a few things to consider

We've compiled a checklist you may find helpful if you're still unsure if an electric van is the best option for your business. By reviewing these key factors and comparing them one by one, you can decide whether going electric is worth the costs.

  • Diesel is more costly because of punitive charges
  • We can find an electric van that will meet our business requirements
  • We can take advantage of government grants to help with the price of an EV
  • We can access funds to cover the initial outlay for charge points at home/business premises
  • Additional charging stations are available on our major routes
  • Insurance is available for our preferred electric van
  • Insurance policies cover main business areas involving an electric van
  • Running costs won’t increase by switching to a plug-in van
  • Local garages can repair EVs

 

The government's Office for Zero-Emission Vehicles provides more information about the challenges and advantages of switching to an electric van. If there is anything you would like to discuss further, please contact one of our EV specialists.

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