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Andrew Leech
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EV Subscriptions Offer Cost Control Solution
With the 2024 Budget set to raise business costs in many areas, Mercia Fleet Management suggests that ‘flexing’ to electric vehicles via subscription could help businesses maintain control over fleet expenses during this inflationary period.
Flexibility with EV Subscriptions Eases Fleet Costs After Budget Increases
Most businesses will face an increase in employers’ National Insurance Contributions and the Minimum Living Wage from April 2025, alongside Vehicle Excise Duty (VED) hikes that will impact tax obligations for many vehicles. This means the need to keep firm control over operating costs is paramount.
Most businesses will face an increase in employers’ National Insurance Contributions and the Minimum Living Wage from April, alongside Vehicle Excise Duty (VED) hikes that will impact tax obligations for many vehicles. For fleet operators, VED is set to rise in several categories, including hybrid vehicles and more expensive EVs. New electric vehicles with a list price over £40,000, for instance, will have to pay the £390 expensive car supplement annually from April 2025. This increase could push leasing costs up by £50 per month for some new EVs.
Mitigating Fleet Cost Increases with Flexible EV Subscriptions
One way to mitigate these rising expenses is by introducing electric vehicles on a subscription basis rather than committing to long-term leases. This approach is especially relevant for businesses with seasonal or contractual needs.
To underline this point, Mercia Fleet Management, the fleet management division of EV salary sacrifice specialist Fleet Evolution, recently conducted research among clients in sectors like professional services and construction. They found that many company cars were used for short-term contracts, often lasting only three months. Andrew Leech, head of Mercia Fleet Management and founder of Fleet Evolution, highlights that EV subscriptions are cost-effective, especially when compared to daily rentals.
“Flex” Fleet Costs Amid Rising Expenses, Says Mercia Fleet Management with New EV Subscription Service
“For clients with seasonal, short-term needs or new employees on probation, we have reduced costs by up to 40% by introducing three-month subscriptions for EVs.
“This has meant that the MG4, our most popular EV, can cost as little as £25 per day, while the Tesla Y on subscription could cost just £40 a day including insurance.
”We firmly believe that subscriptions should be considered as an important part of a fleet strategy, especially to provide greater flexibility, at a time when the Budget has raised the cost thresholds for most businesses in the UK.
“The ability to ‘flex’ a fleet based on demand is vital in the current market for many businesses facing rising costs following the Budget. And these will become even more expensive due to initiatives such as increased VED on new products.”
– Andrew Leech
Subscribe Electric: A New Service for Short-Term EV Solutions
To address these needs, Mercia recently launched an EV subscription service, Subscribe Electric, giving corporate customers a low-commitment entry to electric vehicles while addressing short-term business needs. Traditional EV short-term hire costs can be prohibitive, with a Tesla Model 3 from a daily hire company often reaching around £2,000 per month. By comparison, Subscribe Electric offers a cost-controlled alternative, with all maintenance, breakdown, tyres, and insurance included in the monthly fee – customers only need to add electricity.
Leech added, “Short-term EVs are not only cost-effective in the face of rising business costs, but they also support corporate sustainability goals. After what many see as a challenging Budget for businesses, we’re helping companies find cost-effective fleet options.”
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