Is an electric van worth it for a small business? Is an electric van worth it for a small business?

Is an electric van worth it for a small business?

The UK Government has ambitious plans to phase out the sale of all new petrol and diesel vehicles by 2030, and the sale of new hybrid vehicles by 2035.

The good news is that we're now seeing increased investments in the development of commercial Electric Vehicles (EVs), and a comprehensive national charging infrastructure.

Yet while the focus has been on rolling out electric cars, there's far more interest in going electric from tradespeople than the general public. 83% of tradespeople own, or plan to own, an electric vehicle compared to 54% of the general public.

Tradespeople are also more optimistic about electric vans, with 46% expecting EV ownership to outnumber petrol and diesel vehicles in their sector by 2026 - that's a few years ahead of the Government's own target.

While the Government has announced an end to grants for electric cars, strong incentives remain in place for commercial electric vans. In fact, the money saved from subsidising electric cars is being used to extend the public EV charging infrastructure. This is welcome news for business owners thinking about switching to an electric work van.

So, what are the realities of owning an electric van for business? We'll take a look at the main concerns around ownership: affordability, running costs, range anxiety, and access to charging points. We'll also meet John, a business owner who's already switched to electric to see how it's making a difference to his business.

Financial support to help you go electric

The focus on rolling out electric cars meant that there were significant price differences between electric cars and vans, which put many business owners off. However, this is now changing.

With more manufacturers producing commercial EVs, prices are beginning to fall. And the UK Government has subsidies to encourage business owners to go electric through the Plug-In Vehicle Grant. They vary depending on van size, and there are some limitations for larger trucks, but you could claim:

  • 35% of the cost (to a value of £2,500) of a small van (under 2,500kg)
  • 35% of the cost (to a value of £5,000) of a large van (between 2,500kg - 4,250kg)
  • 20% of the cost (to a value of £16,000) of a small truck (N2) (between 4,250kg - 12,000kg)
  • 20% of the cost (to a value of £20,000) of a large truck (N3) weighing over 12,000kg

    Figures correct as of June 2022. For full details, visit: https://www.gov.uk/plug-in-vehicle-grants

Meanwhile John took a different approach. He established his car valeting service in 2021 and was initially attracted to an electric van because of the lifetime cost savings. Even so, he found the outlay for a new van too expensive, so he looked to the second-hand market.

"I was going to go for HP (hire purchase) in finance, but I didn't want to commit myself into more debt in case anything went wrong with my job. I bought a second-hand van which I've been really happy with."

How an electric van can take your business further

After the initial outlay, the next biggest concern is driving range - 28% of tradespeople are worried that an electric van won't take them as far as a petrol or diesel equivalent. But there's good news.

As technology develops, electric van ranges are increasing. Several models can easily exceed 200 miles on a single charge. And, as the Government invests in expanding the public EV charging infrastructure, 'range anxiety' is becoming a thing of the past. You can see how many charge points are in your local area using this interactive Government map.

For John, range wasn't an issue, as he focused on local clients. So even though his van was made in 2012, its 70-mile range was more than enough for his needs.

"It's one of the first electric vans because the battery range is only 70 miles for a fully charged battery. But because of what I do, I only do local jobs. Let's say around a 10 mile radius for my location. So I don't have to go really far, so for what I do it's perfect."

If you have a driveway, garage or parking at your business, then you could look to install your own charge point. Grants are available if you want to do this. It's also worth exploring off-peak electricity tariffs, as many energy companies offer lower prices at night when demand on the grid is reduced. Another thing to consider is the number of off-peak hours available to charge your electric van.

Charging speeds
One thing to look out for when considering an electric van is how quickly it can charge. If it's a low-capacity battery, you won't be able to use ultra-fast charging points, usually found at dealerships, motorway service stations and supermarkets. They can charge a battery to 80% in around 30 minutes.
“I haven't got a charge point at home at the moment, you know, but that's something I'm looking into - a charge pod installed at my property. I'm making an application. At the moment, right outside my property, there's a charging station."

Running down that bill

Electric van driving ranges are going up. And, even with energy price rises, they're still cheaper to 'fuel' compared to petrol or diesel vans. But, there are other cost savings that switching to an electric van can bring. Let's take a closer look. 21% of tradespeople are interested in switching to an electric van because of fuel savings. Even with the rising cost of electricity, an electric van still remains cheaper to run than petrol and diesel alternatives.

Along with this, as more cities adopt Ultra Low Emission Zones (ULEZ), petrol and diesel drivers are having to pay to drive into city centres. With an electric van, this charge is waived. As is road tax.

“Road tax is free - I thought in the long run, you save a lot of money. You don't pay all these monthly charges anymore."

These aren't the only savings you can make by switching to an electric van. Servicing can also be cheaper as electric vans don't have the same engine design: there are fewer moving parts, no manual clutch, gearbox or transmission that can wear out, and no oil to change. What's more, electric van motors recover energy when you let up the accelerator, resulting in longer-lasting brake pads and discs.

Conclusion

Should you buy an electric van for your business?

Given the push towards Net Zero, and Government policy, it's not a matter of if, but when you'll need to consider an electric van.

All petrol and diesel vans will cease production by 2030, and even new hybrid vehicles will stop being sold by 2035. Even today, 46% of tradespeople think there will be a stigma attached to driving a petrol or diesel vehicle within five years.

If you're starting out, or your business is just hitting its stride, then an EV van can offer you many advantages, whether new or second-hand. For John, the eco-angle of his business meant that investing in an electric van was the right thing to do.

“Another reason why I went electric is because I provide an eco-friendly valeting service. I use eco-friendly products. I don't want to drive a diesel van as that would be contradicting, wouldn't it?"

The higher initial outlay can be offset through lower lifetime running costs. Using electricity as fuel works out cheaper than petrol, even accounting for the recent price rises. Plus, fewer moving parts mean simpler servicing, and you can avoid charges like road tax and ULEZ costs. But, for the final word, let's hear from John:

"I know someone who's got his own business as well. I gave him advice and I told him to go Electric. Because you know, in the long run, you'll be saving a lot of money."
Electric vans - the pros Electric vans - the cons
Lower lifetime running costs Initial outlay
Purchase incentives Uneven nationwide EV charging infrastructure
Environmentally friendly Slow charging time for some vans
Continually-improving range - over 200 miles on a single charge Plan longer journeys around charge points
Improving public charging infrastructure Not as much choice right now - especially in the used van market.
Exempt from road tax, fuel duty, vehicle excise duty and other running costs Home charging points may not be accessible to everyone, especially if you live in a flat, rented accommodation or a house with no off-street parking.
Standard car licence holders can drive electric vans weighing up to 4.25 tonnes. This is due to battery weight, and is known the alternative fuel payload derogation. Reduced payloads. The weight of electric van batteries can be heavy, which can result in a reduced payload and range.

Check out our Electric Van Insurance

Direct Line's comprehensive Electric Van Insurance covers charging cables and home chargers, including accidental damage, fire and theft, plus cover for battery damage as a result of an insured incident. It also includes hotel expenses (up to £150 for the driver or £250 in total for everyone in the van) in the event your electric van can't be driven due to an accident or loss covered by your insurance arrangement.

And if you still haven't made your mind up, we also have another article that takes a closer look at the pros and cons of switching to an electric van for business.

Van Insurance

Added: 07 Sep 2022