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2024 will be the year of the EV with greater supply and lower prices, says Fleet Alliance
2024 will be the year that companies look to accelerate down the electrification route, as they seek to meet their own ESG agendas and address the environmental concerns of their employees. And they will be helped in achieving these ambitions by lower prices and greater supply of electric vehicles.
That’s the view from Fleet Alliance CEO, Andy Bruce, who is a firm believer that electric cars will be more widely available across the board throughout 2024 as supply increases and prices, inevitably, come down.
“The vehicle manufacturers are once again building up stocks of vehicles after several years of shortage of supply, with good levels of many volume models. And, as they are bound by the government’s target to produce 22% of their product mix as EVs in 2024, that means that EV supply will continue to increase.
“As a result, the manufacturers now have to be more realistic about pricing, but reductions in list price, as we saw with Tesla, can distort the market. Discounting is the tried and tested route they will go down and already we are seeing some discounts over 30% in certain specific cases,” he said.
Another shot in the arm for EV production across Europe was the news in recent days of the EU proposal to extend the rules of origin for batteries for a further three years until 2027.
This avoids a potential cliff edge in January when the threat of tariffs on EVs could have led to a price hike, as the greatest percentage of EV batteries come from Asia, and outside the EU.
The Society of Motor Manufacturers and Traders estimates that battery electric vehicles (BEVs) made in the EU could have been hit with a £3,400 tax hike when sold in the UK, if new rules of origin had been implemented in January.
“We welcome this EU initiative as it means stability of parts supply is maintained and the threat of tariffs on EVs has receded for at least another three years,” said Andy.
“All of these factors combined add up to good news for our customers as they will mean lower rentals on EVs, making them more affordable along with the continued attractiveness of very low Benefit-in-Kind (BIK) tax rates.”
BIK on electric cars is just 2%, and is fixed until April 2025. While this rate is set to increase by 1% each year until it reaches 5% in April 2028, it is still well below that of petrol and diesel cars which can be as high as 37%.
“This continues to make electric cars very attractive from a cost perspective, especially when supplied through salary sacrifice schemes which opens them up to wider numbers of employees in all types of businesses at very advantageous rates.
“We calculate that there are savings of up to 60% on vehicles supplied through a salary sacrifice scheme and expect them to continue to grow and flourish. We also believe that the reduction in National Insurance rates announced in the Autumn Statement will have only minimal impact on the effectiveness of these schemes.
“Take our own salary sacrifice scheme, for example, which offers a number of USPs. These include a dedicated driver support team which helps drivers find special offers and available stock vehicles, all-inclusive service, maintenance and breakdown recovery, along with no mandatory Early Termination Insurance or minimum number of employees.
“At the same time, we make our e-Fleet software available to customers to help manage their vehicles, and we use competitive tendering via a panel of funders to select the most price competitive monthly rentals with access to special offers. There is no more cost and tax efficient way of acquiring an electric car.”
Andy said that another factor behind his optimism for 2024 was the degree of pent-up demand that existed in the market.
“We, like many suppliers, are seeing above average levels of contract extensions with a running rate three times that of normal levels.
“I liken this pent-up demand to a dam that is currently showing signs of leaking, but which may well see a more general collapse in the coming months as customers cannot continue to extend their vehicles indefinitely. Salary sacrifice is the route that many will decide to go down.
“Finally, we believe that 2024 will bring us all greater political stability and a gradually improving economic backdrop, which I’m sure we would all welcome,” he said.
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