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Discussion Starter · #1 ·
It’s a long time since I had a Company car and I hadn’t realised until talking to an acquaintance that a Company EV can be leased and paid for out of gross salary with no Benefit in Kind (BIK) which for a higher rate tax payer reduces the price by 40% or more as opposed to an ICE which is treated as a BIK. So, luxury EVs such as the new BMW iX3, Audi eTron etc. are being subsidised very substantially until at least 2025 (I’m told). I know BIK has been discussed on this forum but I guess Company car holders were aware of the rules and didn’t need to explain them explicitly to everybody else.

So it turns out that an EV costing as much as £10k more than the equivalent ICE works out cheaper to lease. I guess this means that the price is never going to reduce until the tax rules change? Also less incentive for manufacturers to focus on smaller cars.
 

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I'd say no because 50% of the new car market is fleets, the other 50% is private buyers, so while 50% of the market might be willing to pay more, the remaining 50% of private buyers aren't and so car manufacturers still need to compete and reduce prices to get these private buyers to switch.

Overall I think it will benefit a lot of private buyers because of way the fleet car cycle works, most fleets buy brand new and run the cars for 3-4 years, generally keeping them well maintained before selling them into the used market. So all of these EVs being bought as company cars will be available to buy as well maintained used cars in a few years time. Plus with so many EVs being sold to fleets, and to private buyers on leases and PCPs, when that wave of EVs hits the used market in a couple of years time it should bring down prices and make a good used EV an attractive option.

Have a look at the volume of Tesla 3 being registered, consider that a lot of these will be hitting the used market around 3-4 years after registration, there's going to be a seriously large number of used EVs looking for new owners.
 

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Was 0% BIk last year, 1% this year, going to 2% next

So this year.. £60K Audi ETron , costs me Approx £20pm in extra tax, but salary sacrifice saves me 42% off the monthly lease fee (albeit Limited providers , so not always the best gross deal)
 

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Discussion Starter · #5 ·
I suppose the logic is that company car owners are high mileage so the environmental impact is greater although the Company car owners I know rarely use them on Company business. Whatever the reason, the only people I know who are buying an EV are Company car owners. Not surprising considering the tax relief.
 

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I'd say no because 50% of the new car market is fleets, the other 50% is private buyers, so while 50% of the market might be willing to pay more, the remaining 50% of private buyers aren't
err ... no that is not logical. You can't say "only 50% of sales are private sales, and this shows private buyers aren't willing to pay that much". Bonkers logic.

They might well be paying more than they want to, but that doesn't mean they aren't willing to pay more.

The op has the right logical POV here; it is not whether private buyers are prepared to pay MORE or not, it is whether fleet buyers are prepared to pay more or not. The latter has much stronger fiscal constraints than private buyers, namely ... if they can buy an ICE for less they will, there is no law stopping them, whereas a private buyer has the luxury of additional environmental considerations.

It's like that old saying "No-one ever goes to that restaurant any more, because it is always too busy."
 

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I think you are mixing up your "lease cost" and your BIK.

BIK doesn't "subsidise" anything, that is the value on which you, as the company car driver, are taxed. Last year was 0%, this year 1% next year and for a while 2%.

There are no "subsidies" as far as I know for EV, however the employer pays a massively reduced NI contribution compared to an ICE car.

I think you are getting confused with salary sacrifice schemes, which are another story, and to be honest I dont understand them - but they heavily favour EV's again.

However EVs are still dearer than ICE because of the batteries.

A small petrol engine costs a few hundred quid to make these days - but a decent 60kwh battery is 10-12k probably!!

Until the price of batteries come down or ICE is taxed stupidly, they will cost more to make
 

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err ... no that is not logical. You can't say "only 50% of sales are private sales, and this shows private buyers aren't willing to pay that much". Bonkers logic.
No, the question was 'is company car tax relief keeping prices high', fleet sales (which mostly benefit from the tax relief) are around 50% of the market and it certainly does affect their decision and willingness to purchase EVs, but the other half of the market, private buyers, mostly don't benefit from the tax relief and hence it doesn't influence their decisions or increase their willingness or ability to pay more for an EV.

Car manufacturers still face competition selling to private buyers, there's still pressure to drive prices down to increase sales to those private buyers.
 

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No, the question was 'is company car tax relief keeping prices high', fleet sales (which mostly benefit from the tax relief) are around 50% of the market and it certainly does affect their decision and willingness to purchase EVs, but the other half of the market, private buyers, mostly don't benefit from the tax relief and hence it doesn't influence their decisions or increase their willingness or ability to pay more for an EV.

Car manufacturers still face competition selling to private buyers, there's still pressure to drive prices down to increase sales to those private buyers.
You are not displaying an understanding of how cars are manufactured and priced.

Let's say a manufacturer plans to produce, say, 100,000 vehicles in some timeframe. Then they go to their market type people and say 'what price can we offer this to the market, so as to sell 100,000 cars?'.

The market type people come back with a number. If it is too low, they 'over-sell' the car and don't make as much profit as they could.

If it is priced too high, they are left with unsold stock on their hands.

Let's say the market actuaries set a price and all is going well, and then along comes some tax arrangement. 'Ooooo!', whoop the beneficiaries of such tax arrangements with joy, 'we were teetering on the edge of buying this BEV-thing or the latest Passat diesel [obviously], let's get the BEV!'

The market actuaries say 'Hey, this new tax thing ... we've not got the production capacity set for this new sales level, so we are going to have to raise the price so the sales level matches production'.

They figure expected sales at the current list-price they will need to produce 110,000 cars this year, but only have factory capacity for 100,000. They have to drop by 10k expected sales.

They make a calculation; every £500 they add, they lose 800 private customers and 200 business customers.

... So they raise the price £5,000, lose 8,000 private customers and 2,000 business customers.

... maybe later on they discover they have lost too many private customers, say 15,000 are lost instead of just 8,000. Now they have to bring back some incentives to get those 7,000 'over-lost' customers back. So then maybe you get some of the new price rise back as some retail incentive (hence, ... that's why you get retail incentives!!!! to sell over-priced stock!)
 

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Discussion Starter · #10 ·
A lot of complicated responses here when actually it’s quite simple. A Company car can be bought out of gross salary which can be worth up to 40% or even more, albeit a 1% BIK (this year). Net result - it can be cheaper to buy an EV as a Company car than an equivalent ICE. This has been widely reported in the press. So, in that sense the EV is being subsidised for Company car holders. Certainly my friends with Company cars are well aware of this and proceeding to place their orders whilst a large portion of private car owners are wondering when they will ever be able to afford one.
 

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If you "buy" a car out of gross salary, its not a "company car" its a salary sacrifice car.

A "company car" is when the company pays, and you use and have some private use - if the company pays and there is no private use, thats a pool car.
 

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Discussion Starter · #12 ·
If you "buy" a car out of gross salary, its not a "company car" its a salary sacrifice car.

A "company car" is when the company pays, and you use and have some private use - if the company pays and there is no private use, thats a pool car.
Understood and thanks for the clarification. So, it’s a salary sacrifice scheme which the Company facilitates and the tax authorities allow. Same result - a leased EV at less than the equivalent ICE.
 

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Don't forget the Ltd company owner/director. Either buy outright and get full relief in year one, or lease like I have and surf the Govt tax breaks for 3 years. Putting Petrol/Diesel cars through the Ltd were a no-no for us, but BEV is a no-brainer. 1% this year and 2% next few years for BIK, everything expensed through the Ltd, and 50% Vat back. That's what made me take the plunge a few months back. How long this will last is another question but long may it continue!

Was just saying to Mrs Ravioli the other day that for a 'family car' the BEV is the perfect solution - no way would I go back to an ICE for that. We have a weekend car for noise and open top stuff. Perfect combo.
 
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