Are EV’s really affordable?

New Business discusses innovative solutions to cost and risk, with Tom Groot, co-founder of the Electric Car Scheme.

NB. Given the near global move to convert to EV's and meet net zero targets, what motivated you to get involved and create The Electric Car Scheme, in an industry full of giants?

I have always had an interest in the world of sustainability and new technology. In fact, my parents were very early adopters of solar panels and installing them at home (in the 90's!) to reduce their reliance on the grid and carbon footprints.

The motivation behind The Electric Car Scheme specifically came in 2020, when my co-founder Tom Eilon was looking to purchase an electric car after moving to the UK from Canada. It was four times more expensive than the equivalent second-hand petrol car, and while he wanted to make the green choice, it was simply not affordable.

We then looked into the tax incentives available, and tried to access them through lease companies. But this was not possible for anyone who did not work at a very larger corporate.

At that point, it became clear there was a real gap for most employees in the UK who were employed at smaller businesses, and we setup The Electric Car Scheme. Overall, we are driven by the belief that everyone would like to get to Net Zero if it is simple and affordable to do. With The Electric Car Scheme, that is now possible.

On the question of competing with giants, we have found that it is often the smaller, more nimble businesses that are more open to the change, and that are able to adapt to new ideas and technologies. Of course, much of the transition will be driven by huge manufacturers, but ultimately it is about getting individuals behind the wheel of EVs. A big part of that is making them affordable.

How does Salary Sacrifice work for employers and employees?

Salary sacrifice is a simple idea. For employers, it is a way to offer attractive benefits to their employees at little to no extra cost. For employees, it is a way to make your pre-tax salary go further.

In our case, we enable employees to access a government backed scheme whereby you can pay for the lease on an electric car out of your pre-tax salary. This allows for savings between 30-60% for employees on getting behind the wheel of an electric car. For many, this makes the difference between being able to afford an EV and not. For others, it can mean being able to opt for a model with a longer range, better handling, or just one that looks nicer. We also make it as easy as possible for both the company and employees, doing a lot of the admin, due diligence and paperwork that people don't have the time or energy to do themselves. Making sustainable choices is incredibly desirable for consumers these days, so we make that possible almost as much as anything else.

For the businesses we work with, The Electric Car Scheme makes it totally free to offer this as a benefit to employees. The benefits of this are three-fold, it makes your business a more attractive place to work, by providing an effective pay rise to those employees who take it up. It also helps firms keep hold of staff, it is a sticky benefit, which makes people think twice before jumping ship, and attracting new talent into their teams. Finally, it can be a big boost for a business's ESG and sustainability credentials, which is becoming more and more important for staff, customers and even potential investors.

Crucially for businesses, using The Electric Car Scheme in particular, rather than doing it themselves or with another provider, means that there is no risk. Whether an employee leaves early for any reason, there will be no cost to the business to terminate the contract on the vehicles should they need to. We have recently introduced our Complete Risk Protection Package, which we offer to all our clients at no extra cost. In fact, in a recent survey of directors that we conducted, 90% said that they believed there is significant risk to the company in offering an electric car scheme. We know the risk of being stuck with a fleet of EVs, or the bill for one, is a barrier to offering the scheme, so we took that risk away.

Is there a typical lease period?

The typical lease period is three years, but we offer options from a minimum of 12 months, up to a 48-month lease. For most vehicles, the longer the lease, the cheaper it will be for the employee. This is not unique to The Electric Car Scheme by any means, but our Complete Risk Protection means you don't have to worry if all your employees are opting for the longer leases.

What happens if the staff member is long term sick or even decides to leave the company within the lease period?

If an employee goes on long-term sick, or has to leave the company for any reason, the car can either be transferred to another employee, the employee leaving can take the car with them, or the car can be returned to the lease company.

In any of these situations, The Electric Car Scheme ensures there is no cost to the Employer - so they do not have to worry about these things happening (which can prevent employers from offering salary sacrifice schemes).

Do you cater for specific size companies?

We work with companies of all different shapes and sizes. Our product is unique in that it caters for small businesses (even as small as 5 or 10 employees), all the way up to larger companies with more than 10,000 employees.

Does working with ECS limit their choice of vehicles? and do you offer EV charging options within your offers?

As we work with all car manufacturers and all of the major lease companies in the UK, we do not limit the choice of electric cars available on the scheme. As long as they are available in the UK, we can offer them.

In addition, working with a panel of suppliers typically reduces lead times as if a car is not available with one of them (for whatever reason), there are others that can step in to help. So the car that you might be waiting six months for on you own could be yours much quicker through ECS.

Employees have the option to include a home charger with installation with their car if they need one (we find most customers do, as often it's their first electric car). The savings available through salary sacrifice apply to the charger, car insurance, and maintenance offered through the scheme as well, so it's an attractive option for our customers.

As an employer, having made the decision to work with The Electric Car Scheme, what happens next?

It's very simple, once you've decided to setup an Electric Car Scheme for your team, one of our dedicated team will get you setup on the system, help you with launch to employees (we have setup a great employee communication programme to support HR teams), and we then run group and 1-2-1 sessions with employees to answer any questions on the scheme. Our employer and employee portal mean the admin is super simple, and within weeks of setup, your first employees will be able to drive their electric car.

How do you see the next 5 years - for the industry, and of course for The Electric Car Scheme ?

I see EVs really taking off over the next year or two. While sales have slowed in recent months, I believe this is just the end of the early adopters and soon we will enter the mass adoption phase which will see demand skyrocket. There are big technological advances happening all the time, with tech like solid state batteries being a potential game changer.

Alongside this, established players such as Tesla are introducing lower cost models, a key driver of uptake.

In addition, we are now able to offer used cars through The Electric Car Scheme, which is bringing down affordability barriers even further, and will help increase uptake over the coming 5 years.

What this will mean for The Electric Car Scheme is exciting, as it's our mission to enable as many people as possible to switch to Net Zero, as soon as possible. More businesses will realise the benefits that it brings to their employees and those working at firms with one in place will be increasingly likely to take it up, after all, it's hard to argue with a 30-60% saving!