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The Best Company Cars to Lease: Electric or Diesel?

 Published 5th November 2023
Company Fleet  Driver Guides  Electric Vehicles  Low Emission Vehicles 

Leasing a car, or fleet of cars, for business purposes is a popular option as it saves a company having to fork out a vast sum to purchase the vehicles up front. It also means your employees can benefit from newer vehicles with lower maintenance costs while reaping tax cuts and keeping the job of mobilising your workforce easy.

When you’re considering what might be the best company cars to lease in the UK, it’s essential to balance various factors such as cost-effectiveness, tax implications and suitability for both work and company use.

Electric vehicles (EVs) and hybrids have become increasingly popular and appealing due to their low carbon dioxide emissions and the addition of favourable benefit-in-kind tax rates.

In contrast, diesel vehicles which have traditionally been a popular option for business cars, as they are frequently cheaper to maintain than petrol cars, are now much less favoured because of environmental concerns and changing tax regulations. This blog will look at the two options of leasing electric or diesel cars for business lease deals and uncover which is the best choice today.

How are diesel and electric cars different?

Diesel and electric cars have a vast array of differences in how they’re powered, the environmental impact, performance characteristics and overall cost of ownership.

  1. Power source – diesel cars are powered by combustion engines that burn diesel fuel to drive the engines – and which are known to be very efficient over long distances and at constant speeds. On the other hand, electric vehicles have electric motors powered by rechargeable batteries which don’t burn any fuel or produce any emissions.
  2. Environmental impact – although modern diesel vehicles are cleaner than older models, they still have a significant environmental impact as they emit CO2, NOx and other particulate matter which contributes to greenhouse gas emissions and air pollution. EVs aren’t completely without any environmental impact, however. Although they don’t produce any emissions, the source of the electricity used to power them can be an issue, although if the electricity comes from renewable sources then the environmental impact is lowered.
  3. Performance differences – EVs deliver instant torque and a poky acceleration, while also being quieter and smoother rides thanks to their lack of gear changes and fewer moving parts under the bonnet. Diesel engines also have high torque, especially at low speeds which makes them ideal for heavy vehicles or towing and they usually have a longer range per tank of fuel than petrol engines and most electric vehicles, although this depends on make and model.

Diesel engines: still a viable option?

Although diesel’s moment of glory seems to have passed, there are some situations where a diesel vehicle still makes sense as an option for a business lease. Typically, diesel cars create a cocktail of noxious emission gasses that includes Carbon Dioxide (CO2), Carbon Monoxide (CO), Nitrogen Oxides (NOx), Sulphur Dioxide (SO2) and Hydrocarbons (HC) as well as Water, Nitrogen and Oxygen.

The first five of these gasses contribute to global warming, breathing issues, acid rain, smog and even death in high concentrations. Modern diesel vehicles now have to meet the RDE2 emissions standardsince January 2020 – making them actually much cleaner vehicles to drive. For some companies and their workforce diesel vehicles are still the most viable option. For those drivers who cover hundreds of miles each day, up and down the UK’s network of motorways, having to stop to recharge during journeys could become a hindrance to efficient working. Diesel vehicles also can offer greater payloads as the weight of lithium-ion batteries can increase the weight, and therefore the load electric vehicles can carry.

Some electric vans have impressive ranges, such as the Vauxhall Vivaro-e, the Ford E-Transit or the BMW i4, the Hyundai Kona EV, the Skoda Enyaq, the Tesla Model 3 and VW ID.3 and may cope with distance driving regularly, but before choosing between electric or diesel, you need to consider the driving needs of your employees. You also need to consider whether you’re looking to lease a van or a car, to ensure the business lease vehicle meets the purposes of your employees.

Cost – what are the implications?

The costs of choosing to lease a diesel or electric vehicle could tip the balance in favour of one or the other. Typically, a business lease deal, whether on a car or van, is usually a smaller, budget-friendly sum per month – much cheaper than trying to purchase outright or find other finance options, but the running costs are more significant in terms of making a decision.

  • Fuelling times - Diesel lease vehicles are much more quickly refuelled as petrol stations are much more widespread and accessible than those with charging infrastructure for EVs. Although the number of EV charging stations is rapidly expanding, they’re not as prolific as places to fill a tank with diesel. Also filling a tank with diesel gets you back on the road in a matter of minutes, whereas charging times can vary from a fairly quick half-hour charge to overnight. Time is money – and you need to factor into your choice how long your employees will need to spend refuelling.
  • Fuelling Costs – Electric charges are generally cheaper than filling a tank with diesel – which has been rising in cost (probably to dissuade drivers from choosing diesel options which create greater emissions). 
  • Other cost considerations - Diesel vehicles are generally subject to higher taxes and more strict environmental regulations due to their emissions, whereas EVs can access governmental tax incentives and rebates as well as avoid ULEZ and other congestion charges – which can add up to a significant, large sum over a year. Workplaces can also access the Workplace Charging Scheme (WCS) grants to install charge points at numerous premises to encourage business leases to choose EV options.

So, should we choose electric or diesel for our company fleet?

The answer to the question this blog raises isn’t exactly a clear cut one, as there are so many variables that need to be considered before coming to a conclusion. It depends hugely on your business and the driving needs and habits of your employees, but some of the factors to consider include:

  Total cost – monthly payments, fuel/electricity costs, maintenance, insurance and any other possible fees. 

  Benefit-in-kind (BiK) tax rates - many EVs are subject to BiK tax rates, governmental incentives and grants.

  Range and charging or fuelling infrastructure – this will depend on how much and how far your employees need to travel.

  Practicality – distances travelled as well as the purpose of the vehicle and use – shorter commutes and city driving will make EVs the obvious choice.

  Future-proofing – changing regulations and future implications of the different vehicle types to make the transition easier in the future as the government plans to phase out petrol and diesel vehicles. 

  Reputation – if you’re committed to reducing your carbon footprint and promoting sustainability as a company for your employees and customers, then opting for an EV lease deal will better align with these goals.

Ultimately, you have to weigh up these factors to make a well-informed decision about whether an EV or diesel option is best for your company’s lease deals. If you’re unsure about which way to turn, then our expert team at Gateway2lease are happy to discuss your unique situation and help you make the best decision for your requirements, so get in touch today to benefit from our advice and support.  

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