When it comes to your fleet of vehicles, managing costs is a big area of concern for most businesses. And a big driver of costs will be fuel. So, making the right decisions for your fleet as to which type of fuel you use and therefore the vehicles you buy will be vital.
There are many options from traditional petrol or diesel vehicles through to hybrid, plug in hybrid and pure electric vehicles. So, if you are looking to change your fleet vehicles in the coming years which fuel type should you be considering?
Here we look at pros and cons of petrol, hybrid or diesel vehicles. As well as progress being made with electric vehicles and when they may be a viable option for fleets.
Pros and Cons of Petrol Vehicles
Petrol vehicles benefit from the fact that petrol is slightly cheaper to buy than diesel, as are the vehicles themselves along with maintenance and servicing costs.
However, petrol vehicles are less fuel efficient so if your drivers are doing long journeys and covering many miles, the savings mentioned above can be deteriorated.
Petrol vs. Diesel vs. Hybrid
And in comparison to some hybrid vehicles or pure electric vehicles petrol vehicles can attract higher vehicle tax prices.
Petrol vehicles are also part of the government’s environmental targets looking to ban the sale of new petrol or diesel vehicles by 2035. As well as stricter rules around higher emission vehicles – with those not meeting certain standards attracting congestion charges and levies when driving in certain areas. All of which could add to your fleet costs.
Pros and Cons of Diesel Vehicles
Diesel vehicles are more fuel efficient. So, whilst fuel costs are higher, if you do a large number of miles, overall it should cost less to run a diesel vehicle than a petrol vehicle. And this is likely why fleets have focused on inclusion of diesel vehicles in fleets.
However, in recent years there have been concerns about emissions from diesel vehicles. Diesel vehicles emit higher levels of Nox gases which cause particular issues for local air quality. As such diesel vehicles are now subject to:
- Higher vehicle tax prices
- Higher company car taxes
- Congestion charges and levies for driving in certain areas
- Parking surcharges
Diesel vs. Petrol
Accounting for these factors, depreciation on a diesel vehicle is likely to be higher as well as appetite for diesel vehicles reduces in light of government pressure and increased costs.
Pros and Cons of Hybrid Vehicles
Hybrid vehicles offer a combination of technology – electric as well as a petrol or diesel combustion engine. You can buy hybrid or plug in hybrid vehicles currently.
Many believe they offer a bridge between traditional petrol or diesel vehicles and pure electric vehicles. The inclusion of the petrol or diesel engine can reduce fears around range linked to pure electric vehicles
Hybrid vehicles emit less CO2 than petrol or diesel vehicles and as a result may benefit from lower VED rates. And for fleets, these lower emissions can result in lower Benefit in Kind tax rates for company car drivers. With no rechargeable battery’s driver habits don’t need to change either to benefit from increased efficiency.
Plug in Hybrid vehicles also attract savings from a lower benefit in kind tax rating. However, current technology means that plug in hybrids can often only manage a range of 20-30 miles on a single charge. Much lower than pure electric vehicles. Which means if your drivers do frequent long journeys, they will likely have to make use of the petrol or diesel engine a lot more which can reduce efficiency and fuel economy.
Diesel vs. Hybrid
When comparing a hybrid or diesel vehicle, emissions and associated costs will be much lower for the hybrid vehicle. But do be aware that sales of hybrid vehicles are now also to be banned from 2035, as with petrol and diesel vehicles.
Are electric vehicles growing in popularity?
Electric vehicles offer an alternative to petrol, diesel or hybrid cars for fleets and much progress has been made with electric vehicles in recent years.
Figures suggest that electric vehicles are continuing to grow in popularity. Whilst numbers are still relatively low, new registrations of electric vehicles appear to have held during the covid-19 pandemic unlike those of petrol and diesel vehicles.
Fleets are also showing growing interest in electric vehicles. Big names such as Amazon are reported to have ordered 100,000 electric vans to be on roads by 2021. And a survey by fleet news suggests that a quarter of those asked expect at least a fifth of their vehicles to be electric by 2022.
The Committee on Climate Change believes the cost of electric cars will be similar to that of petrol or diesel vehicles by 2024-25. This could help fleets overcome the cost of EV technology which is currently perceived to be one of the biggest barriers to making the switch.
And with benefits such as company car drivers paying no tax on pure electric vehicles, reduced vehicle running costs and possible exemption from congestion charging and other charges aimed at high emissions vehicles it is possible to see why electric vehicles could represent a viable alternative for fleets other then petrol or diesel vehicles in the coming years.
The Tesla semi, an electric truck capable of long range whilst pulling a heavy load, announced in 2017 was set to be in full production by 2019. But the full launch has already been pushed back to 2020. So, it may be a few more years before trucks and HGV fleet managers are able to consider making the switch to electric.
What are the governments targets for diesel and petrol vehicles?
The government’s plan is currently to ban the sale of new petrol, diesel and hybrid cars from 2035. Meaning only new electric and hydrogen powered alternatives will be able to be purchased.
At the time of writing the current plans will allow individuals to continue to drive a petrol or diesel car that they already own or buy a second-hand one.
Diesel vehicles in particular produce a significant proportion of dangerous roadside Nox gases. And alongside petrol vehicles, many are becoming subject to additional charges and levies when driven in certain areas. This includes additional charges for driving within Ultra Low Emissions Zones (ULEZ) such as the one in London and Clean Air Zones (CAZ) in other UK cities.
Diesel vehicles which do not meet Euro 6 standards are subject to a levy for driving within an ULEZ and CAZ. As are petrol vehicles which do not meet Euro 4 standards.
Insurance costs will be another thing to keep in mind when choosing the vehicles that you run within your fleet. We blogged last year about the implications of electric vehicles for insurance. Many of these still remain true of today, but we expect insurers and the industry as whole to keep pace with growing numbers of electric vehicles on our roads.
If you are a fleet manager considering changing the vehicles in your fleet and have any questions about insurance or risk management then do get in touch with us at Anthony Jones. We have a team of fleet insurance experts who are happy to help. Contact us on 020 8290 9099 or email us at commercial.motor@anthonyjones.com.
