Rae Castillon on May 21, 2024 No Comments
A lot of businesses often shy away from choosing electric vehicles over internal combustion engine (ICE) vehicles because of the perceived higher costs.
And while, on average, that assumption is true, the long-term cost of owning an EV is about the same—if not lower—as the cost of ICE vehicle ownership.
Factoring in the environmental and on-the-road benefits of driving an EV, owning a fleet of electric vehicles offers tremendous value for businesses in the long term.
This is because the repair and replacement fees of EV cars aren’t as steep compared to gas-powered cars. There’s also a lack of recurring refueling costs due to the car being solely battery-powered.
That said, it’s still a large financial burden to own a vehicle, much more than multiple vehicle types. Fortunately, there are a variety of financing options to help make obtaining an EV much easier.
Let’s look into five effective ways you can fund your EV fleet acquisition.
1. Look into EV Grants and Government Support
With the electric vehicle market slowly capturing a bigger share of the market year-on-year, the government wants to propel this growth for zero-carbon emissions by offering prospective electric car owners financial assistance through EV grants.
These grants come in various forms.
In Australia, there are grants that have supported the rollout of public EV chargers across thousands of landmarks around New South Wales. Furthermore, there have also been rebates worth up to $3,000 given for the first 25,000 EV units sold under $68,750.
In ACT, there’s a scheme called the Sustainable Households Scheme that provides households with $2,000 to $15,000 worth of loans with 0% interest for EV charge port installation.
There are also tax exemptions (namely the fringe benefits tax) for electric vehicle owners that help make leasing an EV more affordable.
There are similar grants available in other Australian territories like the Northern Territory and Western Australia, offering funding covering up to $2,500 for charger installation in both residential and commercial properties.
Another perk of EV ownership is the removal of stamp duty fees. This automatically saves you the upfront cost of stamp duty, which essentially makes EV ownership much easier.
Whether you’re based in Australia or overseas, your local government likely has a similar support scheme for electric vehicles.
Be sure to look for local financing options offered by the local government. This can save you thousands of dollars or make managing cash flow much easier.
2. Lease Instead of Own
Is the need for an EV fleet seasonal or permanent? Are you strapped for cash flow at the moment—to the point that taking out a loan is out of the question? Perhaps you’re able to secure a loan but lack collateral, resulting in exorbitantly high interest rates?
If you resonate with either of these questions, leasing a couple of electric vehicles may be a more strategic business move in the meantime.
Leasing an EV gives you the full benefits of having a fleet of electric vehicles ready to be mobilized without the upfront cost of ownership.
Through leasing, you have the freedom to choose what type of vehicle you want, giving you access to new models that you may otherwise not have been able to afford at full price.
You also don’t have to pay for the maintenance fees—as this is all shouldered by the leasing company. Your monthly repayments tend to be lower than loan repayments, and you don’t have to pay for a downpayment either. Tax benefits are also possible, further lowering costs.
That said, the only drawback of going this route is that you’re not working to own the vehicle.
This means your EVs will always be a liability as it’s not part of your equity. That said, these things can be disregarded in the short-term if your goal is to just harness the benefits of owning EVs.
3. Explore EV Auto Loans
Another viable option for businesses to secure an EV for their operations is by looking into auto loans. Specifically, green auto loans provide consumers with a financing option to buy zero or low-emission vehicles.
Many manufacturers and financial institutions offer loans at much more attractive interest rates compared to traditional auto loans. The annual interest rate for these EV vehicles can be as much as 3% lower than the interest of traditional car loans.
On top of that, EV auto loans may also come with discounts, extended repayment terms and other benefits as part of the loan’s package.
If you get these green auto loans, you can enjoy cheaper monthly repayments and a lower total loan cost overall. That said, you’ll still have to be eligible for these deals, so shop around, build your credit score, and gather the necessary documents to qualify for these loans.
4. Consider Novated Leasing
An innovative way of financing a business EV fleet is by considering novated leasing. This type of financial arrangement involves using the pre-tax salary of employees to lease an asset, in this case, the fleet of electric vehicles.
Going this route can result in tax advantages for the employees and cost savings for the employers, all while still reaping the benefits of having an electric vehicle fleet operating within the business.
In some cases, novated leasing can also grant you discounts that have been bundled with the package, such as fleet discounts.
This makes it even cheaper to operate multiple electric vehicle types. This makes making payments more streamlined—which can help businesses keep a steady grip on their budget.
Learn more about this effective financing option through this link.
5. Opt for A Hire Purchase Scheme
A hire purchase scheme is another effective financial arrangement that can help businesses spread out their monthly payments.
Unlike taking out a loan, you (the buyer) don’t automatically own the vehicle at the start of the contract. You’re merely renting it—and you’ll have to make monthly payments as stipulated in your prior agreement with the other party.
To flesh a practical example, this means that you can’t sell the vehicle in a pinch, which is not the case like in a loan wherein you can do whatever you want with your asset.
However, you (the buyer) can return the electric vehicle in the middle of your rental period as long as it’s stated in a notice of writing. It will come with some penalties, though.
With a hire purchase, ownership is transferred to you the moment you fully clear your payments. This particular characteristic can be an attractive option for businesses that want to have flexible payment terms.
