EV subscriptions can help control rising fleet costs, says Mercia

Mercia Fleet Management says that ‘flexing’ to electric vehicles (EVs) via subscription could help introduce an element of control as fleets face rising costs. 

With most businesses facing a rise in employers’ national insurance contributions (NICs) and the minimum living wage from next April, as well as increases in vehicle excise duty (VED), it argues that the need to keep a firm control over operating costs is paramount.

For fleet operators, VED is set to rise in several areas including hybrid vehicles and more expensive EVs. 

For example, new EVs with a list price of over £40,000 will from April 1, 2025, have to pay the expensive car supplement of £390 a year from the second tax payment onwards.

One way of mitigating the effect of the increases and exerting greater control over costs could be to flexibly introduce EVs on subscription rather than long term leases, especially for businesses with seasonal or contractual requirements, says Mercia, the fleet management division of Fleet Evolution.

Carrying out research among clients in the professional services and construction sectors, it identified that, in many cases, company cars were often deployed for contracts of only three months to meet short-term or seasonal needs and were often not required longer term.

Andrew Leech, head of Mercia Fleet Management and founder of Fleet Evolution, said: “For clients with seasonal, short-term needs or new employees on probation, we have been able to reduce costs by up to 40% by putting in place three month subscriptions for EVs.

“This has meant that the MG4, our most popular EV, can cost as little as £25 per day, while the Tesla Y on subscription could cost just £40 a day including insurance.

“We firmly believe that subscriptions should be considered as an important part of a fleet strategy, especially to provide greater flexibility, at a time when the Budget has raised the cost thresholds for most businesses in the UK.”

He added: “The ability to ‘flex’ a fleet based on demand is vital in the current market for the very many businesses who face rising costs following the Budget. And these will become even more expensive due to initiatives such as the increases in VED on new product.” 

Mercia recently launched an EV subscription service, Subscribe Electric, to give corporate customers a taste of going electric at affordable prices while meeting short-term business needs.

Leech concluded: “We are increasingly talking to businesses that want to find ways of mitigating their costs, especially after what most believe was a bad Budget for business.”