Salary sacrifice EV increase shows potential for rapid electrification, Arval says
23 August 2021
Author: Sean Keywood
Leasing company Arval UK says the number of EVs being taken up through its Ignition salary sacrifice scheme shows how quickly the vehicles can catch on given the right conditions.
The firm said it had seen a 280% growth in the number of Ignition vehicles during the last 12 months, with the top 15 car models chosen now all-electric.
Arval UK consultant Richard Cox said the growth showed both the burgeoning popularity of salary sacrifice, and how quickly EV adoption can happen with an appropriate combination of supportive tax incentives, increased vehicle choice, and firm employer commitment.
He said: "The introduction of zero and very low BIK taxation rates on EVs has made these schemes very attractive and led to this rapid expansion in Ignition.
"The latest, most advanced and environmentally-friendly cars can be offered to employees at extremely attractive monthly rates, supported by more choice in the electric car marketplace which means that there's an option for every budget and lifestyle need."
Cox said Arval was finding that salary sacrifice fitted not just the needs of people who would like a company car and do not currently qualify for one, but also employees who have taken a cash allowance option and are looking for alternative car provision.
He continued: "The level of interest being shown across companies with which we are working is ever-growing. These schemes provide a range of genuine advantages to employers and employees, with no real downsides or compromises.
"They also, of course, show exactly how rapidly EV adoption can occur in the right conditions, which is something that we believe is extremely important from a corporate point of view and as we all work towards the 2030 electrification deadline."
According to Cox, other factors playing a part include the reluctance of employees to return to using public transport in the wake of the Covid-19 pandemic, and a desire for companies to enhance employee benefits in an increasingly competitive recruitment market.
He said: "There remains an ongoing reluctance among some employees to use buses and trains for commuting and business trips, with an accompanying desire to switch into environmentally friendly cars. Salary sacrifice is ideal for people who find themselves in that position.
"In this way, a mobility role is being established for EV-based salary sacrifice as a key element in a wave of new benefits initiatives that are designed to bring innovative options and ideas into play for employees, with only a very limited investment required by their employer.
"Earlier this year, we released some figures showing that almost nine out of ten cars leased through Ignition were now EVs, an increase over the last two years from just four out of ten. That very clearly illustrates the dramatic rate of change."