Managing the financial challenges of electrification

The Government recently announced that it had extended the deadlines for some of its EV-related subsidies for another year. In terms of managing upfront cost, this is good news for organisations that haven’t yet committed to electrification. (It could also be handy for those that are keen to expand their EV fleet and charging investments.)

But there’s more that businesses can do to remove the blocker of upfront cost by reducing or spreading initial expenses.

What subsidies has the Government extended?

First off, let’s look at the subsidies that are still available.

The EV charge point grant provides financial support towards the installation work necessary to fit charge points. It’s valid for current or future installations and offers discounts for each socket and each parking space involved in an implementation project, covering up to 75% of total cost.

The Workplace Charging Scheme represents grants to reduce hardware purchase and direct installation costs by up to 75% or £350 per socket. It provides support towards the cost of up to 40 sockets per applicant. (There’s also a separate Workplace Charging Scheme for state-funded education institutions.)

The Plug-in Van Grant gives eligible organisations 35% off the purchase price (up to defined limits) of 1,500 plug-in vans and trucks each financial year.

The Government’s extended deadlines for all of these grants – originally earmarked for April 2025 – by 12 months.

It’s worth noting that eligibility criteria applies – find out more at gov.uk. In Scotland, additional grants are also available via the Energy Savings Trust.

What else can organisations do to reduce upfront electrification costs?

With or without governmental support, organisations should consider what else is available to help them address the upfront financial challenges of electrification. Doing so will provide a stronger business case for senior internal approval, showing both pragmatism and projections for return on investment.

Let’s look at the options.

Engage a specialist electrification partner

The right expert partner will help understand your needs, tailor your transition and future-proof your investment. This will minimise upfront costs and help you avoid expensive mistakes.

Assessing suitability

As well as seeking to understand your business objectives, budgetary constraints and intended pace of change, an expert partner should help you assess electrification suitability. For organisations looking to electrify vehicle fleets and install supporting charging infrastructure, this will involve recording fleet-vehicle-specific mileage, journey and dwell data.

Understanding whether an EV will be able to comfortably satisfy the demands of each existing internal combustion engine (ICE) vehicle is crucial in phasing your transition for effectiveness and affordability.

Investing cost-effectively in charging infrastructure

Equally, the data from a suitability assessment will help you plot suitable charging locations and decide what specifications your hardware needs. For example, there’s little point paying for powerful and expensive chargers if all charging’s going to happen overnight. In these instances, lower-power chargers are likely to be cheaper and they’ll put less of a strain on both your sites’ electrical capacities and your vehicles’ batteries.

Expert analysis of your site’s electrical capacity against the likelihood of future infrastructure expansion works can result in longer-term cost savings too. Future-proofing your investment by working with an experienced installation partner can offer significant cost savings and potentially avoid further site disruption down the line.

Supporting with subsidies

A good electrification partner will also know what existing government grants, subsidies and incentives you’re likely to be eligible for. They’ll be able to guide you through necessary research and applications. They may also be able to help arrange a finance plan that spreads the cost of your investment – see ‘Arrange a financing plan’ below.

Minimising installation disruption

Having one partner to track the delivery of purchases, schedule installation, manage groundworks and act as an on-site point of contact will simplify implementation. It’ll also prevent costly disruption to your business-as-usual – both for your fleet operations and for other site users.

Enabling adoption

Too many older charge points end up sitting unused when organisations invest in new infrastructure. The ability to ‘adopt’ your existing hardware when you switch charge point operator or introduce updated facilities is something certain partners can offer. This gives historic investments a new lease of life, enables network-wide charging visibility and saves potentially unnecessary replacement costs.

Training your team

Having sessions to onboard your fleet drivers with their new vehicles and charging requirements will help them to hit the ground running. Being able to self-serve for minor issues will also minimise downtime and operational inefficiencies.

Arrange a financing plan

Financing frameworks enable you to split upfront costs over a period of years. This spreads the outlay and avoids one financial year’s balance sheet having to take the hit.

The right financing model could mean the difference between being able to afford a functional EV fleet – and having to stick with ICE vehicles and the problems that’ll cause. For others, it’ll provide the opportunity to expand or upgrade their intended investment.

Managing ongoing costs to get the green light for electrification

It’s worth considering operational cost savings upfront as well. Being able to project effective financial management – and even potential revenue generation – will increase the chances of internal stakeholder approval to electrification plans.

The right electrification partner can help you limit ongoing costs by:

• Providing an effective service and maintenance package that reduces your fleet’s downtime and lost revenue
• Simplifying administration and reducing the associated time and cost involved in managing multiple third parties
• Generating future cost savings – for example, an expert site survey could result in recommendations for groundworks or upgrades now that save you money and disruption in the longer-term

Factor in governmental support when projecting ongoing EV-related costs, too. Other financial incentives designed to encourage EV uptake include clean-air-zone charge exemptions, free parking and tax exemptions for workplace EV charging under certain conditions.

Consider future revenue streams

Electrification has the potential not just to reward organisations with comparative cost savings, but to generate revenue for them as well. To help show the potential for EVs to cover their own costs, consider:

• Providing public charging access – and setting your own tariff
• Leveraging advertising potential via remotely programmed charger screens
• Securing corporate partnerships for the use of your charging hardware
• Implementing smart charging functionality to facilitate potential vehicle-to-grid charging opportunities

Remember indirect financial benefits

While it’s harder to factor indirect benefits into TCO calculations, it’s important to consider the additional financial advantages electrification investments can bring.

So, don’t forget value-adding benefits including:

• The reputational boost of a visible fleet of electric vans on the UK’s roads
• The staff-attraction boost of offering workplace charging as an employee perk
• Increasing dwell time and customer spend by providing charging facilities at your destination

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