Fleet cars: is electric, hybrid, petrol or diesel best for a company car?

It used to be that working out what fuel you wanted your next company car to run on was simple – petrol or diesel. In most cases, people chose diesel because of the economy and comparatively Benefit-in-Kind tax rates. But then the ‘dieselgate’ scandal hit, and people began to worry about the emissions from these engines.

Fleet managers and drivers found themselves in a tight spot, between the pariah that was diesel, and the extra thirst of petrol cars. Well, the good news is that technology has saved the day, in the form of electricity.

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The revolution began with hybrid cars, which, while they still burn fossil fuels (usually petrol), do so much more efficiently than traditional petrols and diesels.

This means they emit less CO2, and therefore are subject to lower tax bills. But while such hybrids were once seen as company-car nirvana, the rules have since evolved, and they’re being taxed more heavily in today’s fleet-car world. That’s why more and more people are turning towards plug-in hybrids – PHEVs – because these emit even less CO2, so are taxed comparatively lightly. Better still, they have bigger hybrid battery packs, so can cover some journeys on electric power alone.

But PHEVs still draw more monthly company car tax than pure electric vehicles. Electric cars emit precisely nothing, so are subject to extremely low BIK tax bills – for the moment at least. However, while electric technology and battery range is evolving all the time, you do need to make sure such a vehicle will fit into your life, because an EV does demand certain compromises in terms of range and recharging times.

Here, we’ll take you through the fuel choices for your next fleet car, assessing them all for cost and convenience. And once you’ve done that, you can find lots more advice to help you get the best out of your company car fleet – including choosing the right model – on our fleet cars pages.

Read more: The cheapest company cars in the UK

Electric cars

Electric-vehicle technology is advancing at a supersonic rate, and the benefit of this is that EVs are able to fit into the lives of more and more people. And this is an undeniably good thing, because the super-low BiK tax rates on EVs make them fabulously affordable company cars.

Zero-emission vehicles are taxed at 3% in the 2025-26 tax year, and this rate will go up to 4% in the 2026-27 financial year, then 5% the following year. However, despite this increase, an EV will still cost much less in BIK tax than even a pure-petrol city car.

On top of that, EVs accelerate with the ferocity of a dragster, so drivers of fossil-fuelled fleet cars will only ever see a pair of rapidly shrinking taillights ahead of them.

However, an EV will be at its best only if you can charge it up either at home or at work. Otherwise, you’re forced to rely on the public charging network, which is both more expensive and less convenient to use.

Pros
·   Supremely low company car tax rates
·   Most EVs can travel more than 200 miles on a charge
·   Makes emore sense if you can charge at home

Cons
·   Long waiting lists
·   Expensive to lease
·   Not ideal for high-mileage drivers

Read more: The best electric company cars

Hybrids and plug-in hybrids

Hybrids are becoming ever-more prevalent in the company car world. Some of these hybrids are the sort of traditional hybrids that scavenge energy from the car’s brakes to recharge the battery (this process is known as regenerative braking). The slight downside is that this type of hybrid can travel only a very short distance on electric power.

Plug-in hybrids (PHEVs) are even more attractive to fleet drivers, because they emit much less CO2 than even traditional hybrids, and therefore sit in much lower tax bands.

And the more efficient the PHEV, the lower its tax banding – so an efficient PHEV that can travel a good way on battery power alone could really pay off. The best PHEVs can officially do more than 70 miles on electricity alone, so are becoming ever-more attractive.

Pros
·   Lower tax bills than a pure petrol or diesel
·   A PHEV has an engine, so no range anxiety worries
·   A comfortable step on the way to a full-on EV

Cons
·  An EV is still much cheaper in company car tax
·  Hybrid batteries cut loads space in some models
·  PHEVs need to be charged up to get the best efficiency

Read more: The best PHEV company cars

Petrol cars and vans

People turned to petrol cars after they shunned diesel, but only to find that they emit a lot of CO2 and so attract much higher BIK tax bills. In addition, petrol cars are much less economical than diesels and hybrids. That’s why fleet drivers are much better off with a PHEV.

Pros
·   No range anxiety, and filling up is easy
·   Much better than diesels for urban motoring
·   Small turbocharged petrol engines are economical

Cons
·   A pure petrol emits more CO2 than a hybrid
·   Much thirstier than diesels on long journeys
·   Comparatively high CO2 means higher BIK bills

Read more: The best SUV company cars

Diesel cars and vans

Diesel’s popularity has plummeted over the past decade, but despite the ever-increasing range of EVs, diesel still has a place for high-mileage company car drivers.

Modern diesels are actually exceptionally clean, because they are required to meet the RDE2 emissions standard, so gone are the days of healthy diesels belching black smoke.

The company car tax levied on diesels is pretty high, but they hit back by having good economy and huge tank ranges.

Pros
·   RDE2-compliant diesel avoid the 4% tax surcharge less efficient diesels face
·   Diesels are more economical than hybrids on long journeys
·   A pure petrol car will emit more CO2

Cons
·   An EV or PHEV will cost much less in BIK tax
·   Even the cleanest diesels are more detrimental to air quality than an EV
·   Diesel particulate filters can become clogged if the car is used only for short journeys

Electric, hybrid, petrol or diesel – conclusion

If you’re a company car driver, then there’s a clear way to slash your Benefit-in-Kind bill, and that’s by choosing a car that features some form of electrification, be that a mild hybrid, a hybrid, a plug-in hybrid or a full-on electric vehicle.

An electric vehicle is the most efficient option, followed by a PHEV, so you just need to work out is an EV will fit into your life. If not, a PHEV is a good compromise.

You must avoid pure petrol and diesel if you want to keep down your monthly company car bill – the high bandings applied to these makes them unrealistic as fleet vehicles.

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