Company car: petrol, diesel, hybrid or electric car?
Business drivers are faced with a wider choice of powertrains than ever. Here's how to decide which should drive your next company car...
Choosing the right type of engine or motor for your company car has never been more complicated. It used to be a choice between petrols and diesels, with the outside chance of a hybrid. And for most drivers, the CO2-based taxation system meant a diesel was invariably the best choice.
Now the decision is much tougher. Electric vehicles (EVs) are the new stars of the company car park, with tempting tax rates as well as range and performance that would have been science fiction a decade ago.
What's more, the number of hybrids – especially plug-in hybrids – has exploded in recent years.
Which is best for company car drivers?
Zero-emission vehicles are taxed at 0% in 2020/21, 1% in 2021/22, and 2% in 2022/23. These come-and-get-me tax rates won't be around forever – in the longer term HMRC will need to make sure it doesn't lose revenue as electric cars take a bigger portion of the market.
But for the next few years, a high-performance electric car costs less in benefit-in-kind tax than a small hatchback with an internal combustion engine.
· Super-low tax rates for the next few years
· Many EVs now have real-world ranges of over 200 miles
· Cheap running costs for private miles, so long as you can recharge at home
· Supply is limited
· The right EV may not be within your leasing budget
· Long journeys are more straightforward with a diesel, petrol, or hybrid
There's an ever-growing choice of hybrids. Some are so called 'self-charging', although this is a little misleading – they recapture energy that would otherwise be wasted, rather than generating electricity from thin air.
For a company car driver, plug-in hybrids (PHEVs) are more attractive from a tax perspective, as they generally have lower CO2 emissions than self-charging hybrids and so fit in a lower tax band.
· PHEVs in particular have low tax bills
· No range anxiety
· A convenient stepping stone from a petrol or diesel to a full EV
· PHEVs need frequent recharging to keep running costs low
· Not in the same league as an EV for tax savings
· Hybrids often lose boot space compared with the equivalent petrol or diesel model
Once the default choice for company car drivers, diesel cars still have their place. While the emissions scandal known as Dieselgate may have terminally damaged diesel's reputation, modern diesels are required to meet the tough RDE2 emissions standard, intended to guard against any further cheating. Today's diesels are cleaner than ever, and ideally suited to high-mileage use.
· RDE2-compliant diesels no longer attract the 4% tax surcharge levied on other diesel cars
· As a rule, a diesel will be more economical than a hybrid on a long journey
· Lower CO2 emissions than the equivalent petrol
· Higher tax banding than an EV or PHEV
· Even the cleanest diesel does more to harm air quality than an EV
· Diesel particulate filters can clog if mostly used for short journeys
As diesel has declined, so petrol sales have risen. But unless an EV or hybrid is beyond your leasing budget, and you only drive short distances, it's hard to find a USP for petrol-powered company cars.
· Modern, small-capacity turbocharged petrols deliver reasonable economy
· No range anxiety, and rapid refuelling
· Better suited to urban driving than a diesel
· Highest CO2 emissions of major powertrain types
· Less fuel-efficient than a diesel on a long journey
· High BIK bills relative to the car's price
The company car landscape has changed rapidly over the past couple of years. An EV or a PHEV will make the most tax-efficient company car, although the best diesels are still fine all-rounders, especially for high-mileage drivers.