Electric vehicles (EVs) are becoming more commonplace as they become more affordable and charging stations become more common. The U.S. isn’t currently leading the charge in the effort to get more green cars on the road; in fact, the U.S. is third globally (behind Norway and China) in terms of the number of EVs on the road. But, as more EVs become available, the question becomes: how do you manage electric vehicle reimbursement?
The State of Electric Cars in 2017
Other countries like England and the Netherlands may not have as many EVs as the U.S., but they have a larger percentage of drivers trying them out. As a result, policies concerning not only what to charge for public (and home) charging but also the reimbursement rate for business mileage have at least been discussed; there isn’t much discussion of this issue taking place among American businesses and the government.
Electric Cars Advantages
According to PlugInAmerica.org, “in order to equal the price of the average gasoline car’s fuel costs, the price of electricity would have to be 2.5 times the national average, and cost 31 cents per kWh.”
This means that EV drivers are paying a whole lot less for mileage. The AFDC (Alternative Fuels Data Center) reports that:
The fuel efficiency of an all-electric vehicle may be measured in kilowatt-hours (kWh) per 100 miles rather than miles per gallon. To calculate the cost per mile of an all-electric vehicle, the cost of electricity (in dollars per kWh) and the efficiency of the vehicle (how much electricity is used to travel 100 miles) must be known. If electricity costs $0.11 per kWh and the vehicle consumes 34 kWh to travel 100 miles, the cost per mile is about $0.04.
On top of that, rates can be even cheaper during off-peak times. The PEV Resource Center, a microsite of the California Air Resources Board's DriveClean.ca.gov website, reports that “off-peak electricity rates of about $0.10 per kilowatt hour (kWh) it is the equivalent of driving on gasoline that costs less than $1 per gallon.”
In addition, the actual cost of operating the car tend to be less as well. For example, one source estimates that the cost of driving an EV “represents a 35 percent decrease in cost over time. Some calculations peg this to about 3 or 4 cents per mile of maintenance cost in an EV versus closer to 6 cents in an internal combustion car. But it’s hard to know for certain.
With all this in mind, it becomes clear that the cost per mile of driving an EV is less than that of a gasoline vehicle, which brings up the major question of our post today.
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Should EV drivers be reimbursed at a cheaper rate than gasoline drivers?
In the United Kingdom, it’s been suggested by HMRC (Her Majesty’s Revenue & Customs) that “fleets can calculate their own reimbursement mileage rate using manufacturers' data for miles per kWh and electricity cost data – the ‘actual costs’ of charging the vehicle.”
This policy may sound fair since it’s an exact calculation. However, there are other considerations that come along with the regular gas vehicle reimbursement rate like that of vehicle depreciation. Those regular costs associated with driving aren’t accounted for in the HMRC formula.
Plus, there are other costs that can be forgotten when it comes to driving EVs. “The actual cost for a kWh varies widely across the U.S., and can swing wildly even within a location based on utility rate plans, season, tiers, time-of-use programs and home solar,” says PlugInCars.com.
On top of wide-ranging electricity rates, the cost of insurance can also be higher since these vehicles are new technology and insurers are still figuring out the appropriate costs of insuring them. Then, EV drivers need to make considerations for how they will charge their vehicles at home since many require specially installed chargers at a cost of $500-1,500.
Reimbursing electric cars vs. gas cars: The same rate?
With extra expenses for EVs that wouldn’t usually apply to gasoline vehicles, perhaps it is fair to reimburse at the same rate. More specific policies in the U.S. regarding this issue could go a long way towards solving the chicken-or-egg problem currently facing companies that provide cars for their employees. Many companies are hesitant to purchase EV cars because there aren’t policies in place concerning EVs and there aren’t enough charging stations; there aren’t policies or charging stations because there aren’t enough EVs on the road to warrant producing such policies and investing in more charging stations.
One solution does seems to be close at hand, however. A June 2017 news report found that new technology to support charging EVs as they drive could be close at hand. Details are in a video by Aban Infrastructure:
Concerning the problem of policies, the general attitude seems to be to simply reimburse at the same rate with some exceptions. The most detailed policy concerning electric cars comes from the HMRC, which provides a detailed Company Car and Car Fuel Benefit Calculator in which electric cars can now be accounted for.
The Future of Electric Car Reimbursement In The U.S.
Such details on EV reimbursement rates are not yet available from a U.S. government source. However, trends show that this will soon need to be addressed as more cars get on the road. After all, there are several government incentives to purchase an electric vehicle, from cash rebates to HOV-lane access in metro areas.
Beyond these incentives, EV drivers are also motivated to drive electric vehicles to support the environment.
Why I drive an electric car? I'm not ok with sacrificing the surface of our planet or our air for my lifestyle. https://t.co/Rb2VtAAAg9— Kyle Field (@mrkylefield) March 4, 2017
In the meantime, it seems safe to simply submit the same mileage for electric vehicles as for gas vehicles since there’s no official information from the U.S. government with separate rates. The way to track mileage might be to track the odometer readings by taking pictures with your phone. Or use a mileage tracking and reimbursement app. If you’re asked for a gas receipt, it’s simply a matter of explaining that you don’t have one because you’re no longer stopping at the gas station.
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