Alternative Fuel Vehicles – Which One Is Right For Your Business

Government policies in relation to fuel-efficient vehicles and air pollution are designed to encourage businesses to adopt alternative fuel vehicles (AFVs).

This leaves fleet managers with difficult decisions. Which vehicles are best suited to your business in terms of cost and performance?

AFVs are more expensive to purchase but much more cost-effective to run. In addition, increased Vehicle Excise Duty (VED), the tightening of environmental laws, and year-on-year increases on the CO2 emissions levy only serves to add to a company’s financial burdens.

What’s Driving The Adoption of AFVs?

  • Government policy
  • Improvement of engine technologies
  • Drop in costs of alternative fuel vehicles
  • Capital allowances
  • Tax incentives
  • Government grants for charging points in the home, workplace and on-street charging


Business Car Leasing v Purchasing

Fleet cars are becoming increasingly popular for businesses. Leasing a company car is less expensive than purchasing a fleet outright and offers more convenience.

With the burgeoning costs of AFVs, businesses that do not have the capital to invest in a fleet of cars will find solutions with our company car leasing plans.


Which type of fuel is the best option for your company fleet?


Advancements in diesel technology means modern engines are more durable, cleaner and fuel efficient than ever before. However, vehicles are more expensive to purchase. Although fuel costs are higher than electric-powered vehicles, diesel engines are more reliable over long distances, can pull heavy loads and require fewer fuel stops.



  • Diesel Fuel efficiency can be 25% more economical than petrol engines.
  • Diesel engines are durable and can be resilient to high mileage if serviced in line with manufacturer recommendations and on time.  
  • Impressive torque makes diesel engines better equipped to tow heavy loads



  • Purchase cost of diesel cars is generally more expensive than petrol equivelants. Leasing is less costly.
  • Maintenance costs can be more expensive if the engine is neglected. This can be avoided by adding maintenance cover on your business car lease plan
  • Higher tax bracket and running costs


Which businesses are Diesel cars best suited?

Businesses that require vehicles for long distance travel and often carry or tow heavy loads may want to consider vehicles with diesel engines. Diesel engines are heavier on the budget over short distances but get the job done.


Automotive engineers have improved the engine technology of petrol cars to make them more economical. They are still the most expensive cars to run, but are not as expensive to purchase. They also carry a lower tax burden than diesel cars.



  • New-Generation small engine turbo powered engines give you better economy without loss of power
  • Purchasing prices are the least expensive on the market
  • More models give you a wider variety of options


  • Low torque and high fuel consumption
  • Petrol prices continue to inch up
  • High VED tax rates
  • Costly maintenance bills


Which businesses are Petrol cars best suited?

Petrol cars are an option for businesses that do not want the additional upfront expense of alternative fuel cars. However, the running costs are significantly higher so are best suited to firms that only need a vehicle for occasional use.


Hybrid (HEVs)

Hybrid cars have the distinction of being environmentally-friendly, cost-friendly and able to last the distance. The primary fuel source is electricity, but once the power runs out, the engine switches to a traditional fuel source.



  • Lower running costs save a significant amount on fuel spend over short distances
  • Rewarded with advantageous tax breaks



  • Purchase cost is significantly higher than traditional models
  • Expensive maintenance costs
  • Less power restricts load and ability to overtake
  • Higher fuel consumption than combustion engines over longer distances


Which businesses are Hybrid cars best suited?

Overall, Hybrid vehicles typically use 30% less fuel than petrol cars over short distances. Businesses that only use cars in the city will benefit from low-cost fuel advantages and less maintenance costs.

Plugin Hybrid (PHEVs)

PHEVs are a true game-changer. Similar to hybrid vehicles, they are part electric and part traditional petrol / diesel fueled but are capable of reclaiming energy that would otherwise be wasted. Although economically efficient, drivers need to remember to charge the car at home or place of business as often as possible.



  • Superior fuel economy – charging stations and home charging make it easier for drivers to maintain sufficient battery power and use less fuel
  • Low emissions are environmentally-friendly
  • Tax advantages in accordance with VED levies



  • Can take several hours for the battery to fully charge
  • Increases cost of electricity bills
  • High purchase costs

Which businesses are Plugin Hybrid cars best suited?

PHEVs use 40-60% less fuel consumption than petrol engines. Although they are most economical for city use, the ability to charge the battery makes PHEVs more reliable and cost-effective over longer distances than standard hybrids.

Electric (EVs)

EVs operate on battery power only. Whilst this improves energy efficiency and significantly cuts running costs, battery-powered cars are limited to shorter distances and require charging more often.



  • Low fuel costs. For example, a standard 60kWh will give you around 200 miles on a single charge for around £10.
  • Cost effective to maintain because they have fewer moving parts than combustion engines
  • Low emissions reward businesses and drivers with a lower tax bracket



  • Only ideal for shorter distances. This will change when more charging stations are available throughout the UK and technology evolves.
  • Lengthy charge times – some batteries can take 2 hours+ to fully charge
  • EV batteries are expensive to replace although there is potential life expectancy for 100,000miles per set. Lease hire vehicles avoid potential financial problems by upgrading vehicles on a regular basis


Which businesses are Electric cars best suited?

EVs are ideal for businesses that provide company cars as a benefit-in-kind, visit clients regularly or deliver goods in local areas. They are also congestion zone charge free so reduce costs in central London and future low emission zone cities.

The Future of Leasing Fleet Cars

The business car leasing sector is coming to a crossroads. Now that combustion engines are being phased out alternative fuel cars have to be part of the conversation.