Reimbursing drivers using the actual cost of electricity is the fairest way to reimburse employees driving electric company vehicles, as our recent analysis has shown. To do this, businesses need to take into account the different costs of charging at home, office, curb side and public charge points on route.
The first step is to work out how much energy the vehicle consumes per mile. This gives you the kWh/mile. Note, this will vary throughout the year with the use of air conditioning/heating.
The cost per mile for home charging can be worked out by multiplying the employee’s cost per kWh by the number of kWh it takes per power the vehicle per mile (i.e. the kWh/mile figure from step one). Employees can provide a copy of their electricity bill to confirm the cost per kWh.
If employees use public charge points, the cost per mile can be worked out in the same way using the vehicle’s kWh/mile.
The rate used to reimburse electric vehicle drivers can be a blended rate of home and public charging, taking any charging using company charge points into account. Or if an employee uses public charging for all/the majority of their business trips, the calculation can use the cost per mile for public charging first and then apply the home rate for any additional business mileage, again taking off any charging that has already been paid for by the company if they have used company owned charge points. Charge cards could also be considered for employees who rely heavily on public charging.
The above method does take a while to work out as it is unique to each individual. The UK has an AER (Approved Electric Rate) of 4ppm but this is less than the cost per mile for larger EVs and vans, meaning electric company car and van drivers will be out of pocket as the AER rate is less than their costs – you can read more on this here.
TMC holds data on the range and the kWh for each electric vehicle in the market. We have APIs set up with providers like EO and Pod Point to take in office and home charging data, along with feeds from charge card providers. Employees who don’t have smart meters that are OCCP enabled can provide details of their energy supplier and cost per kWh and we work out the cost per mile for charging their vehicle at home. They can also claim for any public charging costs for business mileage, where they don’t have a fuel card. Employees can claim their mileage using our system, or via our app, and we work out their reimbursement rate and provide a payroll file to the employer. We also have a charge card that can be used at any charge point that accepts Mastercard or Visa.
For more information, please get in touch with us using the contact form or details below, we’d love to help you.
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