Businesses are under increasing pressure to reduce carbon emissions. With government incentives and long-term plans to ban the manufacturing and sale of fossil fuel cars by 2040, many fleet managers are considering Alternative Fuel Vehicles (AFVs).

The introduction of AFVs has divided drivers into two camps. Petrol and diesel cars have their obvious advantages, but spiraling costs invite financial burdens. AFVs are less expensive to run and carry less road tax. However, the engines have limitations that are not ideal for every business right now. Whether AFVs provide a solution for your business depends on how you need to use fleet vehicles. We have collated some benefits and drawbacks regarding each type to assist you in deciding the appropriate type of vehicle for your business: 

Hybrids (HEVs)

Hybrids are fast becoming the car of choice for business. The engines are a cross between petrol and electric, so you get the best of both worlds. They are the ideal solution that bridge the gap in the crossover from traditional fuels to all-electric cars.

The key advantage of HEVs is efficiency and low-maintenance. Running costs are less expensive that fossil fuels and lower tax bands are beneficial to businesses. Electric cars emit less pollution so are also more environmentally friendly. 

Because HEVs are economical around town and reliable over longer distances, they can be an ideal solution for businesses. They are also available for just about every class of car. However, hybrids are not without limitations. Hybrids are designed to benefit drivers economically in urban driving conditions. Consequently, the performance suffers in comparison to diesel. At the moment, hybrid cars are also more expensive to purchase than petrol cars although this is expected to change by 2023. If purchasing costs are an issue, however, business car leasing provides a cost-effective solution.


Plugin Hybrid (PHEVs) 

Whereas HEVs rely on reusing energy through components within the vehicle such as regenerative braking, plugin hybrids enable drivers to charge the battery through a power source, both at home or a charging point. 

PHEVs have the same benefits as HEVs with the added bonus of being more economical due to superior battery life and can cover greater distances. Once the electric charge is depleted, engines automatically revert to the conventional fuel. Whilst PHEVs do help businesses make significant savings to run, they also cost more upfront than equivalent models. This is because PHEVs run on lithium-ion batteries which are more expensive to manufacture and need to be replaced more often.

Electric-Only (EVs) 

All-electric cars are the most energy-efficient and cost-effective choice for businesses because they do not use traditional fuels. Day-to-day running costs are significantly lower than petrol and diesel vehicles. 

There are still other costs to factor in, such as: 

  • Battery packs in electric cars need replacing every 100,000 miles or so and do not come cheap. This expense can be avoided by leasing a car.
  • The other issue for some businesses will have with EVs is their inability to cover long distances. At present, real world electric engines can only manage up 120 miles on a single charge. 

Studies in five European countries reveal AFVs are a cost-efficient solution for businesses. However, until more charging stations are installed nationwide, PHEVs and EVs fleets in some areas of the country could encounter issues with refueling. 

The type of engine you choose really depends on what you need a company vehicle for. As a BIK for executives and drivers covering short distances, AFVs are perfect. For longer distance drivers, HEVs present a cost-effective solution. By end of 2022, we also expect PHEVs and EVs to present better alternatives as well.