New pence-per-mile electric vehicle funding scheme launched
A new funding model has been introduced that promises to remove the risk of investing in electric vehicles.
A new funding model has been introduced that promises to remove the risk of investing in electric vehicles and make it an affordable option for companies that are eager to introduce electric vehicles (EVs) to their fleets but are deterred by upfront costs.
Octopus Investments has launched a pay-on-use model which incorporates every element required to operate an EV, from the cost of the vehicle itself, to installation of charging points and even investment in local substation facilities to boost grid capacity.
It launched the pay-on-use product with Heathrow Airport in October 2018, but details of the scheme are only coming to light now. This contract was for 25 Jaguar i-Pace cars and could grow to 200 vehicles.
The funding is based on a pence-per-mile fee, calculated according to the cost of the total investment, divided by the operating cycle and the anticipated annual mileage. The company pays only when the vehicle is in use, maximising utilisation, and becomes the owner of the vehicle(s) once the contract period is up. Typical pence-per-mile contract terms will be five or six years for cars and vans, rising to 15 for buses.
Octopus Investments will purchase the vehicles, invest in the depot/office charging infrastructure and upgrade the grid where needed – or, alternatively, buy the large batteries for on-site storage of electricity. The funding option is available for cars, vans and HGVs, as well as specialist vehicles such as refuse collection trucks. It can also incorporate insurance and link the funding to Octopus’ energy tariff for EVs.
Octopus is targeting investment of more than £1 billion in its pence-per-mile venture.
You can read more about electric vehicles here, and the recharging electric vehicles here.