Is it time to switch to an electric vehicle?

Driving an electric vehicle is good for the environment, but is it good for your wallet? Grants, subsidy schemes, and the lower private use addition (bijtelling) make the transition to an EV seem attractive. But depending on your situation, putting off the purchase of an electric car may make more sense. In this article, you can find the pros and cons of switching now, including a calculation model to help you decide.

More and more entrepreneurs are finding themselves forced to switch to an electric vehicle. Because, for example, more than 25 Dutch municipalities establishing zero-emission zones starting in 2025. From 1 January 2025, this will apply to vans with emission class lower than Euro 5. For vans with emission class Euro 6, this rule takes effect on 1 January 2028.

Why switch to an electric vehicle?

Marco van Eenennaam, EV expert at ANWB has the following warning for entrepreneurs: "If you are buying a new van next year, this is important information. If only to help estimate the residual value of a cheaper diesel van. No one who lives or works in and around cities with zero-emission zones will want to take it off your hands from 2025." All vans and lorries registered after 2025 have to be zero-emission vehicles in order to enter the zero-emission zone. So if you spend a lot of time driving in and around cities with these zones, it may make sense to switch to an electric vehicle. If you own a van or lorry built before 2025, the transition scheme applies, which allows vans in emission class 5 or higher to enter zero-emission zones through 2026. For lorries, this transition scheme continues through 2029.

The government has lots of schemes and grants to encourage people to opt for EVs because of their financial benefits. What are these schemes?

SEBA grant for commercial EVs

First of all, there is the subsidy scheme for zero-emission commercial vehicles (Subsidieregeling Emissieloze Bedrijfsauto’s, SEBA). If you are an entrepreneur and are considering an electric van, you can get a discount of up to €5,000 with a SEBA grant, regardless of whether you purchase the vehicle outright or lease it. To apply for a SEBA grant, make sure you meet the following requirements.

• To qualify, the list price of the vehicle must be €20,000 or more, excluding VAT. You will receive a grant worth 10% of the net price of the new electric commercial vehicle, with a maximum of €5,000.

• The commercial vehicle must not be delivered and in your name before you submit the application.

• You must have a purchase or lease agreement for the delivery of a new electric commercial vehicle, but it may not have been finalised when you submit your application. If you are not awarded a grant, you are entitled to waive the purchase.

You can apply for a SEBA subsidy at the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, RVO).

MIA/VAMIL grant

If you are looking to purchase or lease a commercial electric van in 2022, you may qualify for a 45% investment credit with the Environmental investment allowance (Milieu-investeringsaftrek, MIA). This is a considerably higher percentage than the 36% that applied in 2021. In addition, you may write off 75% of the investment cost thanks to the random depreciation of environmental investments scheme (Willekeurige afschrijving milieu-investeringen, VAMIL). To be eligible for MIA/VAMIL, your van must meet certain requirements (in Dutch).

You can apply for the MIA/VAMIL at the RVO (in Dutch). Please note that the annual grant pools for MIA and VAMIL are fixed and that grants are awarded on a first-come, first-served basis, which means the earlier you apply for a grant, the greater the chance that you will be awarded one.

Additional tax liability

If you also drive your fully electric commercial car privately, you will benefit from a reduced private use addition of 16% in 2022, up to a maximum of €35,000 of the list price. Above that, you pay the full additional tax rate of 22%. This lower additional tax rate will remain in effect for the first 5 years from the time you put the car into service.

The government will be phasing out its private use addition scheme for electric vehicles over the next few years. Van Eenennaam: "Electric cars are getting cheaper and becoming more and more common, so the government cannot continue to offer financial incentives." From 2023, the maximum amount of additional taxable benefit will be reduced to €30,000, and from 2026 you will pay the full additional tax rate of 22%.

Calculation example

The calculation example below shows how these grants can work for you in practice. There are 3 important things to consider: your legal form (do you pay income tax or corporate tax), your expected profit, and the expected value of your investments in the current financial year.

‎

Investments ‎	Benefit schemes ‎	Expenses ‎
List price of electric van, excluding VAT and private motor vehicle and motorcycle tax ‎	‎	50,000 ‎
Advice, pre-delivery inspection, and delivery costs, excluding VAT ‎	‎	1,200 ‎
Gross investment ‎	‎	51,200 ‎
Environmental investment credit, max. 45% ‎	23,040 ‎	‎
Small business credit, 28% ‎	14,336 ‎	‎
Corporate tax base ‎	37,376 ‎	‎
Corporate tax rate ‎	-25% ‎	-9,344 ‎
SEBA grant scheme ‎	‎	-5,000 ‎
Net investment ‎	‎	36,856

Why wait?

Although switching to an electric vehicle has its pros, there are also significant cons. Whether it is best to switch now or wait a little longer before buying an electric car depends on your situation.

Acquisition costs

Currently, the prices of electric cars are higher than of comparable fuel models. "The latest electric vans are about 50% more expensive than comparable diesel versions. The generation before that was up to twice as expensive. There is still a gap, but it is getting smaller," Van Eenennaam acknowledges. Second-hand vehicles are cheaper, but can be difficult to find, “because the demand for used electric cars is currently much greater than the supply." If you do not want to or cannot buy an EV, leasing might be a viable option. The advantage of leasing a car is that you will not have to pay for repairs if the battery breaks, for example, because maintenance costs are included in the monthly price. Still, buying an electric vehicle now can be a good investment: "With all the zero-emission zones coming up, the demand for electric vans is likely to increase, which means that your van will probably not depreciate too much. If you lease a vehicle, the lease company will benefit from that high residual value.”

Increasing range

Battery technology is developing rapidly, and as batteries are getting better and better, their maximum range is increasing. In 2021, the average range of an EV was 333 kilometres. By comparison, EVs had an average range of only 172 km in 2017. The longer you put off buying a new electric car, the farther you will be able to drive on a full battery.