Battery Electric Vehicle News / Enjoying the Transportation Revolution

Grumpy_chap

Clearly, where SS is an option, the EV becomes very attractive.
What proportion of people have the SS option?

I am not convinced that picking the most expensive ICE to make the comparison favourable is a true comparison.  The "middle manager" that I referenced buying a car to reflect their "status" would ordinarily be at the lower end of the C-Class / E-Class ranges rather than a top-end Mondeo / Superb.  Picking a £60k version of the E-Class is not something that the "middle manager" would have been choosing or able to finance.

shinytop

For a minute I thought I was having a nightmare where I was on a money saving site where people were discussing spending £900 per month on a £70k car.  Then pinched myself and I realised it was real. 

Look, I get that MSE is about saving money on whatever people want to buy.  And I fully understand the benefits of ss having taken advantage myself.  But come on, £900 pcm or £70k to save some C02 emissions?  Is that really the best bang for your buck?  That sort of money is so, so far off what most people can afford.  Buying these luxury cars isn't going to save the planet.   

JKenH

Grumpy_chap said:

JKenH said:

I just looked at this site for a comparison of Personal lease cost of E class saloon vs EQE, taking the cheapest quote for 5k miles/48mths. I dare say there are differences in spec between the two cars but it’s a starting point. 

EQE

£893.66

https://www.cars2buy.co.uk/personal-car-leasing/mercedes-benz/eqe/

E class £482.36

https://www.cars2buy.co.uk/personal-car-leasing/mercedes-benz/e-class-saloon/

If you are able to lease the EQE under a salary sacrifice scheme then the difference in cost to the higher tax rate payer is much reduced, hence the popularity of EVs under SS schemes.

Edit: this article explains how SS works

https://www.whichev.net/2021/10/04/how-salary-sacrifice-can-make-evs-cheaper-than-petrol-or-diesel/

OK, so you SS £500 per month for the ICE and incur tax liability (40% tax payer) of £400 per month so the total cost is £900 per month.
Alternatively SS £900 per moth for the EV and incur tax liability of £300 for the whole year.  Total cost £925 per month.
In that scenario, where the option is available, it is a no-brainer.

You can play around with this calculator 

E Class (base model car) net cost to employee £1157 per month on SS

https://comcar.co.uk/taxtools/salarysacrifice/

The website unfortunately doesn’t list the EQE but if you really wanted to treat yourself you could get an EQS for a net cost of £1174 per month

https://comcar.co.uk/taxtools/salarysacrifice/

Now, let me think an E class 200d or an EQS 450 for around the same money. Tough one.

Grumpy_chap

shinytop said:

For a minute I thought I was having a nightmare where I was on a money saving site where people were discussing spending £900 per month on a £70k car.  Then pinched myself and I realised it was real. 

Look, I get that MSE is about saving money on whatever people want to buy.  And I fully understand the benefits of ss having taken advantage myself.  But come on, £900 pcm or £70k to save some C02 emissions?  Is that really the best bang for your buck?  That sort of money is so, so far off what most people can afford.  Buying these luxury cars isn't going to save the planet.   

I appreciate your sentiment, but lots of people do buy cars such as the E-Class.  They are "middle managers" choosing something with more "prestige" to reflect their "status".  Most of them probably cannot afford the car in all honesty.  That type of car (ICE) is £42k or thereabouts or £500 per month.

I queried the equivalent EQE which is the Mercedes EV version of the E-Class.  That is much more money at £75k, or £900 per month.

@JKenH provided a scenario where the E-Class (£42k / £500 monthly) is much the same as the EQE (£75k / £900 monthly) if SS is available.  The EQE costs a total of around £925 per month.  The E-Class also costs around £900 per month once BIK is considered.  For a difference of £25 per month, the EV is the obvious choice.  In fact, even if the E-Class was not taken through SS, the pre-tax earnings for a higher rate tax payer still need to be not far off at around £850 x 40% tax resulting in about £500 take home.

What this SS scenario does not address is the many people that cannot take advantage of a SS scheme.  
The SS scenario also dodges my question on this around even if people can have the EQE and get the monthlies similar, can individuals borrow £75k instead of £42k?  It is a substantial uplift in debt being carried.

JKenH said:

You can play around with this calculator 

E Class (base model car) net cost to employee £1157 per month on SS

https://comcar.co.uk/taxtools/salarysacrifice/

The website unfortunately doesn’t list the EQE but if you really wanted to treat yourself you could get an EQS for a net cost of £1174 per month

https://comcar.co.uk/taxtools/salarysacrifice/

Now, let me think an E class 200d or an EQS 450 for around the same money. Tough one.

I used the same calculator and arrived at slightly different figures, but the delta was very close as you found.  

The only thing is, it makes little sense to take an E-Class ICE through SS whereas it makes every sense to take a EQE (or EQS) through SS.
So, the true comparison would have to be the EV as company vehicle via SS compared with pre-tax earning required to meet the monthly of the ICE as personal vehicle.
This is also a tax situation that only some can avail themselves of and will bite the remainder of us as the inflated costs will become baked in for vehicles of that type.

My question of how the normal person ("middle manager") that might be buying an E-Class from their own funds makes the stretch to the EQE?

JKenH

shinytop said:

For a minute I thought I was having a nightmare where I was on a money saving site where people were discussing spending £900 per month on a £70k car.  Then pinched myself and I realised it was real. 

Look, I get that MSE is about saving money on whatever people want to buy.  And I fully understand the benefits of ss having taken advantage myself.  But come on, £900 pcm or £70k to save some C02 emissions?  Is that really the best bang for your buck?  That sort of money is so, so far off what most people can afford.  Buying these luxury cars isn't going to save the planet.   

You are quite right but a lot of people think they are worth it and as long as you can meet the monthly bills why not you might ask. I doubt saving the planet comes into it when you can lease an EV on SS fo4 significantly less than an equivalent ICE car. 

I continue to be amazed at how many young couples I see stepping out of new Mercedes SUVs and this is in an area where the average price of a detached house is £150k. Are people really that well off or is it a decade of almost zero interest rates encouraging folk to live beyond their means? No one would dream of spending the equivalent of their annual salary on a car a couple of decades ago. I was lucky to have a good job in a profession and it was not until I was in a very senior role that I felt able to splash out on a Mercedes. 

JKenH

Grumpy_chap said:

Clearly, where SS is an option, the EV becomes very attractive.
What proportion of people have the SS option?

According to Personnel Today, almost 60% of businesses now offer salary sacrifice schemes. They’re perfect for all employees and add value to employers. Car salary sacrifices are no exception. This evidences with almost a third of employers offer car salary sacrifice schemes to their employees.

https://www.fleetevolution.com/salary-sacrifice-schemes-popular/

Grumpy_chap

JKenH said:

I continue to be amazed at how many young couples I see stepping out of new Mercedes SUVs and this is in an area where the average price of a detached house is £150k. Are people really that well off or is it a decade of almost zero interest rates encouraging folk to live beyond their means? No one would dream of spending the equivalent of their annual salary on a car a couple of decades ago. I was lucky to have a good job in a profession and it was not until I was in a very senior role that I felt able to splash out on a Mercedes. 

I think similarly to you and am equally amazed.
Maybe it is easier to afford a premium £40k or £50k car in an area where a detached house is £150k than an area where a flat is £500k?
There is an essence of entitlement that the younger generation seem able to afford that I never could, and still cannot.
I consider that I have a good job in a proper profession but, like you, consideration of a premium car is only an option as I approach my rather later years of working.  Yet my neighbour's son is in a far less well-paying role, rents a flat, but drives a very nice A4...

QrizB

JKenH said:

I continue to be amazed at how many young couples I see stepping out of new Mercedes SUVs and this is in an area where the average price of a detached house is £150k. Are people really that well off or is it a decade of almost zero interest rates encouraging folk to live beyond their means? No one would dream of spending the equivalent of their annual salary on a car a couple of decades ago. I was lucky to have a good job in a profession and it was not until I was in a very senior role that I felt able to splash out on a Mercedes. 

OT for the thread but my benchmark for car purchases has always been one month's take-home wages. I've broken it twice, once in my 20s when I spent two month's take-home and again this year when I did the same.

The car I bought in my 20s lasted me eight years; I'm hoping the current one will too!

JKenH

Grumpy_chap said:

JKenH said:

I continue to be amazed at how many young couples I see stepping out of new Mercedes SUVs and this is in an area where the average price of a detached house is £150k. Are people really that well off or is it a decade of almost zero interest rates encouraging folk to live beyond their means? No one would dream of spending the equivalent of their annual salary on a car a couple of decades ago. I was lucky to have a good job in a profession and it was not until I was in a very senior role that I felt able to splash out on a Mercedes. 

I think similarly to you and am equally amazed.
Maybe it is easier to afford a premium £40k or £50k car in an area where a detached house is £150k than an area where a flat is £500k?

You may be right. With such low outgoings on housing folk have the spare income to spend on cars. If you have a £150k house though one would think that it was better to spend £10k on the car and put £40k towards a better house than blow £50k on a car. If you are borrowing, then £300/400 per month spent on leasing a car would go a long way towards a bigger mortgage. 

As I have mentioned before, though, finance on secondhand cars is much more expensive than on new ones so why not go for the new one?

Grumpy_chap

JKenH said:

As I have mentioned before, though, finance on secondhand cars is much more expensive than on new ones so why not go for the new one?

Radical shock / horror idea - why not just buy the car you can afford without taking any finance?

A flash car won't set anyone up for a comfortable and secure future with insulation against the inevitable bumps that life's journey will bring.  What resilience do people have today?  What will their retirements be like?  IMO, having everything on "affordable monthlies" is a high-risk and high-stress approach that I would not like to be following.