Forget Netflix, Give Me a Jaguar I-PACE
I've been wanting to swap my diesel car for an all-electric one (EV) for some time, but I kept telling myself that it wasn't the right time.
The excuses all seemed reasonable. EVs are too expensive, there aren't enough charging points at petrol stations, installing a charging point at home would be costly….
Then I remembered a conversation my wife Jane had with me about 25 years ago when we were thinking about starting a family. Back then, I said it wasn't the right time financially. If I could just earn a bit more, build a bit more savings...
Jane said, 'It will never be the right time to start a family.' Our two daughters are aged 22 and 17, and I'm so pleased I listened to my wife!
Time To Take The EV Plunge
So, I decided that I should take the plunge and change my car to an EV. I decided on the Jaguar I-Pace based on cost, performance, and style.
I should just point out that buying a new car makes no sense unless you are financially independent and debt-free. Until then, only buy a used car that you can buy with cash. That will enable you to be able to save enough and build wealth as quickly as possible, without being weighed down by inflexible finance payments.
“Buying a new car makes no sense unless you are financially independent and debt-free.” Tweet This
My biggest concerns about buying a new EV were reliability, future depreciation and battery performance over time. Then I stumbled across a new option from Jaguar's Pivotal division.
Car Subscription, Not Debt
For a £1,000 monthly subscription, I can drive a new or nearly new Jaguar I-Pace SE (or better) with all servicing, maintenance, repairs, roadside assistance, road tax and insurance included.
After the first three months, I can give 14 days notice and then send the car back and stop paying the subscription. Every 6 months, Pivotal will send me a new I-Pace and the process repeats.
This new subscription service removes all the longer-term risks of owning an EV with a maximum rental liability obligation of 3.5 months and a new car every 6 months. This compares with a traditional business lease where you keep the same car for the term of the lease and you are obliged to make all the payments.
And because I have my business pay the subscriptions, it is very tax efficient. A similar tax benefit could be obtained by an employee if their employer is prepared to pay the subscriptions via a salary sacrifice arrangement.
The table below sets out the cost comparison.
The total extra cost to drive the Jaguar I-Pace is around £186 (£133 lost personal net cash, plus additional £58 BIK charge) per month, or £2,230 per annum. But I have no other cost obligations or liabilities associated with the car, the maximum commitment is three months’ initial subscription, plus I can use the £18,000 sale proceeds of my 4-year-old Mercedes Diesel, to make more money.
The subscription service is subject to passing eligibility checks, including affordability and proof of full no-claims bonus. I also have to wait three months to take delivery of my I-Pace, because the microchip shortage is affecting production. But at least that gives me time to get the charging point installed!
As well as Pivotal there are several other car subscription providers including:
Onto (Mainly small EVs)
Flexed (Not subscription, but offers all inclusive shorter-term leases)
Electric cars are the future. And so is, for the right people, tax-efficient, subscription-based usage.
Best wishes,
Jason
Special Note On Taxation
Please take personal tax advice on buying an EV as your personal circumstances will be different to mine. Tax rates, rules and levels of relief are subject to change.
Sources:
Depreciation calculated by The Money Calculator
Estimated charging costs from Which?