Over recent years there has been an increasing shift to diesel engines in company cars due to their lower CO2 emissions, which result in lower company car tax and better fuel economy than petrol cars.
However, diesel engines have been at the centre of recent debates on air quality due to their higher emissions of air pollutants like nitrogen oxides – which are largely responsible for the ongoing breach of EU air pollution limits in urban areas across the country.
Confidence in diesel vehicles is also low as a result of the 2015 ‘dieselgate’ emissions scandal concerning Volkswagen’s use of defeat devices to cheat emissions tests.
As a result, the government is reportedly considering a scrapping scheme for older diesel cars and vans as part of a new package of policies to tackle urban air pollution.
It is thought that the scheme could offer cashback or a discount for trading in old diesel vehicles in exchange for low emission models.
In the meantime, the government has set out a range of incentives to move to ultra-low emission vehicles (ULEV) and fully electric cars, including grants for workplace electric charging stations, tax breaks and grants for eligible vehicles and a new company car tax band structure.
How to decide
To help companies make an informed decision on the type of company car to purchase, the Energy Saving Trust has produced a video guide that outlines all the different vehicle technologies, including diesel, petrol, hybrid, plug-in hybrid, extended-range electric and fully electric.
The guide explains that electric hybrids can be more suitable than conventional petrol or diesel cars for majority-urban driving, as most can run on electric-only power for short distances and are more efficient in stop-start traffic.
Meanwhile, fully electric vehicles offer by far the lowest running costs and car tax, but are not suitable for regular motorway driving, which is better suited extended-range electric cars that can manage longer journeys.
The Energy Saving Trust has also published a government-backed best-practice guide for fleet managers which describes the technologies and business case for adoption in more detail.
A separate guide has been produced to give best-practice advice on efficient driving of ULEVs for new drivers.
According to a 2016 survey of company car drivers commissioned by the government-backed Go Ultra Low initiative, nearly 70 per cent would use an electric vehicle if they were given the opportunity by their employer.