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Do plug-in hybrids always tell a favourable TCO story?

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In Belgium, the taxman gives PHEVs (i.e. plug-in hybrid electric vehicles) a strong leg-up with a deductibility of up to 100% – as long as they do not emit more than 50 grams of CO2 per kilometre and carry a sufficiently large battery. Does that mean that they always benefit from an appealing Total Cost of Ownership compared to diesel and petrol models?

The answer depends on several things. It's not only about the tax deductibility – the difference in purchase price between plug-in hybrid and the diesel or petrol version also plays an important role. At least equally important is the driver's user profile. The greater the number of electric kilometres, the more favourable the equation. Ideally, the electric-fuel ratio should be about 70% -30%. But that's not all.  

“The price difference between the variant with a conventional engine – petrol or diesel – and the plug-in hybrid is often considerable. Whether you make up for that with a higher tax deductibility depends on the difference in COemissions,” explains Philippe Fouyn, Strategic Consulting Manager at Athlon Belgium.

“If you start from a diesel with an emission value of 100g/km and the corresponding tax deductibility of 70%, then the difference in purchase price of the plug-in hybrid mustn’t be too great. If you take a car rated at 130g/km and 55% deductibility as a starting point, then the cards are a lot more favourable for the plug-in. After all, it is between 95 and 100% deductible.”

He does point out that some manufacturers give less discount on the plug-in hybrid model than on the regular variants. This makes the net price difference greater than the gross price difference, which is detrimental to the plug-in hybrid's TCO. It's all about doing the maths.

Look at the TCO2

Whether the balance is favourable to the PHEV also depends on the extent to which you can drive electrically and on the share of highway kilometres. “Drivers who travel       a lot of motorway miles don't have the right profile for a petrol plug-in hybrid but could benefit from picking a diesel-powered PHEV. Someone who can commute to and from the office on electricity and only drives on fuel 30% of the time is the perfect candidate. That's why it is crucial to be able to charge at home – as is a daily charging discipline,” says Philippe Fouyn.

“If your battery has a 50-kilometre range, you shouldn't live further than 30 kilometres from your work to have a favourable TCO scenario. If you can also charge your PHEV at work, then you could say you can live 60 kilometres from the office, as long as you're disciplined about charging at home and at the office,” he adds.

“Anyone considering plug-in hybrids for their fleet should start with driver profiling. It's also a matter of good maths, really taking into account all elements, from the actual fuel costs and the tax deductibility to the non-deductible expenses. That's what we at Athlon call TCO2.”

Anyone who wants to make the right financial choice or anyone who wants a plug-in hybrid in any case but who also wishes to know the possible additional costs at the bottom line, should therefore look much further than the lease price.

Would you also like a simulation of the TCO2 for your current and future cars? Click here for more information on Athlon’s consulting services.     

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