Does a Better Place car pay?

Dubi Ben-Gedalyahu

This month, for the first time, the electric car became an option for recipients of company cars in Israel.

This month, for the first time, the electric car became an option for recipients of company cars in Israel, following the agreement between Shai Agassi' electric car venture Better Place LLC and leasing company Albar Ltd. The question remains, however, whether it is worthwhile for employees to accept an electric car over a regular one.

How much will it cost the employee?

As with any leased car, the cost to the employee who receives a company car consists of the components. The first two, which are deducted from the employee's salary, are the monthly leasing cost and the monthly use value of the car.

The monthly use value of a leased car is the same as for a family car in the mid-range of the Israeli market (about NIS 122,000), or NIS 2,400-2,800 per month. The final price is set between the car fleet owner and the leasing company, based on the number of cars in the contract and/or the buyer's bargaining power, discounts, and the like. It is possible that some employers may encourage employees to take electric cars to improve the corporation's green image, and may subsidize the employee's cost or provide other compensation.

The use value cost currently amounts to 2.5% of the official price list of the car. This is NIS 122,900 for the Renault Fluence ZE electric car, giving a monthly use value of NIS 3,072. Theoretically, therefore, the use value in terms of salary is the same as for a regular gasoline car, unless the employee had a company car that was smaller than the family car and upgraded to the electric car.

How much will it cost the employer?

Most employers pay the employee's annual fuel cost of the company car. In the case of the electric car, this will correspond to the monthly kilometers package that the employer will pay Better Place. The monthly fee varies according to the package bought, and apparently also on the fleet owner's bargaining power and the number of cars ordered.

Currently, most car fleets have no practical restriction on the number of liters of gasoline bought, within reason. An employee who drives 35,000 kilometers a year is not required to pay more than an employee who drives 20,000 kilometers a year. But in the case of the electric car, the employer will decide in advance how many kilometers the employee will have. Company CEOs and CFOs will therefore face internal pressure to order the largest monthly kilometers package possible.

Where are the incentives?

Employees seeking to salve their environmental conscience by becoming an early adapter of electric company car will get an added bonus in the form of a guaranteed parking space at the office. Better Place's electric car service package for organizations includes the installation of a recharging point for each subscriber at their workplace. Employers will presumably have to set aside reserved parking places for electric cars, otherwise the benefit is pointless. We will have to wait and see what happens at organizations with hundreds of powerless electric cars needing parking and recharging.

The problem

Initially, at least, recipients of a Renault Fluence ZE electric company car will have to meet the basic criteria of all subscribers: they must have a private parking space at home or permanent space in a private or public parking lot, where Better Place will install a recharging point. The company believes that, in the second year of operations, it will be possible to add subscribers who use opportunistic street parking.

It should be remembered that while Better Place is the first company on the electric car scene, it is not the only one. When the supply expands, some suppliers will undoubtedly offer home recharging without the need of a recharging point.

Furthermore, at least in the initial stages, which will begin in around December, geographical limitations will exist for the battery replacement stations, from which the electric cars endurance is derived. For the average employee, this is not a problem, but employees who want to use their electric cars for weekend and holiday trips across the country are liable to complain.

Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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