Peugeot UK aim electric iOn at public services and large fleets

Peugeot UK says that their new all-electric iOn is targeted mainly at local government, local authorities and public services and companies active in the transport and energy sectors, leasing companies, car sharing companies and the fleets of large corporations. Private individuals are targeted ‘to a lesser extent’.

This explains Peugeot UK’s marketing strategy. The company will market the new iOn based on an ‘all-inclusive’ mobility offer consisting of a four year contract. On a four year, 40,000 mile contract the monthly payment will be £415 excluding VAT (about £500 a month when the new 20% VAT rate comes in next January). For this you get:

•    The lease of the vehicle (including the battery pack)
•    Full warranty cover for the vehicle, battery and electric power train for the period of the lease
•    Full servicing and full maintenance including tyres, brake pads and brake discs for four years and 40,000 miles
•    Peugeot Connect Services (available April 2011)

Significantly, Peugeot will also make available exactly the same benefits to the second user on a second four year contract at a reduced monthly amount giving a further four years of worry free motoring.
Peugeot are taking orders for the iOn for delivery in the UK at the end of 2010.

Range and charging

The Peugeot iOn is based on the Mitsubishi i-MiEV. Peugeot say the car has a potential range of 93 miles - sufficient to cover the majority of a motorist’s daily trips, 90% of which are less than 35 miles.

It takes six hours to fully recharge the battery using a traditional household socket. A quick charge using a special charging unit provides a 50% charge in only fifteen minutes, or 80% in thirty minutes.  Bearing in mind that a conventional car is at a standstill for up to 90% of the time when used in an urban or semi-urban context, the time needed to recharge the iOn is entirely compatible with what motorists are used to.

With average running costs estimated at £2.50 per 120 miles (21 pence per mile), the energy bill of the iOn is unbeatable regardless of which recharging mode is used.  Carried out overnight or during off-peak hours, recharging costs can be reduced further and help optimise the use of available power produced by the electricity supply companies.

So if you’re a VAT-paying private motorist driving about 10,000 miles a year, does the four year contract make sense? 

Peugeot has calculated the potential cost savings that running an electric vehicle can make compared to a conventional internal combustion engined vehicle. All calculations take into account the Office for Low Emission Vehicles Plug In Car Grant of £5,000.

•    Fuel cost:
o    Cost of 1 gallon of fuel: £5.17
o    Average mpg for a vehicle driven in an urban environment: 30 mpg
o    Total fuel costs to cover 10,000 miles = (10,000/30) x £5.17 = £1,723.33
•    Cost of recharging the iOn over 10,000 miles
o    Cost of recharging = £2.50 per 120 miles.
o    Total costs over 10,000 miles = (10000/120) x £2.50 = £208.33
Difference = £1,723.33 - £208.33 = a saving of £1,515.0 per year.

If you pay the London Congestion Charge you save about £1700 a year. 

If you can take advantage of free parking, eg City of Westminster, you have a potential saving of about £1940 per year - £10 x 230 days of parking, less admin fee.

If you pay Vehicle Excise Duty on your current car, you’ll save on the zero emissions iOn.

Assuming you incur the London Congestion Charge and park in Westminster, Peugeot says your total annual saving could be about £5,150. Over the four years of your contract that’s £20,600. Your contract, at £500 a month including VAT, will cost you £24,000 so your net cost would be £3,400 for which you’d get warranty cover, all servicing and maintenance for four years – a good deal even if you don’t own the vehicle at the end of the lease.

For the majority of motorists who don’t commute into London, however, the main potential saving is on fuel: about £1,515 a year. That’s £6,060 over four years, compared with the contract cost of £20,600.

That’s a net cost of £14,540 - not such a great deal.

It looks as though Peugeot’s marketing strategy is right: in order to make a four year contract work at this leasing cost, aim the car at public services and fleet owners who can reclaim the VAT and need to make a statement about their green policies.