[physicsguy]

The biggest seller of EVs here is the salary sacrifice schemes that give a huge discount to high earners, especially those with kids.

Imagine you're on taxable income of £120k and have two chidlren in nursery. Currently you get no help with childcare costs from the government. From my own experience it's ~£6000 subsidy per child.

You can currently take out an EV salary sacrifice scheme for ~£600 per month (pre tax), and that brings your taxable income down by £7200. Put another £13k in pension. Boom, you're now getting £13k in pension p/a, and your car is effectively free, because you get £12k back in childcare subsidies.

[pmg101]

Your car isn't 'effectively free', because you could sacrifice all £20k into the pension, paying no tax on it, and get the £12k in childcare subsidies because your income is <=£100k. The EV is costing you £7000 pa out of this.

It still might be desirable, but it isn't free.

[physicsguy]

If you're at that income level, your employer pension contribution is already likely high and you've likely been stacking it for a while anyway. At some point there is a diminishing return to how much you should put in your pension too; it's tax on exit after all. You only need 2-3 years of maxed out contributions in your late 20s/early 30s to set yourself up very well for the future.

[bluGill]

If your income is that high the pension is likely something you have anyway

[alt227]

But how long until those children are no longer in nursery and you are not subsedised for it? In ~2 years you will no longer have this help, you will be paying through the nose for the outstanding amount on your new car, and your take home will be significantly less each month.

[physicsguy]

Yeah, but you're still taxed at 72% between £100 and £125k if you have a student loan (as most people in that age bracket will be), so even in that case the hit to your take home isn't that much.

[mytailorisrich]

There is no need to go that high in salary (a lucky very small minority). The higher income tax band (40%) kicks in at 50k. Salary sacrifice schemes offer huge savings to many people.

[KaiserPro]

true it does kick in at 50k but only for stuff over 50k. so its not a cliff like 100k or if you're at the other end on universal credit.

[mytailorisrich]

What I mean is that if salary sacrifice schemes on EV were only used, and very good deals, for people over 100k then it would be extremely niche as we're talking about the top 4% of earners whereas about 16% are higher band taxpayers...

[physicsguy]

People on higher salaries are disproportionately likely to be the ones doing it though - much much more likely to work for companies that implement the schemes for a start.

[mytailorisrich]

Yes, "higher salaries" as in higher tax band (median salary is 39k, higher tax band starts at 50k), which impacts 16% of people. That's why it has an notable impact on sales and also on the used cars market (salary sacrifice schemes are usually PCP/leasing over 3-4 years).

Perhaps it is the "London bubble" on HN as I feel that no-one is registering that 100k+ is a really, really small minority...

[vkou]

Yeah, but you'll have a new car.

Obviously if you don't need a new car, it's a really bad financial decision to buy one.

And even if you do, it might be a bad financial decision to buy one.

[alistairSH]

Obviously if you don't need a new car, it's a really bad financial decision to buy one.

It's almost always a bad financial decision to buy a new car. The first-year depreciation is unreal.

We just bought a 1 year old Audi Q5 in the US for ~30% discount over new. And with the Audi CPO program, the warranty is just as long as a new model.

[traceroute66]

> Obviously if you don't need a new car, it's a really bad financial decision to buy one.

I dunno ....

At least two EV manufacturers offer a 7 year warranty on new cars on all parts INCLUDING the battery.

[vkou]

Replacing whatever is broken in your 10-year old car will on the net cost less than the amortized cost of buying a new one.

[physicsguy]

I'm no proponent of PCP or leasing but you have to admit there is a hassle factor invovled once they hit a certain age + mileage.