Mileage Reimbursement For Electric Cars: All You Need To Know
Emily Maina
Last update on:
August 6, 2024 5:33 AM
Published on:
The rise in popularity of electric vehicles (EVs) in recent years has caused a major global shift in transportation trends. Due to environmental sustainability concerns and rising gasoline prices, many people and businesses are choosing electric cars over traditional gas-powered ones. But how does mileage reimbursement for electric cars work?
In this extensive guide, we'll go over what you need to know about reimbursing mileage for EVs. This includes calculations, differences from vehicles with a combustion engine, and practical tips for both employers and employees. We'll also discuss how your company's reimbursement procedure can be simplified using the best mileage tracking apps, such as Timeero.
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Do Electric Vehicles Qualify For Mileage Reimbursement?
Like their gas-powered counterparts, electric vehicles are eligible for mileage reimbursement.
Compensation for mileage typically applies to employees that use their personal vehicles for work, regardless of whether they're driving an electric car or a traditional vehicle that uses gasoline.
Every year, the IRS sets a standard mileage reimbursement rate that offers an easy way to figure out expenditures without having to keep track of every car-related expense. As of 2024, it stands at 67 cents per mile. You can use our free IRS mileage reimbursement calculator to quickly estimate your potential reimbursement for using an electric car for business purposes.
Although this standard mileage rate is consistent for all vehicle types in the USA, it's crucial to remember that it doesn't directly take into consideration the special cost structures of electric vehicles. EVs often have higher initial costs but lower ongoing expenses when compared to cars that run on fuel.
The IRS mileage rate is practical, but there is another option to calculate reimbursement: the actual expense method. The actual expense method can be helpful if your actual costs are higher than the standard mileage deduction. However, please note that this method necessitates careful record-keeping for accuracy when providing mileage allowance for business purposes.
How Is Mileage Calculated for Electric Cars?
The process of calculating mileage for electric cars differs from the way you calculate mileage for traditional gas vehicles. With electric cars, you're looking at the amount of electricity consumed, not the amount of fuel used (miles per gallon).
To determine the cost of operating an electric vehicle for a specific trip, you'll need to consider factors such as the vehicle's efficiency rating, the electricity cost in your area, and the distance to be traveled.
Efficiency for EVs has a direct financial impact on your company. Knowing how efficient your EV is can help with:
Accuracy in estimating business expenses for travel
Financial planning for operational costs
Calculating possible tax savings using the IRS standard mileage rate
Miles per kilowatt-hour is one of the main measures of electric vehicle efficiency. It provides the maximum distance an EV can cover on a single kWh of electricity.
A higher miles/kWh figure indicates a more efficient car. This figure is essential for determining how long an electric car can run between charges and for projecting how much a trip will cost. It helps you better understand how much each mile of electricity use costs your business.
Kilowatt-hours per 100 Miles (kWh/100 miles)
On the other hand, kWh per 100 miles indicates how much electricity an EV requires to cover 100 miles (electricity rate per 100 miles). This is comparable to traditional vehicles measuring their fuel consumption of gallons per 100 miles.
Here, lower numbers indicate greater efficiency. You can use this metric to budget more precisely for your energy use, especially when making plans for longer trips or figuring out how much a day's trip might cost.
An EV's cost per mile can only be determined by taking into account the cost of electricity and the vehicle's efficiency (the amount of electricity needed to travel 100 miles). Let’s look at an example.
You are self-employed and use an electric car to travel to clients. If the cost of electricity is 10.7 cents per kilowatt-hour, it would cost roughly $6 to charge a 54-kWh battery with a 200-mile range.
In the same way, charging a car that uses 27 kWh to go 100 miles would cost three cents per mile. For 1500 miles, the reimbursement total will be $45 (1500 multiplied by three cents).
You can also consider other costs besides electricity like battery depreciation to get the total reimbursement amount. These additional costs can be calculated yearly and then divided by the average number of miles driven annually to get a cost per mile.
How Is Mileage Reimbursement for Electric Cars Different From Gas-Powered Vehicles?
Besides the cost calculation differences we covered above, mileage reimbursement for electric cars differs from gasoline cars in several ways. These include the following:
Maintenance and Depreciation
Electric vehicles generally have lower maintenance costs and experience less depreciation compared to gas-powered vehicles. They require less servicing and repairs because of fewer moving parts and simplified drivetrains.
When reimbursing mileage for gasoline cars, companies take into consideration fixed and variable costs, including depreciation and repairs. You can learn more about this from our in-depth article, ‘What does mileage reimbursement cover?’ This means that since EVs have lower costs, the reimbursement amounts will also change.
Over the course of the vehicle's life, businesses experience greater cost savings with electric vehicles. Businesses benefit from greater predictability in financial planning due to the generally more stable depreciation rate of EVs.
Government Incentives
To encourage the use of electric vehicles, many governments throughout the world provide grants, tax credits, and rebates. In fact, certain plug-in hybrid and all-electric cars in the United States are eligible for a $3,700–$7,500 federal tax credit.
These incentives can significantly reduce the upfront costs of purchasing or leasing an electric vehicle for both individuals and businesses. When evaluating whether to reimburse electric vehicle expenses, businesses should be aware of the government incentives that are currently in place and take advantage.
Energy Variability
Temperature, driving style, and road conditions are some of the variables that can affect an electric vehicle's energy efficiency. Compared to gas-powered cars, which typically exhibit consistent fuel efficiency under various driving conditions, electric cars are subject to variations in their energy consumption.
Businesses must consider these variances when calculating business mileage reimbursement for electric vehicles. They should also take into account route efficiency, which can impact the amount of energy used while traveling for business.
Charging Infrastructure
While the availability and accessibility of the infrastructure for charging EVs may differ depending on the vehicle’s location, gas stations for refueling traditional vehicles are widely distributed and easy to reach.
The practicality of using electric cars for business travel may be impacted by this discrepancy in the charging stations. Your workers may have to deviate from the best route to find a charging station. When compensating employees for using electric vehicles, businesses should take charging station accessibility into account.
The expense of charging the vehicle should also be factored into the EV mileage reimbursement. While some companies may choose a standard business mileage rate, others might take into account the real cost of the electricity used to charge the car.
Environmental Impact
The environmental benefits of electric vehicles over gas-powered counterparts are substantial. Electric cars contribute to the reduction of air pollution and the fight against climate change because they don’t emit tailpipe emissions while in use.
Companies may decide to support their corporate social responsibility and sustainability goals by providing higher reimbursement rates or other benefits to encourage the use of electric vehicles.
How to Track Mileage With Timeero
Accurate monitoring of usage and expenses is necessary for effective mileage reimbursement for electric cars. Mileage tracking apps can help ensure policy compliance, speed up data collection, and facilitate cost recovery calculations. It can also enhance transparency, accountability, and efficiency in mileage reimbursement processes.
Timeero is a reliable solution for tracking distances covered and verifying these business miles. Let’s take a look at some of its features.
GPS Mileage Tracking
It is possible for companies to precisely monitor the distance traveled by electric vehicles while they are on work-related trips via Timeero's GPS mileage tracking feature. Because of this function, the position of the car is automatically tracked whenever the employee is clocked in. This ensures accurate mileage data without the need for user input.
Mileage tracking on Timeero.
When it comes to electric vehicles, GPS mileage tracking removes the need to estimate distances and gives information that can be relied upon for reimbursement calculations.
With Timeero, You can set the commuting distance for every employee using its commuter mileage feature. After an employee travels more than a certain amount of miles, the app will begin tracking mileage. This allows you to gain control over the travel expenses you are compensating for.
The Who’s Working dashboard allows you to find out exactly where each available employee is at any given time. Timeero lets you swiftly modify a driver's schedule or route in the event of an unforeseen delay.
You can view each employee's location in real time.
Segmented Tracking
The Segmented Tracking feature in Timeero provides detailed insights into how employees utilize their workdays. It breaks down each trip into smaller, more manageable segments.
By documenting the locations visited, distances traveled, and time spent at specific sites or tasks, Segmented Tracking offers a comprehensive overview of electric vehicle usage for business purposes.
Segmented mileage on Timeero.
One of its main advantages is its ability to automate tracking and do away with the need for human data entry. Workers only need to clock in once at the beginning of the day and out at the end to gather all the information needed for mileage reimbursement. This allows managers to quickly assess each trip's details at a glance.
Additionally, managers can find opportunities for efficiency optimization with Segmented Tracking. They can maximize the effectiveness of electric vehicle usage and improve productivity by analyzing the amount of time staff spend on the road.
Shortest Route
Timeero’s suggested mileage feature compares the shortest vs actual route and provides EV drivers with the best routes to follow. This allows businesses to improve the cost-effectiveness of using electric vehicles by reducing travel time and energy consumption when they take the most efficient routes.
Timeero’s Suggested Mileage feature.
Route Replay
Businesses can examine previous routes driven by electric vehicles with the help of the route replay functionality. With this feature, managers can verify that reported distances are accurate, making mileage verification easier and guaranteeing policy compliance.
It is also useful in identifying possible areas for route optimization and efficiency improvements. If the company sees that driving one route takes up less time than another, they can choose the most efficient one.
Timeero’s Route Replay feature.
Time and Attendance Monitoring
A great way to speed up employee attendance and time-tracking procedures is for your company to adopt a mileage-tracking solution. With these extra features, you can gain important knowledge about the whereabouts, activities, and working hours of your staff members.
To guarantee accurately logged hours and legal compliance, along with accurate mileage reports, select a mileage tracking app with a time clock. Timeero’s timesheets provide all of this information, including any overtime, breaks taken, and clock-in and clock-out times.
An employee timesheet on Timeero.
Geofencing
Businesses can establish virtual boundaries around particular locations, like job sites or even charging stations, with Timeero's geofencing feature. Managers are notified by geofencing alerts when electric vehicles arrive or depart from specified areas.
This guarantees adherence to designated routes and gives insight into employee activities. You can also limit the clock in and out to a geofenced zone exclusively. Your staff won't be able to log hours if they are not at work.
Geofencing improves the precision of mileage tracking and makes it easier to effectively manage the use of electric vehicles for reimbursement.
Reports
Timeero centralizes all mileage logs onto a safe and easily accessible platform. Admins can review and approve mileage claims more quickly as a result of this record-keeping method.
Additionally, a history of all travel-related activities is given. Employers can access information on the routes traveled, the duration of time spent at each location, and related clock-in and out times.
You receive mileage tracking reports and other important reports for your business in addition to timesheets. These include reports by date range, by the user or group, by totals, and by the job.
You can export these reports in CSV, Excel, or PDF formats. Because reports are customizable, businesses can easily obtain the specific information. This comes in handy when you’re applying for tax deductions.
Timeero’s mileage logs.
Integrations
Timeero integrates with payroll and accounting software, including the following:
QuickBooks Desktop
QuickBooks Online
Viventium
Paylocity
Paychex
Gusto
Xero Australia
Rippling
RUN powered by ADP®
ADP Workforce Now
This transfers mileage data seamlessly for precise expense tracking and payroll calculations, streamlining the reimbursement process.
How to Reimburse Employees for Electric Vehicles – Best Practices
Reimbursing employees for electric vehicle usage involves a few key steps to ensure accuracy and fairness:
Create a reimbursement policy: Clearly state how your business will compensate employees who use electric vehicles. Information about the reimbursement rate, the documentation needed, and any restrictions or limitations should all be included in this policy. Download our free mileage reimbursement policy template to get started with this.
Document trips: Require workers to maintain thorough records of all business-related trips they take. This should include the date, time, destination, and length of the trip. Calculating reimbursements and verifying mileage will require this paperwork.
Reimbursement calculation: Figure out how much to compensate for each trip based on distance traveled and electricity cost. Once you find a method that works for your business. process the payments promptly to avoid mistakes.
Verification of expenses: Set up a way to make sure that employee reports are correct and follow company policy. This may include reviewing information or documents that workers have provided like trip logs and receipts. Using mileage tracking software takes the guesswork out of this step and ensures all your records are precise.
Communicate with your employees: Inform staff members of policy updates and changes as well as the reimbursement method. Address any questions or worries they may have about mileage reimbursement. Fostering open communication prevents employee pushback and increases productivity.
Pick Timeero For Smooth Reimbursement Processes
As the world moves toward a more sustainable future, understanding mileage reimbursement for electric cars is crucial for both employers and employees. Paying back workers operating their personal EVs for business use helps ease the financial burden on them. It also promotes environmentally friendly practices and reduces harmful emissions.
Leveraging Timeero's features to track mileage for work is a great way for businesses to effectively manage compensating for electric car usage. It also guarantees transparency, accuracy, and compliance with reimbursement policies.
Emily Maina is a tech-savvy writer with a passion for creating content. With years of experience in the industry, she is well-versed in the latest trends and developments in the tech industry. When she’s not working, Emily enjoys exploring the great outdoors or watching her favorite shows.
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