Leasing leads the way for electric vehicles
A recent study reveals most electric vehicles are leased. We explain why it's better to lease than buy when it comes to EVs.
Why you should lease rather than buy when it comes to EVs?
Electric vehicles are far more likely to be leased than bought according to figures from Bloomberg New Energy Finance. The study surveyed US drivers and revealed that 80% opt to lease their EVs with 55% choosing to lease plug-in hybrids.
Leasing helps buyers overcome the inflated purchase price
The initial price of purchasing an electrical vehicle is high. Whether you’re looking to buy a hatchback or sports car, the electric equivalent will have a higher cost new than its conventional counterpart. As with all cars, leasing offers more financial flexibility, allowing customers to use the vehicle without an intimidating up-front cost. There’s also the cost of batteries to consider. Some manufacturers only allow drivers to lease the batteries, and with this limitation on ownership, it makes more sense to lease the entire vehicle.
Rapid advances in technology
While EVs still make up just 1% of the global market, ownership is not a priority for their drivers. One reason for this might be the rapidly advancing technology. Over the last five years, there have been big increases in EV technology with charging times coming down as ranges increase. As the technology advances, more manufacturers will join market and that means better choice and, more competitive pricing for consumers. Enthusiasts are unlikely to want to be tied into a vehicle in the long term when the next generation of EVs offers far greater possibilities.
A challenging used vehicle market
Electric vehicles are still relatively new and that means the second-hand market is small but surprisingly there is little demand. The depreciation in value of electric cars is far greater than that of conventional models, with Automotive News reporting that electric compact cars sold in 2014 are worth just 23% if their original price, despite guarantees on batteries and the reliability of the technology. As advancements have come so quickly, it seems that there isn’t enough of a status quo to build an effective second-hand market. Many have likened EVs to smart phones with generational improvements coming along with reductions in costs, meaning it doesn’t make sense to buy older products. There are also no government incentives or grants available when buying EVs on the used market.
Could electric be the answer for business fleets?
With stricter emissions tests, higher tax and greater regulation, businesses are looking for alternatives to diesel cars to help keep their fleets as efficient as possible. RAC Business recently reported that 62% of large businesses are considering phasing out diesel vehicles from their fleet. As the leasing model is proving successful for electric cars in the private market and technology is advancing, this could mean a swift uptake in EVs. However 40% of businesses have said that they are not confident in the range capabilities of electric vehicles.
While the future may appear uncertain, at ACVM we can supply any car or LCV that’s available from manufacturers in the UK. If you have any questions about the long-term future of your fleet or if you’re thinking about going electric, our account managers are always happy to help.