Electric & EV Car Leasing - The Facts

All About Electric Car Leasing, Electric Lease Car Deals, Help & Advice

Electric, plug-in hybrid and hybrid technology is almost certainly on the increase in the UK as we make changes for a “combustion engine-less” future by 2030 (or similar). Alternative technologies are on the increase albeit in a slow and steady manner, as UK road-users begin to warm to the idea of a car without pure petrol or diesel technology.

Pure Electric Vehicle (EV) Car Leasing - FAQs

So what is a pure electric vehicle (EV)? By this we mean a car which operates from a high performance battery (generally lithium-ion). There is no petrol or diesel combustion engine element to the car and Zero tailpipe emissions. An EV is the “cleanest” vehicle solution. The Government’s commitment to removing fossil fuel based cars (and vehicles) is placing more pressure on manufacturers to produce these types of solutions.

How far does an EV travel? As there is no combustion engine, the EV is limited to the range of the battery – at present there are a growing number of EVs which can offer up to 250/300 miles on a full charge. Some of this may alter when cars face more “real world” conditions. Some smaller battery–operated vehicles will offer 100-150 miles only on a full charge. This is where the phrase “range anxiety” originates – customers, personal or business, are concerned that the battery will not be able to meet their driving conditions. When the battery is out of charge, the car will not operate. The customer will, in this case, need to arrange onward travel or remediate the situation at their own expense.

So how do you charge an EV? The charging of the car is fundamental. For customers with off-street parking, a home charge unit would be the quickest and most convenient way to charge an EV. There are a number of companies which operate in the UK who can offer low cost charging points. Some vehicle manufacturers may offer a grant of up to £500 towards the cost of installation for eligible customers (using an accredited supplier). More and more businesses are offering charging points for their employees or customers – supermarkets, car parks, train stations and even public charge points.

How long does an EV take to charge? This depends on the capacity of the car/battery and the power output of your charging unit. A charging unit will often be available as a 3.6KW (16Amp) or a 7.2KW (32Amp) output. You could expect the lower output to charge your EV in around 8 – 12 hours and the higher output to achieve this twice as quickly. There are a growing volume of fast charging points (which can charge your EV in 3-4 hours) and rapid charging units (which can charge your EV in under an hour). Tesla have been installing a number of the rapid charging stations across the UK, particularly at service stations.

So why lease/buy an EV? At the time of writing, an EV is eligible for a £3,500 Government plug-in grant (this was reduced from £4500 in 2018). To ensure the grant qualification a vehicle must emit CO2 of less than 50g/km and have a zero emission range of at least 70 miles. Additionally, the EVs are popular with company car drivers as they offer a better tax position for company car taxation. HMRC produce a Benefit in Kind (BiK) banding table which sets out the BiK percentages in conjunction with CO2 (shown as g/km). From the tax year 2020/21, a zero emission vehicle qualifies for the 2% BiK banding (so long as the vehicle can travel 130 miles or more on the electric range). Vehicles travelling on a lower electric range will incur a higher BiK. This represents a fundamental change in taxation attitudes and, for company car drivers, will offer considerable savings. While it may appear more beneficial to business customers (due to tax savings/corporate image), there are some personal customers who are more environmentally-minded. EVs offer a long-term solution to automotive sustainability and the global reduction in emissions. For those customers who are affected by congestion charge/low emission charge zones, there are cost-savings available for utilising an EV. While London has been at the forefront for these emission-based charge zones, other cities like Manchester, Liverpool and Leeds are considering replicating this in the very near future.

Are EVs a risk-less future? While manufacturers are continuing to develop their electric propositions, the limited range could render the vehicle unsuitable for some high mileage drivers. Some of the finance companies that we operate alongside will limit the contract mileage we can offer on an EV, for example a small city EV with a limited range may only be supplied on a contract not exceeding 10,000 miles. In contrast a higher-range vehicle (like the Tesla and Jaguar I-Pace) may be supplied on 15,000 or 20,000 mile per annum contracts. Servicing and maintaining an EV is slightly different to a combustion equivalent. Please do consider that with contract hire you can maintain the vehicle yourself (driver-maintained) or include all servicing, maintenance and tyre obligations for an additional cost (funder-maintained). Research suggests that electric cars are nearly 70% cheaper to maintain; the EV has less components that require maintenance and wear/tear on tyres and brakes is reduced. For EV Drivers, research where the nearest EV approved dealer is located as part of this. Additionally, insurance costs are reportedly higher for electric vehicles. Consider this as part of your analysis.

Best Electric Lease Car Deals 2020 (Personal/ Business)

· Nissan Leaf (Electric)

· Jaguar I-Pace (Electric)

· BMW i3 (Electric)

· Hyundai Ioniq (Electric)

· Renault Zoe (Electric)

· Tesla Model S (Electric)

· Tesla Model X (Electric)

· Hyundai Kona (Hybrid/ PHEV)

· Kia Soul

· Kia e-Niro

· VW e-Golf

· Audi e-tron

So what is the driving force for electric vehicles in the UK? And, can you lease an electric vehicle?

Beginning with the second question, it is of course possible to use contract hire and leasing to procure an electric vehicle (or eco car). Indeed, using this form of finance is perhaps safer for most customers, as we still don’t know the demand for used electric cars. With contract hire you have the ability to return the vehicle at the end of the contract, so if there is an issue with electric vehicles (in general), this is a risk which is being passed across to the finance company. As such, for the more risk-averse out there, leasing an electric vehicle may be a safer route than a purchase-style product. Also, for most limited companies, this will be a far better route for tax/cash-flow and risk.

So why are more customers looking to lease an electric car?

The pressure on automotive manufacturers has been increasing, as world attitudes toward climate change and the environment has changed substantially. In particular, our guarded attitude towards the oil industry has seen investment into alternative forms of energy in all walks of life. Cars (and vans/trucks) are a huge contributor to pollution and they are now having to make significant changes.

In the UK, one of the biggest driving factors for economical cars arises due to our tax legislation on company cars. When an employee enjoys a benefit, they must pay benefit-in-kind (BiK) tax. With a car, the level of tax you pay centres around its emissions which is shown as “x” grams per kilometre. The more polluting the vehicle, the higher the rate of tax will be. Conversely, the less polluting a vehicle is, the lower the rate of tax will be.

Over the next 2 -3 years the Government have made some significant changes which will bring about a big increase in the demand for alternative vehicles. For example, a car emitting zero emissions (i.e. an electric car) will attract 13% in 2018/19, 16% in 2019/20 BUT from 2020/21 this will attract a 2% BiK rate.

For many company car drivers, this will reduce their monthly tax bill by 60-90%! -- Does this mean all company cars will be electric by 2020? We shall soon find out…

In addition to the above, there is further demand on manufacturers which has arisen under new testing procedures – the Worldwide Harmonised Light Vehicles Testing Procedure (WLTP). As a result of a number of scandals pertaining to emission and MPG statistics, car manufacturers from September 2018, have to go through much more rigorous testing standards. From September 2019, this will apply to light commercial vehicles (LCVs). Unsurprisingly, the higher testing standards has seen some vehicles increase the level of CO2 per km and decrease their combined MPG. Added to this is the real driving emissions (RDE), which will measure pollutants like NOx. This is placing huge obligations on manufacturers in respect of combustion engines.

For personal customers using a car allowance or just their own income, you might think that there is no requirement (or benefit) for an electric vehicle. In truth, this statement is not without credence and there is some conjecture that the Government needs to do more to encourage personal drivers to consider electric vehicles – free insurance? Income tax breaks? Free charging points. There are a number of simple incentives which the Government could introduce to make private car users consider this type of vehicle other than the fact there will be zero fuel bills and zero road fund licence.

For those drivers living in the London areas, there may be some additional benefit to using an electric vehicle. The Transport for London (TFL), have a number of Congestion Charge Zone (CCZ), Low Emission Zones (LEZ) and Ultra Low Emission Zone (ULEZ) policies in place. For example, the CCZ operates between 7am and 6pm Monday to Friday in certain areas, so that drivers pay £11.50 per day to move around this zone. However, there is no payment required if your car or van emits 75g/km or less. For electric vehicles, this means that no charge is payable (please note you need to register your vehicle for this). To supplement this, LEZ and ULEZ are either in operation, or about to come into operation. These zones will operate 7 days a week and 24 hours a day. Again, polluting vehicles will pay considerably for operating in these areas. What needs to be made clear is that this type of emissions charging will come into effect across other cities – Manchester, Leeds and Liverpool are already investigating this.

Some drivers will either have to seek public transport or electric vehicles in order to avoid these charges moving forwards.

So are we ready for a green future? Alternative fuel cars, particularly fully-electric, are still a new concept in the UK. However, attitudes are definitely changing and we are seeing an increasing number of enquiries into electric vehicles. Manufacturers are now throwing resource into these cars, which means a) better product; and b) better prices.

With options such as – the Kia Niro, Kia Optima, Mitsubishi Outlander, Mini Countryman, Hyundai Ioniq, VW e-Golf, Jaguar I-Pace, Tesla and Hyundai Kona – the customer is almost spoiled for choice.

Learn more about electric car leasing in our Help & Advice pages or contact our helpful leasing team for more information, you can also read electric lease car reviews in our blog.