Leasing companies are charging too high a price for EVs compared with petrol cars, according to an environmental campaign group.
Transport and Environment said its research had found leasing companies were charging higher prices for EVs, chiefly based on residual value fears it said were no longer justified.
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In response, the leasing industry body the BVRLA has accused Transport and Environment of having ‘little understanding’ of how the market operates and highlighted falling used EV prices seen in recent months.
According to Transport and Environment’s analysis, the average extra cost of leasing an EV compared with a petrol car in the UK for 36 months is £6,764, while the average extra depreciation cost incurred in that time is £1,845.
It argues that leasing companies typically charge customers for the expected loss in value of a vehicle over a three or four-year lease, so higher lease prices mean they expect EVs to lose more of their value - something it says is unjustified, despite the typically higher purchase prices of EVs, since depreciation is the key factor.
Transport and Environment director of electric fleets Stef Cornelis said: “Today customers are being overcharged by leasing companies if they want to switch to a battery electric car.
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By GlobalData“Leasing firms are too conservative when setting their monthly prices. Their rates reflect the state of play from five years ago.
“With this pricing strategy, their profits are obviously high and consumers are overpaying to go electric. At the same time, they are harming the BEV transition.”
Although Transport and Environment criticise leasing companies in other European countries for having a lower proportion of EVs than the private car market, it does note that the UK is an exception to this, with an EV uptake of 34.2% for leasing companies compared with 10.8% for private buyers.
Responding to Transport and Environment’s research, BVRLA director of corporate affairs Toby Poston said: “Vehicle leasing companies have led the charge in bringing battery electric vehicles to market. The accusations levelled by Transport and Environment show little understanding of how this market operates.
“Like a toddler taking its first steps, the BEV market still needs support in the form of tax incentives, grants and marketing campaigns that give fleets and drivers the encouragement they need to make the leap.
“This support disappears when it comes to selling the same vehicle on the second-hand market. The lease companies that have invested billions in untried, untested BEV technology are navigating this ocean without a map, compass or weather gauge.
“The current market has seen five consecutive months of falling prices and a growing imbalance between vehicle stock and prospective buyers.
“Despite these market conditions, BVRLA members continue to buy new electric vehicles in record volumes. They are absorbing the financial risks of a turbulent used market on behalf of their customers.
“Transport and Environment’s research would be better focused on making the case for more government support on public charging infrastructure and other measures that will benefit the used BEV market.”
Auto Trader commercial director Ian Plummer has also come to the defence of the leasing industry.
He said: “This report shows little understanding of how residual values are calculated and how the automotive industry functions whilst ignoring the context of a maturing market where lenders can’t rely on abundant historical datasets to make decisions about new products.
“We believe this is a case of financial institutions simply having to base calculations on the limited data available to them in an emerging market, rather than any deliberate attempt to unfairly increase profits at the expense of the consumer.”
