In the UK, we’re inching towards electric cars as a viable alternative for both buying and leasing.
But the Government plans to be the catalyst in this change by pumping money into electrical charging points. A total of twelve eco-driven projects are set to receive almost £40 million to fund improvements like solar-powered forecourts and underground charging systems.
The hope is that these measures will encourage uptake of electric vehicles at a time where sales are declining. Drivers cite cost and availability of charging points as a barrier to switching, which suggests that leasing could be the better option for electric vehicles in the short-term.
Is leasing an electric car right for me?
We chat to Paul Barker, editor of Company Car Today, about the considerations small businesses should make when leasing an electric car and the benefits having one (or more) can bring to your business.
What considerations should small businesses make when leasing an electric car?
The key thing is an understanding of how you’re going to use the car. Electric vehicles make a massive amount of sense as long as you’re doing the right kind of mileage. As weird as it sounds, it’s about doing enough miles as well as not too many.
A lot of the electric vehicle ranges are around the 200-mile mark between charges if you’re picking up some of the newer ones. If you’re not doing enough miles, it doesn’t make enough sense financially compared to a small capacity petrol engine.
The key saving financially from an electric car – as well as company car tax and national insurance – is on the fuel itself. Charging a car costs around 20pc of what you’d be spending on fuel. If you’re not using enough fuel, you’re not making the saving you would if you were to lease a small petrol engine instead.
Why does it cost more?
A combination of things – first of all, the technology is more expensive. As we’ve had 130 years of petrol cars, the production process is as refined as it can be. With an electric car it’s in its infancy. Some parts of the batteries are still quite difficult to source. Global demand is outstripping supply at the moment so with Kia and Hyundai (they’re the cars that have the longest range) there’s a 12-month waiting list for both.
Other considerations include making sure the charging infrastructure is there to back up your electric vehicle. If it’s a car that employees are going to use – particularly if it’s a plug-in hybrid rather than fully electric – make sure they can charge them at home as well. There’s now a grant to go towards a home charging point which is really useful.
Unfortunately some companies buy plug-in cars rather than electric for tax reasons and then they never find a charging socket, so you’ve got to make sure the company policy works around people charging them. Electric cars are a bit simpler – as long as the car fits the purpose, you haven’t got the option of not charging it.
You’ve also got lower servicing costs and if you’re going in and out of London then you’re missing the congestion charge. You’ll be saving yourself £200 a month.
It’s only going to get bigger with the Birmingham Zone coming in less than 12 months and you’ll need lower emission or electric vans in Manchester city centre by 2021. As more clean air zones pop up then electric cars make a lot more sense for people going in and out of those areas.
With all this said, you’ve got to accept the fact that an electric vehicle is going to cost you more initially.
Does that mean it’s better to lease than buy an electric vehicle at this point?
It could be as the technology is moving very quickly. For example, the second-generation Nissan Leaf was launched at the beginning of 2018 with a range of under 200 miles. They’ve just brought out a car that increases that by about 50pc.
As batteries are getting better, cars are upgraded mid-life. At least if you’re leasing rather than buying, you’re not exposed to any potential residual impact value of that. It might be that the older cars with lower ranges aren’t as desirable on the used car market. You find the values are dropping quicker than you might have expected.
Leasing is becoming the increasingly intelligent way of doing it because a) they’ve now got sensible residual values and b) it means the leasing company rather than person involved is exposed to the risk of that.
What benefits does leasing an electric car have for business?
It depends on the business – if it’s one that’s customer-facing and based in a city centre then there’s a lot of benefit from the corporate social responsibility (CSR) side where you can show your business is doing something to help the environment. There’s a lot of emphasis at the moment around urban pollution from vehicles.
People love driving them as well. The performance is instant compared to the lag you get with petrol and diesel vehicles. They’re also a lot more relaxed coming out of an electric vehicle than they are petrol vehicle because there’s an almost therapeutic angle to driving a car that makes no noise.
Which electric car models are ideal for leasing?
The Renault Zoe, which is one of the smallest and cheapest electric vehicles is a good bet – there’s a new one coming out around September or October this year with a larger battery.
I think I’m right in saying that Renault were doing some good leasing deals on Zoe because it’s an outgoing car. To be honest, prices change so often as residual values get better and better and driver start showing more interest.
Over the next 12 months or so there’ll be more pure electric vehicles and plug-in vehicles coming onto the market. The choice is about to swell significantly. There are at least six new all-electric vehicles launching this year and there’ll be a few coming next year.
How does leasing a plug-in hybrid compare to leasing a fully electric vehicle?
Plug-in hybrids tend to be slightly more expensive if anything as they’ve got the two power trains. BMW are expecting plug-in hybrids to take over diesels in popularity next year because the tax incentives are so good for company car drivers.
With these vehicles you’re more likely to be doing high range mileage, so it makes sense to have the back-up of the petrol power. It’s a different market.
Which electric cars are best for leasing?
Before we set off, here are a couple of definitions to help you out. The traditional test for electric vehicles is the New European Driving Cycle (NEDC) which is gradually being replaced with the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). These mark out how certain standards of the car will be measured like average mileage on full charge and average speed.
The charging times listed are based on household mains plugs. They’ll differ from a roadside charging point or the specialist wallbox that you can buy and plug in at home.
WLTP range: 283 miles
Charging time: 29 hours
- Regenerative braking
- ECO+ mode (adjusts maximum vehicle speed and energy consuming systems to achieve maximum efficiency)
- Lane following assist and lane keep assist
- Front and rear parking sensors
- LED daytime running lights
- Rain-sensing front wipers
WLTP range: 168 miles
Charging time: 18 hours
- Lithium-ion battery-powered chassis
- Heated front seats and steering wheel
- Rear view monitor
WLTP range: 279 miles
Charging time: 29 hours
- 80pc rapid recharge in 80 mins
- Wireless phone charging pad
- LED headlights
- Touch screen entertainment system
- Apple CarPlay
- Automatic dimming rear view mirror
WLTP range: 179 miles
Charging time: 20 hours
- Z.E Voice – lets pedestrians know you’re coming when driving between one and 18 miles an hour
- USB jack SD multimedia
- Electronic stability control
- Hill-start assist
WLTP range: 144 miles
Charging time: 17 hours
- 341 litres boot space
- Heat windscreen
- Driver’s knee airbag
WLTP range: 193 miles
Charging time: 19 hours
- 0-62mph in 73 seconds
- Rain sensor with auto headlight activation
- Anti-dazzle exterior mirrors
WLTP range: 259 miles
Charging time: 42 hours
- Audi sound system
- Audi Phone Box with wireless charging
- Rear view camera
- Fast acceleration – 0-60 in under six seconds
WLTP range: 292 miles
Charging time: 43 hours
- 30 mins charge will give 80 miles
- Meridian sound system
- Wi-Fi hotspot
- Traffic sign recognition
- Adaptive speed limiter