European car leasing companies are overcharging for electric vehicles (EVs) compared to their equivalent petrol models, harming the overall transition to EVs, according to a new study.
The new study published by Transport & Environment (T&E), Europe’s leading clean transport campaign group, analysed leasing deals for battery electric vehicles (BEVs) in the used car market.
The report found that, in Europe, leasing offers for BEVs are on average 57% more expensive than their equivalent petrol models.
For example, according to T&E’s reporting, an electric Peugeot 208 costs approximately €574 a month, whilst the petrol Peugeot 208 is offered at €371.
This discrepancy might seem natural, given demand for EVs and their inherent benefits, but the report also determined that BEVs and diesel and petrol vehicles all have similar resale values.
According to T&E, leasing companies have typically charged customers for the expected loss in value of a vehicle over the three- to four-year period of the lease, which means that higher prices match leasing company’s expectations that BEVs will lose more of their value.
This, however, is no longer the case, and T&E claims that the “higher leasing prices for battery electric cars are unjustified.”
In fact, in a T&E analysis of 2.7 million used car prices, it was found that BEVs do not depreciate more than other types of cars and, in Europe’s largest markets of Germany, France, and the UK, depreciate on par with diesel and petrol vehicles.
According to T&E’s study, BEVs actually keep more of their value over time, serving to highlight increased consumer confidence in newer models with improved technologies.
“Today customers are being overcharged by leasing companies if they want to switch to a battery electric car. Leasing firms are too conservative when setting their monthly prices,” said Stef Cornelis, director of electric fleets at T&E.
“Their rates reflect the state of play from 5 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.”
Focusing such analysis on leasing companies, especially in Europe, is important, considering that they boast a fleet of 12 million vehicles across the continent and, in 2022, accounted for 22% of new car registrations.
What’s more, many of these leasing companies – often owned by banks and car manufacturers – do not have targets to transition to fully electric BEVs by 2030. Rather, any such targets are weak and often include PHEVs.
“These giants of the auto world have gone unnoticed and are slipping through the cracks,” Cornelis concludes.
“Looking at their weak targets for battery electric vehicles, leasing companies are climate laggards and not green leaders. Unless they rapidly accelerate their electrification plans, we will struggle to supply a second-hand market that will make BEVs affordable to far more people and we further delay the decarbonisation of the transport sector.”
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.