T&E Study: High Leasing Rates for Electric Cars Hinder the Transition

Leasing offers for electric cars are overpriced. That is the conclusion of a recent analysis of the used car market by the European environmental umbrella organization Transport & Environment (T&E). In Germany, leasing offers for purely battery electric vehicles (BEVs) are on average 69 percent more expensive than comparable combustion models, the analysts state. For example, customers paid around 737 euros per month for a leased electric Volkswagen ID.3, while a combustion-engine Golf costs only 449 euros.

“Leasing companies charge their customers too much when they switch to electric cars. The pricing of leasing companies is too conservative. Their monthly rates are stuck in the past, on the level of five years ago. This way, leasing companies are slowing down the switch to electric cars, while making record profits and customers pay overpriced rates,” criticized Stef Cornelis, Director of Electric Fleets at T&E.

According to the study, pure electric cars de facto have the same resale value as vehicles with internal combustion engines. Leasing companies usually charge their customers the depreciation of a vehicle that is expected over the three to four-year leasing period. Higher leasing prices would suggest that BEVs depreciate more. However, an analysis of used car prices by the NGO shows that electric cars in Germany do not lose more value after 36 months than diesel and petrol vehicles. After twelve months, the depreciation of electric cars was even less. Thus, the higher leasing rates for electric vehicles are not justified. According to the study, BEVs even lose less value over time, which reflects consumers' confidence in newer models with improved technology.

High Demand for Used Electric Cars

The demand for new and used electric cars is currently as high as ever. Leasing companies, which are often owned by banks and car manufacturers such as Volkswagen (VW Financial Services), Mercedes-Benz (Athlon), and BMW (Alphabet), have a very large influence on the switch to electromobility with a fleet of 12 million vehicles in Europe. According to the study, leasing companies accounted for 22 percent of new registrations in Europe last year.

“Leasing companies have long gone unnoticed. When you look at the weak electrification targets of these unknown giants in the automotive world, leasing companies are laggards in climate issues and not green pioneers. If they don’t rapidly advance their electrification plans, we will hardly create a used car market that makes electric cars affordable for more and more people, and we further delay the decarbonisation of the transport sector,” Cornelis accused the providers.