As electric vehicles (EVs) gain prominence in the automotive industry, leasing has become an increasingly popular option for fleet operators looking to enjoy the benefits of EV ownership without the long-term commitment and residual value risk. However, potential lessees often encounter significant disparities in rental costs among leasing companies offering EVs which can be in excess of ￡100 per month. In this article, we explore the factors contributing to varying rental costs and provide insights to help fleet operators navigate the leasing landscape effectively.
Understanding the Factors
Vehicle Model and Features:
- The rental cost of leasing an EV is heavily influenced by the specific make and model of the vehicle. Premium EV models with advanced features and technology may command higher rental fees compared to entry-level or mid-range models. Traditionally with ICE vehicle choice policies it was common to select a a small number of manufacturers; with EVs it is recommended to provide a much wider choice of manufacturers. Brand snobbery has also reduced with EVs, so introducing new brands can bring an attractive policy to drivers.
Lease Terms and Mileage Allowance:
- Lease terms, including lease duration and mileage allowance, play a crucial role in determining rental costs. Shorter lease terms typically result in higher monthly payments, while longer terms and lower contract mileage may offer more affordable options. Check your contractual benchmarks are accurate of the true mileage, as many drivers have reduced annual mileage post-Covid due to Teams/Video calling and working from home.
Residual Value and Depreciation:
- The residual value of an EV, or its projected value at the end of the lease term, affects rental costs. EVs with higher residual values often have lower monthly payments since the lessor can recoup more of the vehicle's value through resale or lease-end options.
Manufacturer Incentives and Rebates:
- Manufacturers frequently offer incentives, rebates, and promotional deals to encourage EV leasing. These incentives can significantly reduce rental costs, making leasing more affordable. Availability and eligibility criteria for incentives vary among leasing companies so don't rely on quotes from one lease company. For larger fleet operators it is worth setting up discount terms directly with the manufacturer, though it is worth ensuring these terms are better than those discounts provided by the leasing company. Checks should also be taken to ensure such discount terms are being correctly applied into the lease rates too.
Charging Infrastructure and Support Services:
- Some leasing companies include charging infrastructure and support services as part of the lease package. These may include access to charging networks, installation of home charge point, and ongoing maintenance services. While these added benefits enhance the overall leasing experience, they may contribute to higher rental costs. Many fleet operators ask drivers to fund the cost of a home charge point, with zero interest funding options available to them.
Navigating the Leasing Landscape
- Before committing to a lease agreement, it's essential to compare offers from multiple leasing companies. Consider factors such as upfront payments, lease terms, mileage allowances, and included features to determine the best value for your needs and budget. A panel funding approach to all vehicle orders is well worth considering delivering significant cost benefits.
Research Manufacturer Incentives:
- Stay informed about manufacturer incentives and rebates available for EV leasing. Visit manufacturers' websites, consult with the corporate teams or fleet management provider and explore online resources to uncover potential savings opportunities that can help lower rental costs.
- Don't hesitate to negotiate lease terms with leasing companies to secure a more favourable deal. Discuss options such as lease duration, mileage allowance, and upfront costs to tailor the lease agreement to your preferences and budget.
Consider Total Cost of Ownership or Whole Life Cost:
- Look beyond the monthly rental cost and consider the whole life cost over the lease term. Factor in expenses such as insurance, maintenance, charging costs, employers NI and tax relief to make an informed decision.
Evaluate Additional Services:
- Discuss with your fleet provider the option of "Pay on Use" maintenance for EVs. Typically fleet operators liked the comfort of a fully bundled lease package which included maintenance. However studies and analysis have shown that maintenance packages don't always offer value for money. With newer EV models having less mechanical parts, the level of maintenance required is much less than equivalent ICE vehicles. Savings of 10%-20% can be achieved utilising a "Pay on Use" model, which if correctly managed by the fleet provider, the drivers won't experience any difference in service.
Navigating the varying rental costs of EV leasing companies requires careful consideration of multiple factors, including vehicle model, lease terms, incentives, and additional services. By comparing lease offers, researching manufacturer incentives, negotiating lease terms, considering whole life cost, and evaluating additional services, fleet operators can make informed decisions that align with their preferences, budget, and business needs. As the EV leasing market continues to evolve, staying informed and proactive is key to securing a cost-effective and rewarding leasing solution.
