Electric car leasing customers are being ‘overcharged’

Leasing companies have been accused of overcharging for deals on electric vehicles.

According to green transport organisation Transport & Environment (T&E), leasing offers for EVs are 57 per cent more expensive on average than for their equivalent petrol models. For example, leasing an electric Peugeot e-208 costs approximately £509 a month, but the petrol model is offered at £329.

Leasing companies typically charge customers for the expected loss in value of a vehicle over a three or four-year lease, with higher prices meaning they expect EVs to lose more of their value. However, the analysis shows that EVs have similar resale values to diesel and petrol vehicles, so more expensive EV lease deals are “unjustified”. The group analysed 2.7 million used car prices and found EVs do not depreciate any faster than petrol or diesel cars.

At the time the data was analysed, depreciation for EVs in Europe’s biggest markets (Germany, France and the UK) was on par with diesel and petrol. A difference was detected in Spain, but the gap was seen to be closing.

“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. 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 EV transition.”

However, the story isn’t so simple, according to Adrian Dally, director of motor finance and strategy at the Finance and Leasing Association. “It isn’t so much where residual values go – what matters is volatility and predictability.

“Residual values have been collected for petrol and diesel vehicles for 80 or 90 years, and every day thousands more data points go in, so you can predict with great confidence what future values are going to be.

“EVs are a much newer technology and the vehicles change rapidly. That creates volatility in prices – your residual values are all over the place. T&E’s data was taken at a moment in time and related to what residual values were like then. But if you look at the data now, EV residual values are going down quite rapidly.”