Leasing makes electric cars more affordable than PCP, study finds

A leasing business has analysed pricing data and found that driving a battery electric car on a lease is cheaper than funding the EV on PCP (personal contract purchase).

Leasing.com found that leasing was the most cost-effective option on 13 of the 15 most popular pure electric BEVs it markets.

The highest cost difference was 31% for an Audi E-Tron, with the average difference in cost being 18%.

Just the Renault Zoe and Jaguar I-Pace were cheaper using PCP.

Making BEVs affordable is one of the most important challenges to address as the UK moves towards the 2035 ban on sales of new cars with combustion engines, according to David Timmis, managing director of Leasing.com.

“Without this, the market simply won’t shift quick enough,” he explained. “Thankfully, leasing provides consumers an alternative route to driving an EV that won’t break the bank and, in fact, will save them money compared to PCP – the current most popular new car finance product in the UK.”

Leasing, including personal contract hire, has been on the increase in recent years however the majority of new car private buyers still prefer PCP, which allows them to terminate the contract early without a very significant penalty, unlike leases which are for a fixed term.

Much of the growth in BEV sales of late has been in the corporate market, where leasing is commonplace, and the Socioety of Motor Manufacturers and Traders warned a year ago that the electric car revolution has been "primarily for fleets, not families" and it urged for incentives that tempt consumers and infrastructure that reassures them.

Auto Trader recently found consumer interest in EVs had dipped because the prices remain high.

The Finance and Leasing Association (FLA) reported that the value of new car personal leasing grew 27% in the 12-months to January 2021.

Toby Poston, director of corporate affairs at the British Vehicle Rental and Leasing Association (BVRLA), said: “Leasing is the perfect way to finance a new BEV.

“With so much economic uncertainty and technology changing so fast, it is not surprising that more and more people are using this fixed cost, affordable and hassle-free method to fund their leap to electric motoring.”

Leasing.com’s analysis shows that the Tesla Model 3 has a list price of £42,935, however, when leased over four years, the total cost comes in at £25,445.77.

Compare that against a PCP cost of £30,384 (not including the balloon payment), and leasing will save drivers 19% over the life of the contract, it says.

The largest saving overall was found when comparing costs for an Audi E-Tron. On PCP, the Audi has a total cost of £43,420.14 at the end of a 48-month contract.

On lease, the same make and model comes in at a total cost of £34,311.50. A total saving of £9,108.64, it says.

Leasing.com compares personal and business car leasing offers from brokers, dealers, motor manufacturers and independent funders.