Electric Car News – Why New Electric Car Depreciation is pushing UK customers into Used EV Leasing

UK customers are being pushed into Used EV Leasing because of New Electric Car Depreciation - Electric Car News

Risk. The one word which often gets ignored in the procurement journey for a UK consumer, or business, looking to get a new vehicle. Much of our thinking is around the concept of “deal”, as opposed to the value of the proposition.

By this we mean that there is an almost over-the-top fixation on the headline price for the vehicle, as the concept of blind consumerism takes over. For a new BEV, this isn’t really useful, especially when there are various finance products and routes to them, all of which come with various pros and cons. These include:

•  Cash – the main pro / benefit being you own the vehicle and so can manage it as you see fit. There are no restrictions on usage or accountability. For a business this allows for immediate tax relief (Corporation Tax) in year 1. The con is that as the proprietor for the vehicle, you are subject to the vagaries of depreciation and price fluctuations. Plus, you have to maintain and manage the vehicle yourself;  
•  Hire Purchase – similar to the cash purchase in that the main pros are that you are looking to own the vehicle outright but only subject to the finance being paid off. With HP there are tax benefits and ownership benefits which are worth considering. However, the impact of depreciation and maintenance / servicing remains the same. In addition, you are subject to interest rates and will be unable to access the terms / discounts on contract hire;  

•  Contract Purchase – with a protective end balloon / guaranteed future value, the main benefit of PCP or BCP is that you have the ability to own the vehicle outright at contract end, subject to satisfying the end value. There are similar tax benefits and potential benefits to the above but with the protection of being able to hand the car back at contract end. This does make it more secure for you / the company. However, interest rates do apply and the terms / discounts on contract hire are not always afforded to this type of contract. The reality of contract purchase is that if you hand the car back, then you are just treating it as a lease but just paying more for the luxury of it; and  

•  Contract Hire – a contract to use and return, the asset is never transferred to the individual or the company. The big pros of contract hire (leasing) is the non-ownership and ability to return the vehicle at contract end. It is also possible to utilise a funder-maintained arrangement, so that the cost of all servicing, tyres and breakdown is included. Most of the bigger discounts and support will be for the leasing market too. However, the big con / negative, is that if you like the vehicle, you cannot buy it or own it and, in some cases, you just have to return on a strict cessation date. Contract hire is not a flexible form of financing. 

So when you see articles like “Ten fastest depreciating new cars revealed: Nine are EVs …”, it is important to contextualise this in light of the above. While the thisismoney news brief  does raise some interesting thoughts about EV values, this is really more concerning for 1) the manufacturers making the product; and 2) the used car market / auctions managing this.

While some private, or corporate entities may have bought new electric cars, this will not be the case for a majority of transactions. As the article suggests, some of the biggest hit vehicles include:

•  Mercedes EQE (number 10) – the e-class saloon retained just 31% of the value after 3 years / 36,000 miles on the clock;
•  Subarus Solterra (number 6) – the SUV allroad retained just 29.7% of the value after 3 years / 36,000 miles on the clock;
•  Citroen e-C4 (number 2) – the small SUV retained just 27.7% of the value after 3 years / 36,000 miles on the clock; and
•  Lexus UX 300-e (number 1) – the small SUV retained just 27.3% of the value after 3 years / 36,000 miles on the clock.

Ouch.

On reflection, these are early pioneer vehicles, which some brands just didn’t get quite right. Aesthetics, functionality and battery technology were not always present in those models manufactured between 2019 - 2023, simply because our EV market was developing and learning.

What manufacturers thought the UK driver wanted was not always correct. With a swathe of new Chinese entrants offering better specification, improved battery technology and incredible pricing, the market has been massively distorted. But the lesson exists nevertheless; if you want to move into ownership, be prepared for the impact of the above.

On the other side of this, is the used electric industry, which has increased at a similar rate to the fall in pricing. 2 – 4 year old low mileage EVs are now more attractive to a range of consumers and businesses in the UK as our  e-car  team have discovered.

The demand has pushed so much so that our ex-lease car offering is now as equally popular as the new car offering. With 150 – 200 low mileage ex-lease cars at any one time, the benefits of contract hire apply to these options:

•  Fixed month price (not subject to depreciation)
•  Low initial rentals / payments (no deposit)

•  Full maintenance - all servicing, maintenance, tyres and breakdown recovery included for the duration 
•  Battery Protection - all EVs come with AVILOO battery health certificate and the finance will cover any issues or problems (even if outside the battery warranty)
•  Stock – all EVs are deliverable in 7 – 10 days

As some of the options shown are less than 2 years old, the battery technology and specification on the vehicles are impressive. When you compare this to the cost of a new vehicle, the 40 – 50% savings are enough to make many customers think more carefully about their decision.

In terms of the used EV shown, the VOLKSWAGEN ID.3 HATCHBACK 150kW Match Pro 59kWh 5dr Auto, this is based on the following configuration:

•  Metallic - Grenadilla black/Metallic black roof
•  Taia cloth - Grey melange
•  18" East derry black diamond surface alloy wheels

58kWh - with a usable battery of 58 kWh this RWD SUV offers 140kW (188hp), top speeds of 99mph and 0-62 times of 8.0 seconds. Real-world ranges suggest a combined 190 miles in colder weather with warmer temperatures to allow for 260 miles (on a full charge) – 225 miles combined .

The 11kW AC allows for 0-100% charging times of 6 hours and 15 minutes with the 105 kW DC enabling 10-80% in 27 minutes. The ID.3 has Bidirectional charging – a V2L option of 3.6kW via the exterior outlet. It has a 157mpg equivalent, 385L cargo volume (1267L with the seats down). It cannot tow. The heat pump is available as a cost option.

Need more help and advice on a new or used EV?

Head to our  Used Electric Car Lease deals   and just get in touch with our expert team on 01942 910 001 or by emailing us at [email protected].