Five electric cars that cost less to lease than petrol cars

Leasing an electric car can be a great way to avoid premium purchase costs, and the UK’s DriveElectric has done some sums that show that when fuel savings are taken into account, leasing an EV can be even cheaper than leasing a petrol car.

To meet its 2050 Net Zero target, the UK government is looking at legislating a ban on new petrol and diesel car sales by 2035, expected to be formalised on August 31.

But EVs – even compact and city models – are more expensive to buy than petrol and diesel equivalents, because batteries currently make up as much as 50% of the cost of car.

Although upfront purchase costs of EVs are expected to be equal to petrol and diesel vehicles within the next 5 years, as battery costs drop, UK lease company DriveElectric says that there may be no need to wait.

DriveElectric has looked 5 models that are currently available in the UK and worked out that because fuel savings mean the cost of leasing and running an EV can be cheaper, leases offer an opportunity for more people to go electric. See the chart below for DriveElectric’s sums.

All are short-medium range vehicles, with batteries under 50kWh capacity or less. They include the Smart EQ ForFour 17 kWh, Skoda CITIGOe IV SE 37 kWh, Renault Zoe GT Line 50 kWh, Volkswagen e-Golf 35 kWh, and Peugeot E-2008 50 kWh electric cars.

The leasing costs are based on a 4-year personal leasing contract that covers 10,000 miles or 16,000 km a year, and include VAT.

The fuel savings are based on 14 pence per kilowatt hour electricity costs compared to fuel cost of an equivalent petrol or diesel vehicle.

“There’s much talk about EVs reaching price parity with petrol cars over the coming years, but zero emission electric cars can be more affordable than people think today,” said Mike Potter, managing director of DriveElectric in a statement.

“Fuel costs of EVs are around 20% of the fuel costs of petrol cars, and spreading the cost of the initial purchase price over monthly leasing payments means that EVs are now typically cheaper than petrol cars from a whole-life cost point of view.

“This could enable large numbers of motorists to make the switch to EVs to help improve local air quality and achieve Net Zero,” he said.

Unfortunately for Australia, the five models that DriveElectric has compared are not currently available here (the Renault Zoe, which was originally available to fleets only, has now been pulled by the French car maker citing a lack of supportive government regulations).

Similar results may be found for some of the more affordable models available in Australia, such as the Hyundai Ioniq and Nissan Leaf – in fact, as reported by Climateworks at The Driven’s 2019 EV Conference, EVs already make financial sense for fleets.

As noted by The Driven in this article here, there is a gap in the Australian market for small short range vehicles that may also fit DriveElectric’s sums – if or when they are eventually introduced here.

While a national electric vehicle strategy is expected to be announced by the end of the year, it will likely focus on broader issues such as charging infrastructure.

However, state strategies such as NSW Net Zero’s plan to incentivise take up of electric vehicles in fleets is aimed at engendering confidence amongst car makers to introduce more EV models and thereby give consumers as well as businesses more EV choice.