Transport & Environment (T&E), Europe’s leading advocates for clean transport and energy, says that a form of social leasing could serve as an “ideal measure” to support middle- and low-income drivers gain access to electric vehicles (EVs).
Social leasing has already been implemented with some success in France – and in a new paper T&E says such affordable monthly leasing payments of around €100- €150 per month will put EVs within reach of those who cannot afford to buy one.
In Europe, the average price of a battery EV (BEV) has actually increased, rather than decreased, from €40k to €45k since 2020, with the majority EV models sold in the large and premium segments. Even on the smaller models, electric cars are being sold at a significant premium to their petrol equivalents, much higher than the extra cost of the car battery.
T&E estimates that the median price most in the EU are willing to pay for a new or used BEV is €20,000. The issue in Europe is further complicated by the fact that 80 per cent of Europeans buy their vehicle on the second-hand market, where there is still insufficient EVs to accommodate even potential demand.
All of this means that there is a risk that the transition to EVs only benefits the higher social classes while other categories are left behind, T&E writes. And EVs could become more costly under carbon pricing mechanisms like the European Union’s Emissions Trading System, due to start in 2027.
“This is likely to increase the price of car mobility for European drivers, and would have a disproportionate impact on low income, car-dependent drivers, who spend a larger share of their available income on mobility,” T&E writes.
France, however, has already sought to address these inequalities with the introduction in December 2023 of a social leasing program which makes EVs available for between €49 to €150 per month, combining public subsidies with leasing to target the bottom half of the population in income.
So popular was the program that there were over 90,000 applications and 50,000 accepted, doubling initial expectations, with most beneficiaries being younger and with lower incomes compared to typical new EV buyers.
Ater the first year of the program, the French authorities found that 61 per cent of beneficiaries had a reference annual income of between €10,200 to €15,400 (around $A16,500 to $A25,000).
Similarly, the average age of the first 25,000 beneficiaries was around 40, 9 years younger than the average for purchasers of new EVs in 2023, and 14 years younger than the average for purchasers of new passenger cars as a whole.
The French social leasing program offered twenty vehicles across various segments with a lease period of 3 years, with the possibility of a purchase option at the end of the lease, or the renewal of the lease.
T&E says other EU member states should integrate social leasing programs into their Social Climate Plans, which are due to be submitted by June 2025, and should prioritise low- and middle-income, car-dependent households, and focus particularly on those who rely on cars for work or travel long distances annually.
Eligible models to be used in the program, according to T&E, should be compact, affordable, and have a low environmental impact, with a preference for models made in Europe and a price cap of around €25,000 ($A40,600) for segments A and B is suggested to maximise the effectiveness of public spending.
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.