‘EVs gaining ground, but ‘great divide’ widens’ – BVRLA study.

Electric cars are all the rage in the automotive industry, but a new report suggests that there is a significant gap between the demand for electric cars from private drivers and businesses. The latest Leasing Outlook report from the BVRLA highlights that there is a growing disparity between company-provided cars and private motorists when it comes to the demand for electric vehicles.

The report, which covers data for Q1, reveals that battery electric vehicles (BEVs) made up 41% of all new business contract hire (BCH) cars, leading to a drop in average new BCH car CO2 emissions to just 56.3g/km. With company car drivers seeking vehicles with low Benefit-in-Kind tax bills, battery electric cars have surged in popularity, accounting for 37% of new deliveries in Q1 and 33% of the entire BVRLA car fleet.

While the uptake of electric vehicles among businesses is positive, there is a concerning gap emerging between corporate and private demand. As more electric vehicles enter the leasing fleet, there needs to be a corresponding increase in demand for EVs in the used car market to prevent residual values from declining.

The Leasing Outlook report also highlights that business contract hire (BCH) has risen by 7.5% year on year, while personal contract hire (PCH) has seen an 11.3% decrease. The success of BCH and salary sacrifice schemes, which have witnessed a 63% increase year on year with most involving electric cars, has contributed to the BVRLA’s car leasing fleet growing for the fifth consecutive quarter, up by 3.6% year on year.

Turning to the van sector, BVRLA members’ total fleet in Q1 reached 513,938 units. Although this was a 0.7% increase year on year, it was a decrease from the 518,522 units reported in Q4 2023. The report also notes a lack of interest from commercial vehicle operators in electric vans, prompting manufacturers to push eLCVs to meet ZEV mandate requirements. This shift is leading some fleets to switch manufacturers and requiring leasing companies to provide aftersales support in regions where new OEMs lack dealer support.

Toby Poston, BVRLA director of corporate affairs, warned of the widening gap between corporate and private demand for electric vehicles. He emphasised that while phase-out targets and sales mandates are pushing the industry towards EV adoption, they cannot do so alone. Poston suggested that leasing companies may be willing to support a slightly higher Benefit-in-Kind (BiK) rate for company car EVs to bolster private demand through grants and scrappage schemes.

Additionally, the report indicates that some leasing firms are advocating for support for plug-in hybrid and hybrid models, as they can immediately reduce CO2 emissions and are accessible to all drivers, even those without charging capabilities at home or work.

Amidst the volatility in the second-hand electric vehicle market, the leasing sector is adapting by offering used car leasing options. Demand in this sector has risen by 7.7% in the last quarter as more drivers opt to lease a used EV and shift the residual value risk to the leasing company.

The BVRLA’s Leasing Outlook report also includes insights from Fleet Assist on SMR trends and AI impact, Cap HPI on the ZEV mandate’s effects, and Auto Trader on new and used demand trends. For a more in-depth look at the report, visit the BVRLA website.