The rise of secondhand EV leasing in the UK is a fascinating development in the automotive industry, driven by the soaring cost of petrol and the increasing popularity of electric vehicles. This trend is not just about saving money; it's a strategic shift towards a more sustainable and cost-effective way of driving.
The Cost Factor
The primary driver of this shift is the skyrocketing cost of petrol, exacerbated by the geopolitical tensions surrounding Iran. As petrol prices climb, electric vehicles (EVs) are becoming an increasingly attractive alternative. The UK's used EV leasing market has seen a remarkable 170% growth in the last year, according to the British Vehicle Rental and Leasing Association (BVRLA). This surge is not just a temporary blip but a sign of a lasting change in consumer behavior.
The Rise of Used EVs
The supply of secondhand electric cars is rapidly increasing as early adopters of new EVs move them into the used market. With over 2 million electric cars on British roads, the demand for used EVs is only expected to grow. The BVRLA's Toby Poston highlights the appeal of used leasing, offering consumers access to well-maintained, technologically advanced cars at various price points without the financial risk associated with buying new.
Salary Sacrifice and Personal Contract Hire
Salary sacrifice schemes are playing a pivotal role in making electric driving accessible to a broader audience. By allowing people to deduct the cost of cars before tax, these schemes effectively subsidize EV purchases. The number of secondhand EVs leased through salary sacrifice has risen fivefold in the last year, according to the BVRLA. Personal contract hire, a similar concept where people rent a car for a monthly fee, has also seen a significant increase, almost six times over.
Business and Tax Incentives
Businesses have been early adopters of electric cars due to generous tax breaks on benefits in kind for employees. The BVRLA reports a 50% increase in business contract hire for used EVs in the last year. The Electric Car Scheme, a salary sacrifice company, has seen its used EV leasing triple since its introduction in 2024. Thom Groot, the company's CEO, attributes this growth to affordability, noting that used vehicles are bringing EVs within reach of people who couldn't justify a new one.
Overcoming Barriers
One challenge in the secondhand leasing market is the tax system, which calculates benefits in kind based on a car's value as new, even when someone is buying secondhand. This can make the financial benefits of used EVs less attractive. However, companies like Octopus Electric Vehicles are addressing this issue, offering significant savings compared to leasing new EVs.
The Future of EV Leasing
The future of EV leasing in the UK looks promising. With the cost of petrol likely to remain high and the supply of used EVs increasing, the demand for secondhand leasing is expected to grow. Gurjeet Grewal, CEO of Octopus EV, predicts a 122% year-on-year growth in secondhand leasing, highlighting the value proposition of used EVs. As the market matures, we can expect further innovations in leasing models, making electric driving even more accessible and affordable.
In conclusion, the rise of secondhand EV leasing in the UK is a testament to the power of market forces and consumer behavior. It's a strategic shift towards a more sustainable and cost-effective future, where the benefits of electric driving are within reach of a broader audience. As the market evolves, we can expect to see more innovative solutions that will further accelerate the adoption of electric vehicles in the UK.
