Electric car leasing and PCP

If you want an electric car, but are worried about the responsibility of ownership at the end of a contract, leasing could be the answer

BuyaCar team
Aug 10, 2021
Nissan Leaf driving

Certain aspects of electric car ownership are fantastic. Providing you plan how you charge it, the running costs can be spectacularly low, while maintenance costs for an electric car are also dramatically cheaper than for a petrol or diesel car. On top of this, there’s the knowledge that you are contributing to improving the air quality around you by not pumping out harmful exhaust gases.

But there are issues. The technology – particularly surrounding batteries, range and charging – is still relatively new, so it’s changing and improving at a rapid rate. As a result, you might want to make sure you’re not stuck with an out-of-date used model after a few years.

This is when leasing one makes a lot of sense. You can get a brand new model - with the latest battery tech - for a fixed monthly payment. And as you have to return the car at the end of the contract, there's no need to worry about its future value.

Leasing is like a long-term car rental agreement, where you make an initial payment and then a series of fixed monthly payments until the end. The monthly payments on leased cars can be cheaper than with an equivalent finance agreement, but only for brand new models: leasing is not normally available for used cars.

If you want to buy a used or nearly-new car electric car, with the same sort of option to walk away at the end of a contract, then you can go for a Personal Contract Purchase (PCP) agreement. This offers low monthly payments and the ability to hand your car back at the end of the agreement - just as with a lease. However, at the end of the contract you also have the option to buy the car or - depending on its value - to trade it in for another vehicle.

There are currently 1292 nearly new and used electric cars available from BuyaCar, with finance costs starting from £189 per month. Bear in mind that the cheapest models sometimes come without batteries included in the price, so you may need to pay for a battery separately with an additional monthly payment. Consequently, it's worth checking whether that's the case with any electric car you're considering - new or used.

A positive of leasing the battery separately is that if the capacity of your battery drops below a certain threshold, the car company should replace it for you, rather than you facing a substantial bill, which would be the case if you owned the battery. It's worth remembering, however, that electric cars typically last pretty well, with less maintenance needed than with equivalent petrol or diesel models.

Yes, an electric car's battery capacity may drop a little over time, but this is no different to the power a petrol or diesel engine produces dropping over time or the engine becoming less efficient, so there's nothing to fear about used electric cars, provided you pick one that suits your needs.

Why lease an electric car?

Leasing could have been invented for electric cars because - like mobile phones - they are developing so fast that new and improved versions are arriving regularly. Leasing helps to avoid tying up your money owning last year’s electric car. If you can afford the monthly payments, leasing an affordable model now and then moving on to a newer model in a couple of years with no worries about selling on the old car can offer real peace of mind.

For example, battery range is growing all the time. When it was launched in 2011, the Nissan Leaf had an official range of 110 miles. The version of the car available new in the 2020s, however, has an official range of up to 239 miles - meanin that you should be able to travel twice as far per charge. Yes, you may find it difficult to achieve that figure in real-world driving, but that was the case with the old model, too.

If demand for older electric cars begins to drop, leasing can protect your money, too, as your payments are fixed for the duration of your contract. If the car’s worth less than anticipated once you hand it back then that’s a problem for the leasing company.

Taking out PCP finance on a nearly new or used car also makes sense for the same reasons, as it offers the option of returning the car at the end of the agreement, you don't need to worry about its future value. Meanwhile, if you buy an electric car, hope for it to be worth a certain figure after a few years and it's actually worth much less, as drivers prefer newer models, you could be out of pocket.

Leasing an electric car for business use

Electric cars make a lot of sense for business users as well, because they qualify for the lowest rate of company car tax. This means that company car drivers can cut their company car tax bills by choosing an electric model rather than one powered by petrol or diesel. This is one way the government is encouraging drivers to choose cars with lower tailpipe emissions, with electric cars emitting nothing directly.

Yes, you have to remember that the energy required to charge a car often results in emissions - from a gas-fired power station, for instance - but you can expect driving an electric car to result in lower overall emissions than going for a petrol or diesel model. 

Leasing an electric car makes financial sense for companies, too, because payments are fully tax-deductible, as they are with all cars that emit less than 110g/km of carbon dioxide.

Leasing an electric car battery

With some lease deals, leasing the car is only part of the story. You may also have to lease the battery as a separate item, whether you get a new or used car, as highlighted above.

The original version of the Nissan Leaf was available as a cheaper Flex model, which cost less because the battery wasn’t included, so you had to pay an additional monthly lease figure for this. The same is true for the Renault Zoe, which initially only included the cost of the battery if you upgraded to a model badged ‘i’ - a premium of £5,600 when new.

Battery lease costs aren’t cheap, with prices for the Zoe starting at £49 per month for earlier cars and £59 per month for newer models with a larger battery, badged as Z.E. 40. Both of these monthly figures limit you to 4,500 miles per year; you’ll need to pay more if you travel further.

These monthly payments come on top of the cost of the car itself - current used Renault Zoe deals start at £9,990 or £189 per month on BuyaCar, so the car is very affordable, you just need to make sure to budget for the battery if you get a model that doesn't include the battery.

Regardless of who you lease the car from, a leased battery is guaranteed to hold at least 75% of its charge over four years or 100,000 miles. If it doesn’t, Renault will repair or replace it free of charge. That’s better than the guarantee offered if you buy the battery with the car where Renault guarantees that it will hold at least 66% of its charge or the battery will be repaired or replaced.

Other manufacturers, including BMW, Tesla, Jaguar and Volkswagen include the battery in the price of every car, so with these you don't need to budget for an additional battery payment every month.

Cost of leasing an electric car

Uncertainty over the future value of electric cars has made leasing them expensive in the past. This is because leasing companies haven’t wanted to be left out of pocket by getting a car back that’s worth very little, so have erred on the side of caution and made monthly leasing costs high.

But this situation has changed, as electric car sales rise and the vehicles become more familiar to those purchasing new and used models.

Second-hand Nissan Leafs currently cost from £246 per month on BuyaCar, the BMW i3 starts at £274 and an electric VW e-Golf can be had from £304 per month. These don't offer as high a range per charge as newer models, but they are far more affordable...

Best electric cars to lease

VW e-Up

Used deals Limited stock

Look beyond the odd name and here’s the perfect city car: nippy, compact and practical, and able to enter clean-air zones free of charge. The battery is included in the price and guaranteed for up to eight years. The car’s high purchase price meant that this wasn't the cheapest new car to lease, though used car PCP deals can be appealingly affordable.

VOLKSWAGEN UP BUYERS' GUIDE

Renault Zoe

Used deals from £9,990
Monthly finance from £189

This is an ideal electric hatchback thanks to its roomy interior, attractive looks and Z.E. 40 high-capacity battery, which provides more than 150 miles of range in real-world driving. You’ll need to add battery leasing costs to most used cars, as they weren't initially sold with the battery included. Renault has now ended its battery leasing format, however, with the 2020-on model being sold with batteries included.

RENAULT ZOE BUYERS' GUIDE

Nissan Leaf

Used deals from £17,358
Monthly finance from £272

A good example of how quickly electric car technology progresses, this version of the Nissan Leaf has a much longer range than its predecessor, as well as more advanced technology. It’s still not cheap to lease when new, but you won’t face expensive fuel bills, and deals typically include a reasonable 10,000-mile-per-year allowance. Previous-generation cars, however, are becoming increasingly good value in comparison. We have used deals on BuyaCar starting from just £10,995, while monthly finance costs could be as little as £246.

NISSAN LEAF BUYERS' GUIDE

 

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