Drivers being overcharged for EV leases?
Discussion
I agree. What about you?
"Drivers leasing new electric cars are being overcharged by hundreds of pounds each month, it has been claimed.
Companies have been accused of failing to reflect the strong resale value of cleaner cars when they set their prices, according to clean transport campaign group Transport & Environment (T&E).
The monthly cost is typically based on a vehicle's expected depreciation over the period of the contract - often three or four years.
But leases for new battery electric vehicles are, on average, 51% more expensive than their petrol counterparts, despite analysis suggesting EVs do not go down in value faster than traditionally-fuelled cars.
For example, an electric VW ID.3, costs around £605 a month, while a petrol VW Golf is offered at £376.
The report found that leasing companies still consider electric cars to be 'new and uncertain products', which is an 'outdated' approach.
T&E electric fleets lead Ralph Palmer said: 'Customers are being overcharged by leasing companies if they want to switch to an electric car.'"
Source: https://news.sky.com/story/drivers-leasing-new-ele...
"Drivers leasing new electric cars are being overcharged by hundreds of pounds each month, it has been claimed.
Companies have been accused of failing to reflect the strong resale value of cleaner cars when they set their prices, according to clean transport campaign group Transport & Environment (T&E).
The monthly cost is typically based on a vehicle's expected depreciation over the period of the contract - often three or four years.
But leases for new battery electric vehicles are, on average, 51% more expensive than their petrol counterparts, despite analysis suggesting EVs do not go down in value faster than traditionally-fuelled cars.
For example, an electric VW ID.3, costs around £605 a month, while a petrol VW Golf is offered at £376.
The report found that leasing companies still consider electric cars to be 'new and uncertain products', which is an 'outdated' approach.
T&E electric fleets lead Ralph Palmer said: 'Customers are being overcharged by leasing companies if they want to switch to an electric car.'"
Source: https://news.sky.com/story/drivers-leasing-new-ele...
raspy said:
I agree. What about you?
"Drivers leasing new electric cars are being overcharged by hundreds of pounds each month, it has been claimed.
Companies have been accused of failing to reflect the strong resale value of cleaner cars when they set their prices, according to clean transport campaign group Transport & Environment (T&E).
The monthly cost is typically based on a vehicle's expected depreciation over the period of the contract - often three or four years.
But leases for new battery electric vehicles are, on average, 51% more expensive than their petrol counterparts, despite analysis suggesting EVs do not go down in value faster than traditionally-fuelled cars.
For example, an electric VW ID.3, costs around £605 a month, while a petrol VW Golf is offered at £376.
The report found that leasing companies still consider electric cars to be 'new and uncertain products', which is an 'outdated' approach.
T&E electric fleets lead Ralph Palmer said: 'Customers are being overcharged by leasing companies if they want to switch to an electric car.'"
Source: https://news.sky.com/story/drivers-leasing-new-ele...
Well given the values of all of the used electric cars that we have for sale have massively tanked in the past few months, dropping circa £1000 per month with higher end electric cars dropping even more per month, with each one of ours up for sale for far less than we paid for them and traditional ICE cars increasing in value according to the book, I would suggest the bolded bit is wrong! "Drivers leasing new electric cars are being overcharged by hundreds of pounds each month, it has been claimed.
Companies have been accused of failing to reflect the strong resale value of cleaner cars when they set their prices, according to clean transport campaign group Transport & Environment (T&E).
The monthly cost is typically based on a vehicle's expected depreciation over the period of the contract - often three or four years.
But leases for new battery electric vehicles are, on average, 51% more expensive than their petrol counterparts, despite analysis suggesting EVs do not go down in value faster than traditionally-fuelled cars.
For example, an electric VW ID.3, costs around £605 a month, while a petrol VW Golf is offered at £376.
The report found that leasing companies still consider electric cars to be 'new and uncertain products', which is an 'outdated' approach.
T&E electric fleets lead Ralph Palmer said: 'Customers are being overcharged by leasing companies if they want to switch to an electric car.'"
Source: https://news.sky.com/story/drivers-leasing-new-ele...
Funny they should use the Golf v ID3 comparison as an example when we've recently had a thread discussing the fact that the cheapest ID3 has a list price of £39.5k versus the cheapest petrol Golf at £25.5k, so 55% more expensive however you look at it.
If you compare the Mini Cooper S, a car where the electric version is far closer in price to the comparable ICE (£26k v £29k) then the lease cost difference is <£50 a month (£386 v £431). That's on a 1+35, 10k per year deal.
Or an M440i XDrive Grand Coupe versus the i4 40 M-Sport. Both list at £60k, but the ICE car is considerably more per month to lease on the same terms (£980 v £830)
If you compare like for like cars the difference doesn't appear to be anything like what is being suggested.
If you compare the Mini Cooper S, a car where the electric version is far closer in price to the comparable ICE (£26k v £29k) then the lease cost difference is <£50 a month (£386 v £431). That's on a 1+35, 10k per year deal.
Or an M440i XDrive Grand Coupe versus the i4 40 M-Sport. Both list at £60k, but the ICE car is considerably more per month to lease on the same terms (£980 v £830)
If you compare like for like cars the difference doesn't appear to be anything like what is being suggested.
HTP99 said:
Well given the values of all of the used electric cars that we have for sale have massively tanked in the past few months, dropping circa £1000 per month with higher end electric cars dropping even more per month, with each one of ours up for sale for far less than we paid for them and traditional ICE cars increasing in value according to the book, I would suggest the bolded bit is wrong!
It's all relative though I'd have thought? Used EV prices have been artificially high for a long time and were due a reality check.What are you seeing with regards to 3 year values as a % of purchase price? Are ICE holding up better than EV or is it just that things have finally balanced out?
It seams we on the same page here. The lease companies have to calculate future values. That is hard for EV as there is an element of supply and demand that is unknown. They will provide a low risk future value and therefore higher payments. If you can sell the car for better then you quids in, but the issue has been that its hard to sell used EVs.
ashenfie said:
It seams we on the same page here. The lease companies have to calculate future values. That is hard for EV as there is an element of supply and demand that is unknown. They will provide a low risk future value and therefore higher payments. If you can sell the car for better then you quids in, but the issue has been that its hard to sell used EVs.
^this.Used Ev's seem hard to shift, because there's a lot of them, and the prices used car dealers are asking are a good way off what dealers are willing to offer in PX for them, and that's even if they're willing to take an EV on, as we've heard stories on here of some dealers refusing them.
I mentioned in another thread. Tesla are selling used 2020 Model 3 Performance's for £43k, and WBAC are offering only £25k. That's almost a £20k difference and will surely put people off buying a used EV when the used values are so uncertain, which compounds the issue.
Pricing is nearly all about what the buyer will pay. Given that the BIK is very low on EVs, the leasing companies wanted a slice of the pie so just jacked up rates as they figured people would pay it. Just like manufacturers increased prices for the same reason. The leasing companies absolutely raked in money when depreciation was low or even negative. Depreciation of absolutely everything has been all over the place since 2019 so I don't think there is an EV angle to this per se. The only angle is the BIK bit which nicely subsidises lease rates.
There's nothing consistent about lease pricing, whatever the car. They change with the wind depending on what the broker is willing to make, what the funder (typically part of the manufacturer) is willing to offer or support, and which models are in demand or not. The forecast residual is only a single factor in what the customer will pay.
EVs now are in short supply, have a ready stream of both retail customers and fleet / salary sacrifice so they charge what they can get away with. The demand for petrol/diesel cars is dwindling but they need to keep the factories going so they'll support sales of them via discounting leases amongst other incentives.
As said, the ID.3 to Golf comparison is laughable when the former is in such short supply they're only offering high spec ones on long lead times, while the Golf is much cheaper, and according to VW's own website, available direct from stock as they've got so many knocking about.
EVs now are in short supply, have a ready stream of both retail customers and fleet / salary sacrifice so they charge what they can get away with. The demand for petrol/diesel cars is dwindling but they need to keep the factories going so they'll support sales of them via discounting leases amongst other incentives.
As said, the ID.3 to Golf comparison is laughable when the former is in such short supply they're only offering high spec ones on long lead times, while the Golf is much cheaper, and according to VW's own website, available direct from stock as they've got so many knocking about.
TheBinarySheep said:
^this.
Used Ev's seem hard to shift, because there's a lot of them, and the prices used car dealers are asking are a good way off what dealers are willing to offer in PX for them, and that's even if they're willing to take an EV on, as we've heard stories on here of some dealers refusing them.
I mentioned in another thread. Tesla are selling used 2020 Model 3 Performance's for £43k, and WBAC are offering only £25k. That's almost a £20k difference and will surely put people off buying a used EV when the used values are so uncertain, which compounds the issue.
The question is, is it actually putting people off buying the used cars from Tesla?Used Ev's seem hard to shift, because there's a lot of them, and the prices used car dealers are asking are a good way off what dealers are willing to offer in PX for them, and that's even if they're willing to take an EV on, as we've heard stories on here of some dealers refusing them.
I mentioned in another thread. Tesla are selling used 2020 Model 3 Performance's for £43k, and WBAC are offering only £25k. That's almost a £20k difference and will surely put people off buying a used EV when the used values are so uncertain, which compounds the issue.
If they are shifting them at over £40k, it's not them that has the problem.
£40k is a lot of money for a used car.
Particularly for a used car with the clock ticking on its battery.
What warranty do you get with that?
It looks to me like a pretty fierce write-down every month.
OutInTheShed said:
The question is, is it actually putting people off buying the used cars from Tesla?
If they are shifting them at over £40k, it's not them that has the problem.
£40k is a lot of money for a used car.
Particularly for a used car with the clock ticking on its battery.
What warranty do you get with that?
It looks to me like a pretty fierce write-down every month.
Agree with your first point, but the rest..If they are shifting them at over £40k, it's not them that has the problem.
£40k is a lot of money for a used car.
Particularly for a used car with the clock ticking on its battery.
What warranty do you get with that?
It looks to me like a pretty fierce write-down every month.
What does "£40k is a lot of money for a used car" even mean? And since when is the clock ticking any more on a used EV battery than it is on a used ICE cars engine? And what are you assuming the write down is, 100% of the cars value over x years?
From a warranty perspective the battery on a Model 3/Y is covered for 8 years or 120k miles. That's 5 years longer than the warranty the majority of manufacturers offer on their ICE engined cars and based on the degradation being seen on older Model S/X cars it will be far from at the end of it's useful life at that point.
OutInTheShed said:
The question is, is it actually putting people off buying the used cars from Tesla?
If they are shifting them at over £40k, it's not them that has the problem.
£40k is a lot of money for a used car.
Particularly for a used car with the clock ticking on its battery.
What warranty do you get with that?
It looks to me like a pretty fierce write-down every month.
I'm not sure they're actually shifting them though. If they are shifting them at over £40k, it's not them that has the problem.
£40k is a lot of money for a used car.
Particularly for a used car with the clock ticking on its battery.
What warranty do you get with that?
It looks to me like a pretty fierce write-down every month.
Looking on Autotrader, you can get a model 3 performance, same year and same mileage as from Tesla, but for £10k less (£35k). I know you'd be buying from Tesla, but is that really worth an extra £10k? You hear storied on here that dealers can't get rid of them, and I read an article that said EV's are staying on the forecourt for longer than their petrol equivalents.
I did some rough calculations of buying a used model 3 vs buying a used M340i. Both cost around the same but based on the information available the M340i depreciates less. So I worked out that over the course of 3 year, both would ultimately cost around the same to run with the fuel and maintenance savings from the Tesla being eaten up by it's depreciation.
For context,
2020 Tesla Model 3 £37k, WBAC price, £25k.
2020 BMW M340i £37k, WBAC price, £35k.
If we then factor in 15% depreciation each year, at the end of three year the Tesla will be worth £10k and the BMW worth £15k. I worked out of three year I'd save roughly £5k in fuel/servicing costs with the Tesla. So that covers the depreciation.
Other than wanting to drive an EV, there doesn't seem to be any benefit of buying a used Tesla over the BMW.
Granted, my calculations are only based on current prices/WBAC valuations. Those could change, and likely will, I just don't know which way.
I fancied a change of car, and really like the idea of a Tesla 3 Performance, but I just can't make the numbers work and I'm concerned that the Model 3 will be worth pennies when it's 6 year old.
Edited by TheBinarySheep on Tuesday 28th February 11:05
Pointless extrapolating long term values based on current WBAC prices as you say. Had you done the same calculation 3 months ago your conclusion would have been very different, and could easily change again significantly in the next 3-6.
On the benefit front, I'd assume for people looking to buy this type of car the significant performance advantage (both on paper and real world) that the Model 3 P has would be a consideration?
On the benefit front, I'd assume for people looking to buy this type of car the significant performance advantage (both on paper and real world) that the Model 3 P has would be a consideration?
SWoll said:
Agree with your first point, but the rest..
What does "£40k is a lot of money for a used car" even mean? And since when is the clock ticking any more on a used EV battery than it is on a used ICE cars engine? And what are you assuming the write down is, 100% of the cars value over x years?
From a warranty perspective the battery on a Model 3/Y is covered for 8 years or 120k miles. That's 5 years longer than the warranty the majority of manufacturers offer on their ICE engined cars and based on the degradation being seen on older Model S/X cars it will be far from at the end of it's useful life at that point.
....
So at 3 and a bit years old, you're paying £40k for something the maker will only stand behind for another 4 and a bit years?What does "£40k is a lot of money for a used car" even mean? And since when is the clock ticking any more on a used EV battery than it is on a used ICE cars engine? And what are you assuming the write down is, 100% of the cars value over x years?
From a warranty perspective the battery on a Model 3/Y is covered for 8 years or 120k miles. That's 5 years longer than the warranty the majority of manufacturers offer on their ICE engined cars and based on the degradation being seen on older Model S/X cars it will be far from at the end of it's useful life at that point.
....
That suggests you might be wanting to write it down to banger money in the that period, which is a lot of money every month.
The clock is ticking on a Li-Ion battery from birth.
Every cell maker acknowledges that.
Every car maker builds that into their 8 year warranty.
No EV maker is saying their cars will typically have a 20 year life.
The comparison with IC engines is puerile, because we have 100 years of history, we have an understanding of what we are letting ourselves in for.
We know they average 14 years or whatever at scrap. We've got used to the way they become bangers and then sheds.
The question is, are Tesla actually selling those cars at those prices, or are they merely offering them, which would have the effect of creating an appearance of low depreciation?
Who is buying them?
Are they buying them for cash?
If someone is asking £40k for an old Tesla, it makes the new one look the better deal.
It's an immature rapidly changing market.
You buy a new Tesla today, you don't know much about what the market for it will be like in 3 or 4 years.
BUT, that's also true of IC cars. The rules of the game are changing at a pace.
Surely the price of leasing electric cars is determined mainly by how much people are willing to pay for them with anyone involved in the contract (manufacturers, brokers, dealers etc.) looking to make as much money as possible? I do appreciate some people such as those with car allowances may be ‘forced’ to lease an electric car for various reasons, but is it not just supply and demand based on the amount of cars that can be produced?
OutInTheShed said:
So at 3 and a bit years old, you're paying £40k for something the maker will only stand behind for another 4 and a bit years?
Again, £40k for a 3 year old car is hardly a new thing? And ICE car manufacturers will already have stopped standing behind their products by the time you've bought at that age it in most cases, so struggling with your point as sounds like a good deal in comparison to me?This is the world of buying used cars, I don't see that it has anything to do with whether it has a battery or not and as above the idea that all EV batteries will all be useless at 8-10 years and 100k miles is clearly b
ks.Gin and Ultrasonic said:
Surely the price of leasing electric cars is determined mainly by how much people are willing to pay for them with anyone involved in the contract (manufacturers, brokers, dealers etc.) looking to make as much money as possible? I do appreciate some people such as those with car allowances may be ‘forced’ to lease an electric car for various reasons, but is it not just supply and demand based on the amount of cars that can be produced?
But the government schemes are distorting the market, increasing what people are willing to pay.At ground level, it's not just about cars with £40k price tags when they're well used.
Kia, cheapest electric new on Autotrader £32k.
Cheapest petrol, half that.
That is a lot of depreciation every month.
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