EV Lobby Hates The Fact That EVs Cost Too Much
By Paul Homewood
h/t Ian Magness
From Sky News:
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The report found that leasing companies still consider electric cars to be "new and uncertain products", which is an "outdated" approach.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.
"Leasing firms are too conservative when setting their monthly prices.
"Their rates reflect the state of play from five years ago.
"With this pricing strategy, their profits are obviously high and consumers are overpaying to go electric.
"If leasing companies’ prices reflected the realities of the market, more consumers would have access to affordable new EVs (electric vehicles)."
I’d like to know who is funding the EV lobby, as they continually get this sort of biased coverage by the media. And shame on Sky for not seeing through the propaganda.
They should know that car leasing is a free market, and it is not up to the EV lobby to tell it what prices to charge. If lease rates really are too high, other leasing firms will quickly undercut them.
The EV lobby might not like it, but the market knows best, and the experts at the leasing companies will have looked at their costings very carefully.
Indeed, far from overcharging, there is a very real risk that lease companies could be stocking up potential losses, with second hand prices for EVs falling as larger numbers appear on the market, whilst at the same time there is little demand for them.
After all, an EV with 75,000 miles on the clock. not untypical for company cars, would be virtually worthless given that the battery would be near the end of its life.
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
Exactly. Especially since there i no convenient way to assess the condition of battery and how many cycles it has gone through.
The reason is surely that the life of the car could be the life of the battery as by then the battery will cost more to replace than the car.
Tesla warranty is 8yr/120k miles.
Recent Model S battery replacement after over 9yr/127k miles $15k, should be good for another 10 years. New Model S is about $100k.
https://teslamotorsclub.com/tmc/threads/2013-s85-battery-replacement-out-of-warranty-my-experience.289468/
Why on earth would somebody want to pay $100k for a car?
And that there’s no reason you can recoup the EV premium. There’s no subsidy for second-hand cars so that vanishes with the first owner. And faced with an electric BMW for £20k or any exactly equivalent one for £15k, why buy the EV? So the unsubsidised portion of the EV price premoium will likely disappear too.
The monthly lease payments may be a standard % of the car’s value new – about 1%. That’s what seemed to be the case when I looked at two examples at https://cliscep.com/2023/01/08/on-the-soaring-demand-for-evs/
No, they depend on (i) interest and (ii) depreciation.
It looks like there is a small variation, but 1% is a good rule of thumb. It is difficult to be sure that numbers are comparable because deals change over time and they don’t disappear from the internet. Prices from Whatcar, leases from Leasing.com, both bottom “life” models:
Golf £24,399 monthly lease = £228.55 = 0.94%
ID3 £38,845 monthly lease = £394.06 = 1.01%
So the golf is indeed cheaper, which must be depreciation (the interest has no effect on such comparisons). In each case the deposit is 9* the monthly lease.
But in both cases the available leases are far cheaper than in the report. Are the quoted ones no deposit leases?
Surely the whole point of a lease is to ONLY have the monthly payments and no ridiculous upfront deposits and yet another huge amount at the end so that the car is actually yours. Or perhaps some people like being permanently in debt.
Well at least they’re not being charged per mile travelled like they are in Victoria, Australia!
Ah!But Victoria is a small State – only about the size of Great Britain.
And the Premier makes most of your politicians look like a genius and Hitler like a sweet gentle darling. The “opposition” look like a used door mat.
😆😆. Glad I don’t live there then, and I have no intention of ever owning an EV!
Victoria is losing population depleting the stock of commonsense so presumably sales of EVs might be rising there.
The next big scandal is going to be Electricgate. Rather than leasing companies making excessive profits they are more likely to take a bath. No-one really knows the resdiual value of EV’s as there is no mass market yet to gauge resale values. I recently spoke with a BMW technician and his emplyer had a queue of customers with battery problems. Two lifts were occupied with EV’s awaiting a battery replacement and 4 more were outside waiting for space. Removal of the battery is not easy and nor is repair.
Then we have all the issues of range Realistically the range is about 50% of what is claimed and the battery can only be really charged to 80% and dicharged to 20%. Who in their right mind would buy a used EV. Those EV’s coming off lease are going to a tough time finding a mug who will buy them. I see the leasing companies taking a huge hit finacially as will the OEM’s who will be on the hook for warranty claims. Few EV’s are going to make it to old age. The EU average is 14 years for ICE cars. EV’s might get 7 or 8.
One might look at your numbers and think, “That’s 60%.” But battery paranoia must be added. Owners won’t actually operate near the bottom end. Your 50% may even be high.
Owners establish a pattern of use, and stick to it.
ICE owners don’t even think about it.
You are probably correct, especially when the heater or A/C is operating. I was trying to be not too pessimistic.
A further point to consider is the obsolecence of the electronics.
The real issue is what’s the market and as you rightly say, who knows? My guess is that there’s no way most of the price premium EVs get new survives into the second-hand market. For a start the subsidy will vanish. Then for the rest of the premium to exist, second-hand buyers have to be willing to pay more just because its electric or buy a less good car just because its electric. Some will but most will not. I don’t think the virtue-signalling goes very deep when money is the issue.
The pathetic range of all electric cars is the major problem. Why did they even launch these LESS practical and simultaneously more expensive vehicles and expect the market to buy / use them voluntarily?
The range is bad enough, but _hours_ to recharge instead of maximum ten minutes to refill petrol and diesel vehicles.
Tesla is doing quite well. Warts and all.
Lets see how many folks stump up for a second hand battery car, in fact I don’t recall any ever knowing of a secondhand battery salesman. Who would buy a used battery, which is essentially what these cars are, a battery with seats.
The leasing companies are cognizant of the soon to burst EV bubble that will leave them stuck with un-leasable trash once the initial lease runs out. Wake up, people; EVs are expensive, unreliable, pretentious displays of self-abuse that might very well go up in flames before the lease runs out.
But deprecistion will be higher.
There’s no reason to believe the purchase price premium survive I to the second hand market.
Batteries may have shorter lives than ICE components
EVs are heavier and may wear more quickly.
Sounds like those required to put their money at risk have a better understanding than those putting other peoples money ey at risk.
I honestly believe that unless the government changes direction we might end up following the Cuban example – fossil fuel cars are never scrapped, they just get repaired and repaired over and over.
Yes, together with imports from countries like France and Germany who will never go through with banning ICE vehicles as too many jobs depend on them, the UK will continue to operate as now until the government shuts down the petrol stations to stop us..
Leasing is all about the costs of financing the contract and the expected residual value.
In the case of EV’s, who knows what the future residuals will be? I wouldn’t dare buy one with my own money and I suspect millions more wouldn’t either.
The EV lobby groups would be well-advised to shut their mouths, because if not for the security of a (usually business) contract then for most people an EV won’t happen at all.
As well as range anxiety and long re-charging times (dangerous in dark, empty car parks), there will also be issues with the extra weight possibly causing multi-storey car parks to collapse and the increasing risks of very nasty Li-ion fires. I would think the insurance premiums on evs must be higher than for ices.
A far better solution is to convert ices to use green methane.
‘Strong resale value’? Who in their right mind is buying second hand EVs when they could well need a new set of batteries that’ll cost more than a new ICE?
Need to compare used EV prices with the cost of used ICE vehicles. That shows starkly the problems a secondhand EV salesman will face. Simply, you would have to be quite mad to buy a used EV.
You would have to quite mad to buy a brand new EV (assuming you can even afford one) until the range and recharging time problems are fixed.
>>Simply, you would have to be quite mad to buy a used EV.
Two thirds of EVs are bought as company cars. Maybe the lease companies have seen the huge tax savings that generates and are trying to grab a piece of the pie?
It doesn’t make any difference to the actual employers. Leasing costs are a business expense irrespective of ICE or EV. Where it does make a difference is individual employees being hammered with tax for tools that are necessary to do their job. Company car tax should never have been invented. It is akin to employees paying tax because their employers provide desks and chairs in office jobs or for example providing safety equipment (masks, gloves protective clothing. safety shoes, goggles etc.) in industry.
>>company cars. Maybe the lease companies have seen the huge tax savings
It does make a difference if the employer opts to buy the car; the entire purchase price can be written off against profits in the first year (aiui – I’m no tax expert).
Employees get a huge saving on their BiK taxation. The difference is 35% of vehicle list price per year (37% typical ICE vs 2% for EV).
I am not a tax expert either, but I doubt the entire purchase price can be written off in the same year. There are limits to the amount of purchase prices that can be set off entirely in the year of purchase and I think all cars would exceed those limits. The VAT refund / offset is different.
Of course much depends on whether there are and the level of any profits. It could be better to just depreciate.
>> if the employer opts to buy the car; the entire purchase price can be written off against profits in the first year (aiui – I’m no tax expert).
According to a tax website:
“For expenditure incurred before 1st April 2021, a 100% First Year Allowance (FYA) was available for a new car which is an ‘electrically-propelled’ car, or which has low CO2 emissions. An ‘electrically-propelled’ car is a car that is propelled solely by electric power (i.e. it is an All Electric Vehicle, or AEV). A car has low CO2 emissions, where the emissions do not exceed 50g/km (typically, a Plug-in Hybrid Electric Vehicle, or PHEV).
For expenditure incurred on or after 1st April 2021, the FYA is restricted to new electrically propelled and zero emission cars.”
‘But leases for new battery electric vehicles are, on average, 51% more expensive than their petrol counterparts’
Frankly, I don’t thing 51% is enough.
‘despite analysis suggesting EVs do not go down in value faster than traditionally-fuelled cars’
[citation needed]
Then “transport campaign group Transport & Environment (T&E)” should set up an EV leasing business to profit from its superior management and economic skills.
Think that your EV will last forever… or maybe 15 years?
Who is going to repair it at that age?
Or maintain the electronics?
Or replace the battery?
Will Tesla or NewChineseNo-Name still be in business?
Any issue in these things makes your car a worthless liability.
” Who is going to repair it at that age? ”
For electric motors in other sectors e.g. process industries, the motors are generally reliable, it’s the drives that typically fail. The OEM can usually repair until the OEM declares “no more technical support” . Third party repairers are generally available after the OEM has walked away, but the effectiveness of the repair can be a lottery.
Bring back Ward Leonard !