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Fleet switch to electric brings leasing into focus for SMEs

EV plug

The high purchase price of electric vehicles (EVs) is persuading small and medium enterprise (SME) fleets to consider leasing, according to FleetCheck.  

Peter Golding, managing director at the fleet software company, said that the cost of purchasing outright electric cars and vans was a primary factor in causing many smaller fleets to reconsider their acquisition method.

“We have a large number of SMEs in our user base and, especially at the smaller end of the scale, vehicle acquisition is often relatively ad hoc,” he explained.  

“This doesn’t mean it isn’t taken seriously but there is not the same kind of structured approach seen in larger fleets.”

Golding says that, when businesses have cash available, they will often outright purchase, but will also take out loans or leases at different times.

“It often just depends on the particular car or van, the driver and the moment,” he added. “However, the relatively high purchase price of EVs looks as though it is starting to change this approach.

“While businesses generally recognise that whole life costs for EVs are comparable to petrol and diesel equivalents, the upfront costs are something of a concern.”

Leasing was already popular among SMEs, but that momentum appears to be growing, particularly when it came to EVs, according to Golding.

“Leasing circumvents the problems of upfront costs and provides regular payments over a period of time, plus it also removes any residual value worry,” he said.

“This is an issue because some SMEs perceive that current EVs will be superseded by better models in the medium term.”

Golding also acknowledged that, against a bleak economic backdrop, leasing enabled businesses to keep more money in the bank for a longer period of time, providing a higher degree of liquidity if problems do arise.

“Of course, if we see a price realignment for EVs in the medium term that makes purchase prices lower, this trend might reverse but, especially among the more expensive, longer range EVs favoured by fleets, this seems relatively unlikely,” he concluded.

The move to leasing EVs comes in the wake of new research from BP which suggested fleet decision-makers and drivers think that the cost of EVs will stand in the way of wider adoption.

In a survey of 500 business drivers and 250 fleet managers, it found that more than two-thirds (69%) of drivers and 62% of fleets believed electrification could be held back by the significant upfront costs.

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