Leasing an electric vehicle lets your business cut upfront costs, reduce emissions and access predictable monthly payments: here’s how EV business leasing works.
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Keeping tabs on the environmental impact of your business is a key part of meeting your Environmental, Social & Governance (ESG) reporting commitments as a responsible business owner. And one significant way to lower your carbon footprint is to replace your internal combustion engine (ICE) vehicles with electric vehicles.
Electric vehicles (EVs) – also referred to as battery electric vehicles (BEVs) if they are powered solely by electricity – are becoming a more affordable option. But in order to replace your aging ICE fleet with EVs, you’ll need the necessary capital to buy or lease these new vehicles. This is where EV business leasing comes in.
Let’s explore what an EV business lease is and how you can use this financing arrangement to bring your vehicles and fleet up to date.
An EV business lease, typically known as Business Contract Hire (BCH), is a long-term rental agreement. A finance company purchases an electric vehicle and then rents the EV out to your business for an agreed monthly fee.
The lease will usually be set up for a fixed period, typically of between two to four years. There will be mileage limits placed on the use of the EV, and you’ll need to factor in regular maintenance costs to keep the vehicle properly serviced.
Both BCH and purchase finance (also known as a business contract purchase) allow you to make use of a vehicle. However, one is based around a rental agreement, and the other is more of a progression towards eventual ownership of the vehicle.
Let’s look at the key differences:
Taking the leasing route is popular with business users because it avoids the outlay of buying an EV, while giving you full use of the vehicle through the rental scheme.
It also gives you a predictable way to manage the lease payments, with possible tax relief on some of the costs associated with taking on the BCH.
Leasing is generally cheaper in the short to medium term (2 to 4 years) because it requires a lower upfront payment. It also results in lower fixed monthly payments, as you only pay for the car's depreciation. Additionally, you can reclaim 50% of the VAT on the rentals, and pass the financial risk of a depreciating asset to the leasing company.
However, buying can be cheaper over the long term (5+ years), as it allows the business to claim a massive 100% first-year allowance on the purchase price against corporation tax. The total net cost may be lower once the finance is paid off and you own a saleable asset.
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If you’re considering switching from an ICE vehicle to a BEV, it’s sensible to do some research and to look at various examples of EV business deals that are currently available to UK business users.
Lease providers such as Carwow, Leasing Options, Fleet Alliance and Synergy all offer ways for business users to lease BEVs, with affordable payments and a range of different vehicle options to choose from.
Let’s take a look at some BEV options to see what types of vehicle are available and what the cost implications of taking out an EV business might be.
The Dacia Spring is available from Carwow. It’s a great choice as an entry-level BEV for a small business, offering low initial and monthly outlay. If you’re looking for a short-range, city-only transport, the Spring is a great choice.
The VW ID.3 from Leasing Options is a stylish electric hatchback that provides a modern, spacious cabin and the reliability you’d expect from Volkswagen. What you get is a solid blend of performance, technology and usable range for regional business travel.
One of the original popular EVs, the Nissan Leaf from Carwow provides a proven, comfortable, and reliable option for mixed business use. The car offers a balance between cost and practicality, making it ideal if you need extended range and space, but without moving into premium pricing.
The Tesla Model 3 from Synergy is a rear-wheel drive (RWD) vehicle that remains one of the most desirable business lease vehicles. It delivers excellent efficiency, access to the Supercharger network and the Tesla EV pedigree. It's an ideal option if you’re looking for a premium, longer-range saloon.
The Kia EV6 Air from Synergy, often available in the mid-range Air specification, stands out with its striking design and, critically, its ultra-fast charging capability thanks to its 800V architecture. It's best suited for businesses requiring maximum flexibility, long-distance driving, and a premium aesthetic without the full premium price tag.
Here’s a summary of the five vehicles, with approximate initial rental costs and monthly payments to factor into your decision-making process:
The full cost of your EV business lease will vary greatly, depending on a number of considerations. When thinking about which BEV and which leasing provider to choose, it’s worth thinking about how the deal measures up.
The overall cost and monthly expenditure will vary, based on:
Make sure you’re checking prices against similar terms and with the same VAT amount included when working out comparable prices.
Before you make any decisions on an EV business lease, look at multiple offers for the same vehicle and see how the different providers compare. The cheapest deal may be the most attractive, but does it include the same services and benefits?
Buying a BEV and having full ownership of the vehicle might sound like the obvious option to choose when you’re thinking about updating your fleet.
But business contract hire, or leasing, does have some advantages over purchase finance.
For example, core benefits of leasing include:
If a deposit or upfront lease payment strains your cash flow position, short-term business finance, like an iwoca Business Loan, can help you quickly bridge the gap.
Flexible business loans are a great way to bring extra working capital into the business, giving you the cash you need for the initial lease payment.
You can claim 50% of the VAT costs from your rental expenses and 100% of the VAT on the maintenance and upkeep costs. Electric cars also have the advantage of a low Benefit-in-Kind (BiK) rate – with the current BiK rate sat at 3%.
To operate a BEV, you obviously need access to a charging point. Electric vehicles will need to be charged regularly, in the same way that you’d fill your ICE vehicle with petrol or diesel.
Charging networks and available electric charging stations are increasing across the UK, with over 86,000 charging points in action across the country.
You can use public charging stations at many service stations, car parks and out-of-town shopping centres. It’s also possible to install charging stations in your workplace car park or at your home address.
The majority of charging is done at home, so installing a charging point at home is something you may factor into your costs for switching to electric.
The short answer is, yes, you can install an EV charging station – but only if you meet certain conditions. You’ll need a suitable location for the charger, off-street parking to park the BEV and permission from your landlord or freeholder if you’re renting or have a leasehold property.
Chargers must be installed by approved chargepoint installers and you’ll need to have an electricity supply that’s suitable for installing a chargepoint.
It’s also worth noting that EV charging points are expensive to install. The higher the power of the chargepoint (and the speed it can charge), the more expensive it will be. The average cost of an EV chargepoint is £1,110, but additional costs for extending cabling and necessary groundworks could potentially add another £1,000 to this amount.
The Government provides financial assistance to help EV users install a charging point at home. The EV chargepoint grant helps reduce the cost of installing an EV chargepoint socket at your property, both for homeowners and those who are renting a property.
You can get either £350 or 75% off the cost to buy and install a socket, whichever amount is lower.
Installing a dedicated EV home charge point is highly recommended for the convenience and lower cost of charging. But having a chargepoint is generally not a mandatory requirement of the leasing contract itself.
An EV business lease, or BCH, is one way to add an electric vehicle to your business fleet. But there are other options for either buying or leasing a BEV and doing your bit to make business travel more green.
To have the use of a BEV, you could:
Changing from ICE vehicles to battery electric vehicles is a significant investment. But if you need additional capital to cover the costs, iwoca Business Loans are the fast and straightforward way to access the extra funds.
iwoca loans offer:
Apply for an iwoca business loan.
