Electrification prompting switch to leasing for SMEs

The process of switching to electric cars and vans is starting to prompt a move to leasing among small-medium enterprises (SMEs), FleetCheck is reporting.

Peter Golding, managing director at the fleet software company, explained that the high purchase price of electric vehicles (EVs) was a primary factor in causing many business of this size to reconsider their acquisition method.

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

“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.

“However, the relatively high purchase price of EVs looks as though it is starting to change this approach, according to feedback we are hearing. 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.”

Peter said that leasing was already popular among SMEs but that momentum did seem to be growing around further use, especially when it came to EVs.

“Leasing circumvents the problems of upfront costs and provides regular payments over a period of time, plus it also removes any residual value worry. This is an issue because some SMEs perceive that current EVs will be superseded by better models in the medium term.

“Also, there is a general degree of worry about the shape of the economy and leasing means that businesses can 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.”