Should you lease or buy an EV?

This is often the strongest argument for electric car lease-versus-buy decisions, particularly for drivers who are concerned about battery tech improving rapidly. Battery capacity, charging speeds and onboard tech are improving year-on-year, but with leasing typically involving contracts of two to four years, drivers can upgrade regularly to the latest models.

Fixed monthly payments mean you know exactly what your outlay will be throughout the contract. This can make budgeting easier compared with ownership, where depreciation and resale value, as well as long-term maintenance costs can be less predictable. Vehicle Excise Duty (road tax) is included in the price, and some agreements can also include servicing.

For business drivers or those with salary sacrifice schemes, leasing an electric car can offer significant tax benefits, thanks to the UK’s low Benefit-in-Kind (BiK) rates for EVs.

What considerations should you have when leasing an EV?

Before you decide whether leasing an electric car is a good idea, it’s worth mulling a few important factors.

How far will you drive? Most EV lease agreements include a fixed mileage allowance, which is generally between 5000 and 15,000 miles a year. If you drive significantly more than this, you could face additional charges at the end of the lease. The cost per mile will be set out in the agreement, but they can soon add up.

Having access to home charging can make EV ownership or leasing much more convenient and cost-effective. You can switch to an EV-specific tariff from your energy provider that gives favourable rates for electric car charging, and can save you a huge amount. Without a home charger, relying solely on public charging can dramatically increase your running costs. Some organisations also offer employees charging at work.

EV lease agreements usually last between two and four years. Choose a term that suits how often you like to change cars.

Some lease agreements include maintenance packages as an option, but generally drivers are responsible for their own insurance and servicing costs, so make sure to factor those in. Luckily, many electric vehicles have longer service intervals than petrol or diesel cars.

What does a typical EV lease agreement include?

If you’re wondering how much it costs to lease an electric car, the answer depends on factors such as the vehicle price, the contract length and the mileage allowance.

However, most EV lease agreements include a brand new electric car, a fixed contract length (usually 24 to 48 months), and an agreed annual mileage allowance (with an agreed charge for excess mileage). Vehicle Excise Duty will be included.

There’ll usually be manufacturer warranty cover for at least part, and often all, of the lease term. If the lease runs longer than the standard vehicle warranty, check with the leasing company to see what cover applies

Once the agreement is made, you simply make the monthly payments and return the vehicle at the end of the agreement, provided it meets fair wear and tear guidelines. These are specified by the BVRLA (British Vehicle Rental and Leasing Association), which stipulates what is an acceptable condition for a car at the end of a lease. If your car doesn’t meet these, it might be wise to get them rectified yourself before the car is returned to avoid extra charges.