How many kilometres are you allowed to drive with an electric company car lease?
Electric commercial vehicle leasing is becoming increasingly popular amongst business owners and fleet managers. However, the switch to electric vehicles raises specific questions that were less relevant under a traditional lease contract. One of the most frequently asked questions is: how many kilometres are you actually allowed to drive, and what are the consequences if you exceed that limit?
In this article, we answer the most practical questions about mileage limits for electric company car leases. Whether you’re a small van is considering, a double-cab van, or a fully electric vehicle for your business, the information below will help you make an informed choice.
What is a mileage limit for electric company car leases?
A mileage limit for electric company car leases is the maximum number of kilometres you are allowed to drive per year or over the entire term of the contract. You agree this figure with the leasing company in advance, and it forms the basis for calculating your monthly lease payment.
The more kilometres you agree to drive, the higher the monthly cost. This is because a higher mileage reduces the vehicle’s residual value at the end of the lease term. The leasing company factors this risk into the price in advance. At electric commercial vehicles This is an additional factor, as the battery capacity – and therefore the value of the vehicle – depends in part on how it is used.
The mileage limit applies to the vehicle’s total usage, regardless of whether you are making business or private journeys. In a business lease agreement, only business use is usually taken into account, but this varies from contract to contract. You should therefore always read your contract carefully before signing it.
How many kilometres a year is considered normal for a business lease?
For business leases of electric company cars, the most common mileage limits range from 10,000 to 30,000 kilometres per year. The most popular option is 20,000 kilometres per year, which is a realistic average for daily use for many SME business owners and self-employed people.
What is considered ‘normal’ depends very much on the type of business and how the vehicle is used. A courier or construction worker who drives long distances every day will need a higher annual mileage than a business owner who mainly uses the vehicle locally. When estimating your annual mileage, bear the following in mind:
- The average number of working days per year on which you use the vehicle
- The average distance per journey
- Any seasonal peaks, such as busy periods in logistics or construction
- Whether you also use the vehicle outside working hours
Furthermore, with electric commercial vehicles, driving behaviour affects the actual range. In cold weather or when the air conditioning is used intensively, the range may decrease, which means you’ll need to charge more often, but this doesn’t necessarily mean you’ll cover more kilometres. The number of kilometres driven is independent of energy consumption.
What happens if you drive more kilometres than agreed?
If, at the end of your lease contract, you have driven more kilometres than agreed in the contract, you will be charged an excess mileage fee. This amount per kilometre is set out in the contract in advance and varies depending on the type of vehicle and the leasing company.
The excess mileage charge is intended to compensate for the depreciation of the vehicle, which the leasing company had not factored into the original price. For electric company cars, this amount may be slightly higher than for traditional vehicles, due to the impact of driving behaviour on battery health.
What if you drive fewer kilometres?
If you drive fewer kilometres than agreed, you may in some cases receive a refund of the under-kilometre allowance. However, this is not always the case. Many leasing companies apply an asymmetrical policy: excess kilometres are always charged, but shortfall kilometres are not always refunded, or are only partially refunded. Be sure to check this point carefully in your contract.
How can you avoid unpleasant surprises?
The best way to avoid excess mileage charges is to make a realistic estimate when signing the contract. Make sure to allow a small margin above your expected usage. It is cheaper to agree on a slightly higher mileage limit in advance than to pay excess mileage charges afterwards.
How do you choose the right mileage for your lease contract?
You can work out the correct number of kilometres by using your past driving habits as a starting point and adding a buffer of 10 to 15 per cent on top. If you don’t have a reference yet, it helps to multiply your expected daily mileage by the number of working days in a year.
A practical approach is to follow these steps:
- Calculate your average daily driving distance on working days
- Multiply this by the number of working days per year (on average 220 to 240 days)
- Add a buffer to cover unexpected journeys, peak periods or private use
- Compare this figure with the mileage options available in the contract
- Select the next option above your calculated average
With electric company cars, it’s also wise to take into account how charging habits affect your planning. If you regularly make long journeys and need to charge en route, this can impact productivity. A vehicle with a longer range may therefore be a better choice, even if this affects the lease term.
If you run a business with several vehicles, it’s worth analysing your entire fleet rather than each vehicle individually. This can sometimes enable you to reallocate mileage or better coordinate contracts.
What is the difference between an operational lease and a finance lease in terms of mileage?
With an operational lease, the leasing company sets the mileage limit and bears the residual value risk. With a financial lease, you become the owner of the vehicle at the end of the contract, which means the mileage limit is less strict, but you are responsible for the depreciation.
Operating leases and mileage limits
With an operational lease, the mileage limit is a fixed agreement. The monthly lease payment is based on the vehicle’s expected residual value, and that residual value is directly linked to the number of kilometres driven. If you drive more than agreed, you’ll have to pay a mileage surcharge. If you drive fewer kilometres, you may be entitled to a refund, but this depends on the terms of the contract.
An operational lease is attractive to many business owners because all the costs are known in advance and the vehicle is returned at the end of the lease term. You do not run the risk of the residual value being lower than expected.
Finance leases and mileage limits
With a finance lease, you finance the vehicle and become the owner at the end of the term. There is no fixed mileage limit imposed by the leasing company, but you are responsible for any loss in value resulting from high mileage. This means that if you sell or trade in the vehicle, you can expect to receive a lower price if you have driven a lot of kilometres.
For business owners who drive a lot and ultimately wish to keep the vehicle or sell it, a finance lease can be an attractive option. There is greater flexibility in terms of mileage, but the financial responsibility is also greater.
Can you adjust the mileage limit during the lease term?
Yes, in many cases it is possible to adjust the mileage limit during an ongoing lease contract. Most leasing companies offer this option, but there are conditions and costs involved. An adjustment almost always involves a recalculation of the monthly lease payment.
If, halfway through the contract, you realise that you are consistently driving more or less than expected, it is wise to discuss this with your leasing company in good time. Taking action early is cheaper than waiting until the end of the contract term and then being faced with a hefty bill for excess mileage.
When adjusting the mileage limit, please bear the following in mind:
- Adjustments can usually only be made upwards, not always downwards
- The monthly instalment increases as the mileage limit rises
- Some leasing companies charge an administration fee for amending a contract
- An adjustment only makes sense if you still have a sufficient remaining term
If you want flexibility in your mileage without the risk of incurring charges for exceeding your limit, it is sometimes wiser to opt for a higher mileage limit when you sign the contract. This gives you more leeway throughout the entire term of the contract.
How we can help you with electric commercial vehicle leasing
At Van den Hurk Commercial Vehicles, we understand that choosing the right mileage limit and the right lease contract raises a lot of questions. We’re happy to help you find the right solution, whether you’re looking for a small van for local journeys, an electric commercial vehicle lease for your entire fleet, or a double-cab van for mixed use.
What we can do for you:
- Tailored advice on the right mileage limit based on your driving behaviour and business needs
- A wide range of electric commercial vehicles, from small vans to larger vehicles
- Flexible leasing options – both operational and financial – tailored to your situation
- Personalised support from initial consultation through to delivery, with no hidden costs
- More than 60 years of experience in the Helmond and North Brabant region
Are you wondering which lease contract is best suited to your business? Please get in touch with us or take a look at our current offer on the website. We’d be happy to help you with honest advice and a suitable solution.
