Is leasing an electric company car cheaper than buying one?

Many business owners are faced with the question of whether it is better to lease or buy an electric commercial vehicle. The purchase price of electric vehicles is higher than that of comparable vehicles with internal combustion engines, but the total costs over the entire term tell a different story. Whether you’re looking for a small van for daily deliveries or a company minibus with double cabin For your team, the type of financing has a significant impact on your monthly outgoings and your tax position.

In this article, we answer the most frequently asked questions about leasing electric company cars, so that you can make an informed choice. We compare the actual costs of leasing and buying, explain when each option offers the best value, and give you practical steps to get started.

What exactly is an electric company car lease?

Electric commercial vehicle leasing is a financing arrangement whereby you use an electric commercial vehicle for a fixed monthly fee without actually owning the vehicle. You pay for the use of the vehicle, not for ownership. The leasing company or supplier remains the legal owner of the vehicle for the duration of the contract.

There are two main types of lease that you, as a business owner, can choose from:

• Operating lease: You pay a fixed monthly amount that covers maintenance, insurance and, in some cases, breakdown cover. At the end of the contract, you return the vehicle. This is the most popular option for business use, as you do not bear any residual value risk.
• Finance lease: You finance the purchase through a lease arrangement and become the owner of the vehicle at the end of the contract. You bear the risk of depreciation yourself.

Operational leasing is particularly popular for electric company cars, as the residual value of electric vehicles is more difficult to predict than that of traditional petrol or diesel cars. By opting for an operational lease, you pass that risk on to the leasing company. This makes it an attractive way for many SMEs and self-employed people to drive a modern electric company car without having to make a large capital investment.

What are the actual costs of leasing an electric company car?

The actual costs of leasing an electric commercial vehicle involve more than just the monthly payment. You pay a fixed monthly instalment which depends on the vehicle type, the lease term, the annual mileage and the services included. For a compact electric van, the monthly lease costs are usually between 400 and 800 euros per month, depending on the specifications.

What is and isn’t included in the lease payment?

With an operating lease, maintenance, repairs and, in some cases, insurance are included in the monthly payment. This makes budgeting straightforward: you know exactly where you stand. What is not usually included, however, are the electricity charging costs. You pay for these yourself, but they are consistently lower than the fuel costs of comparable diesel vehicles.

Other cost items to bear in mind:

• One-off administration fee upon signing the contract
• Extra kilometres if you exceed the agreed number of kilometres
• Excess in the event of a claim if insurance is included
• Any costs associated with installing a charging point at your business premises

Tax benefits of leasing electric company cars

A key advantage of leasing is the tax treatment. Lease payments are fully deductible as business expenses, which reduces your taxable income. Furthermore, electric company cars are subject to a lower additional tax liability than fossil-fuel vehicles, which offers a significant benefit where the vehicle is used privately. The exact percentages may change annually, so always consult a tax adviser for the current situation.

How much does it cost to buy an electric company car?

Buying an electric commercial vehicle requires a significant initial investment. The purchase price of electric vans is, on average, 20 to 40 per cent higher than that of comparable diesel models. A new small electric van can easily cost between 35,000 and 60,000 euros, whilst an electric double-cab commercial van or a specialised vehicle, such as a refrigerated van, is even more expensive.

Total cost of ownership on purchase

When buying an electric commercial vehicle, you shouldn’t just look at the purchase price. The total cost of ownership (TCO) includes all expenses over the vehicle’s lifetime:

• Purchase price: The initial purchase price, which may be financed by a loan
• Impairment: Electric vehicles lose value relatively quickly in their first few years
• Maintenance: Electric powertrains require less maintenance than internal combustion engines, but battery replacement can be a significant cost in the long term
• Insurance: Usually slightly higher than for diesel vehicles due to the higher new-car value
• Charging infrastructure: Investing in charging points at your business premises

Benefits of buying for your business

Buying also has clear advantages. You build up equity in the vehicle and can benefit from investment allowances, such as the KIA (Small-scale Investment Allowance) or MIA/Vamil for environmentally friendly investments. What’s more, you have complete freedom of use: no mileage restrictions, no contractual obligations, and you can adapt the vehicle to your specific business needs.

With second-hand electric company cars, the purchase price is naturally lower, but you also need to factor in the risks relating to battery capacity and the remaining warranty when making your decision.

Is it cheaper to lease or buy an electric company car?

Whether leasing or buying is cheaper depends on your circumstances. On a monthly basis, leasing is almost always more expensive than buying a car outright and paying it off. Over the full term of 3 to 5 years, however, the costs are very similar, particularly when you factor in the tax benefits, the elimination of residual value risk and the reduced uncertainty regarding maintenance costs.

When is leasing more cost-effective?

Leasing is more cost-effective if you:

• You don’t want to, or can’t, invest a large amount of start-up capital
• You want certainty about your monthly costs, with no surprises
• You want to avoid the residual value risk associated with electric vehicles
• To take advantage of the full tax deductibility of lease payments
• You often want to upgrade to newer models with better battery technology

When is buying the more cost-effective option?

Buying is more cost-effective if you:

• You want to use the vehicle for a long time, preferably for more than 5 years
• Have sufficient equity to finance the purchase without having to pay high interest rates
• Would you like to benefit from investment allowances, such as MIA or Vamil?
• You drive a lot of kilometres and don’t want to be restricted by a kilometre limit
• You wish to modify or convert the vehicle for specific applications

The fair conclusion is that there is no one-size-fits-all answer. An entrepreneur who wants to drive the latest electric small van every three years is generally better off leasing. A company that uses vehicles intensively for many years and covers a lot of kilometres may benefit more from buying.

When is leasing an electric company car the best option?

Leasing an electric commercial vehicle is the smartest choice if you value predictable monthly payments, flexibility and access to modern vehicles without a major capital outlay. Leasing offers the most benefits particularly for start-ups, fast-growing businesses and organisations that wish to renew their fleet regularly.

Leasing is the right choice for you if

Leasing is a good option in the following circumstances:

• Your business is growing rapidly: You don’t want to be stuck with vehicles that won’t meet your needs in two years’ time
• Cash flow is important: You want to keep your working capital free for other investments in your business
• You drive an average annual mileage of: Usually up to 30,000 kilometres per year; beyond that, excess mileage charges may push up the bill
• You always want the latest technology: Battery technology for electric vehicles is improving rapidly; with a lease, you can drive a newer model straight away once your contract ends
• You want to be taken care of: Maintenance and repairs are included, so you don’t have to spend time arranging servicing

Leasing is less suitable if

There are also situations where leasing is less of an obvious choice. If you need a double-cab commercial van or a specialised vehicle that you want to convert for a specific purpose, ownership offers greater freedom. The same applies if you intend to use the vehicle intensively with a high annual mileage, as the costs for excess kilometres can quickly mount up with a lease.

How do you go about leasing an electric company car?

You can start leasing an electric company car in just a few simple steps. First, assess your driving profile, then compare providers and sign a contract that suits your business needs. The whole process usually takes two to four weeks, from the initial enquiry to delivery.

Step 1: Determine your driving profile

Before you apply for a lease, it’s a good idea to have a clear picture of your driving profile. Consider your average annual mileage, the type of journeys you make (urban distribution, long distances or mixed use), the load capacity you require, and whether you have charging facilities at your business premises or at home.

Step 2: Choose the right type of vehicle

The choice between a compact electric van and a larger electric double-cab commercial van depends on the nature of your work. Delivery companies and self-employed professionals often opt for a smaller van, whilst construction firms and service providers benefit more from a roomier cabin with extra seating and load space.

Step 3: Compare lease providers

Don’t just compare the monthly payment, but also what’s included. Pay attention to the contract term, the mileage allowance, the services included and the terms and conditions in the event of damage or early termination of the contract. A lower monthly payment may sometimes seem attractive, but if maintenance and insurance aren’t included, the total costs could end up being higher.

How we can help you with electric commercial vehicle leasing

At Van den Hurk Commercial Vehicles, we help you make the right choice between leasing and buying, tailored to your business situation. With over 60 years’ experience in the Helmond region, we know the needs of SMEs, self-employed professionals and fleet managers inside out.

What we can do for you:

• Personal advice on the most suitable form of financing for your situation
• A wide range electric commercial vehicles, from small vans to double-cab commercial vans
• Flexible leasing and purchase options, including bespoke solutions for your vehicle fleet
• Transparent prices with no hidden costs
• Support from advice right through to delivery, so you can get on the road quickly and safely

Would you like to find out which electric commercial vehicle is best suited to your business and what leasing or buying would mean for you? Please get in touch with us or take a look at our current offer on the website. We’d be happy to help you find a solution.