Private and business driver demand for electric cars continue to diverge, creating concerns about the long-term success of the drive to decarbonise.

The report underscores the growing divide between company-provided cars and private motorists when it comes to EV demand

That’s one of the findings of the latest Leasing Outlook report from the BVRLA, which shows a growing divide between company-provided cars and private motorists when it comes to EV demand.

The report, encompassing data for Q1, reveals that battery electric vehicles (BEVs) accounted for 41% of all new business contract hire (BCH) cars, pushing average new BCH car CO2 emissions to just 56.3g/km.

Such insatiable appetite of company car drivers for vehicles with a low Benefit-in-Kind tax bill has seen battery electric cars power to the top of the charts, accounting for 37% of new deliveries in Q1, and 33% of the entire BVRLA car fleet.

But this positivity is offset by the growing gap between corporate and personal demand. As the leasing fleet becomes more heavily weighted towards electric vehicles, demand for EVs in the used market needs to keep pace to avoid residual values spiralling.

The latest Leasing Outlook report also reveals that across all fuel types, business contract hire (BCH) rose 7.5% year on year, while personal contract hire (PCH) dropped by 11.3%. Salary sacrifice is up 63% year on year, with the overwhelming majority of those registrations involving electric cars.

The successes of BCH and salary sacrifice have seen the BVRLA’s car leasing fleet grow for the fifth consecutive quarter, up 3.6% year on year.

Within the van sector, BVRLA members’ total fleet in Q1 stood at 513,938 units; up 0.7% year on year but down 0.9% on the 518,522 reported in Q4 2023. The report also reveals that commercial vehicle operators are showing little appetite for electric vans, while manufacturers are pushing their eLCVs in an attempt to meet the terms of the ZEV mandate. This is leading some fleets to change manufacturers and forcing leasing companies to build aftersales support in regions where the new OEMs do not have dealer support.

Toby Poston, BVRLA director of corporate affairs, said: “The current trajectory of the transition to EVs is increasingly one of the haves and the have-nots. Phase-out targets and sales mandates are beginning to force the industry’s hand but will not succeed in isolation. Where incentives have been present, registrations have followed. The sectors currently benefiting from such support cannot bear the weight of the full transition alone. As the divergence between corporate and new and used private demand grows, the financial risk associated with bearing that risk becomes unsustainable.”

The report also reveals that leasing companies would potentially support a slightly higher BiK rate for company car EVs to cross-subsidise private demand for new and used EVs via grants and scrappage schemes.

The Leasing Outlook finds that some leasing firms are also calling for support for plug-in hybrid and hybrid models, on the grounds that these can deliver an immediate reduction in CO2 emissions, albeit lower than a switch to battery electric, and are accessible to all drivers, regardless of whether they can charge at home or work.

One way in which the leasing sector is adapting to a volatile market for second-hand electric vehicles is through used car leasing. Demand in this sector is up 7.7% in the last quarter alone as more drivers are drawn to accessing a used EV via lease, where they are not personally taking the risk on the residual value.

The BVRLA’s Leasing Outlook report also includes commentary from Fleet Assist (SMR trends and impact of AI), Cap HPI (Impact of ZEV mandate) and Auto Trader (Trends in new and used demand). The full report can be read on the BVRLA website.