Battery electric cars accounted for almost half (47%) of the BVRLA business contract hire (BCH) fleet in Q3 2025, showing that the sector remains at the vanguard of decarbonisation.

The BVRLA’s latest Leasing Outlook Report, which covers the third quarter of 2025, reveals that three-quarters of lease cars are now capable of zero-emission driving, thanks to electric, plug-in hybrid or hybrid powertrains. Battery electric is the dominant powertrain but uptake remains uneven; from 83% of the salary sacrifice fleet to 47% of the business contract hire fleet but only 18% of the personal contract hire fleet. As a result, average emissions for new BCH cars are down to a record low of 40.2g/km, compared to 107.3g/km for new personal contract hire (PCH) cars.

Salary sacrifice cars remain the cleanest of all, at 82% battery electric and 14% plug-in hybrid.

The BVRLA said the figures show the success of the supportive Benefit-in-Kind treatment of electric cars for driving uptake – among PCH drivers, who can’t access this advantage, nearly two-thirds (64%) are still behind the wheel of a petrol/diesel car.

But within the LCV sector, diesel continues to dominate, accounting for 87% of the fleet. BETA analysis indicates that 10% of the BVRLA van fleet is now electric, but executives say eLCV uptake is largely restricted to a handful of very large customers. As a result, average emissions of LCVs remain stubbornly high at 173.2g/km; a figure exceeded in only one quarter since 2017.

The latest Leasing Outlook also reveals the BVRLA lease fleet grew to 1.98 million vehicles in Q3 2025, breaking the 1.5 million vehicle barrier for the first time in seven years and edging closer to the two million vehicle mark.

But the rise comes with a warning from the sector that volume growth is at the expense of margins, which are expected to worsen in 2026.

A deeper dive into the figures also shows some sectors are booming while others are shrinking.

Consistent with recent trends, leasing fleet growth is being driven by business contract hire (BCH) and salary sacrifice; the latter remains the fastest-growing part of the sector.

Business contract hire is up 7.9% yoy to 936,352 cars. Meanwhile, salary sacrifice car schemes remain the star performer; up 123.4% yoy to 209,119 units based on reevaluated data.

But personal contract hire continues to struggle – down 3.7% – as households commit tighter budgets elsewhere.

And the divergence between the car and van markets continues, with car registrations on the BVRLA fleet up 12.5% year on year, while vans have declined by 4.2% over the same period.

Values for used electric cars also remain a monumental concern. Used EVs are proving popular among salary sacrifice customers, but the Leasing Outlook says the depreciation of EVs has been so savage that “no stone has been left unturned” in efforts to support the used market. These include pilot projects to offer independent dealers used EVs on a sale or return basis.

The report also says that the ZEV mandate is a major concern. New car sales are expected to fall from 2027 due to the mandate and manufacturers are predicted to discontinue many petrol and diesel models in the UK to meet battery electric vehicle targets.

Executives also say the new eVED pay-per-mile charge for EVs has the potential to damage new and used car demand. And there are concerns over a heavy administrative footprint.

On the positive side, any early fears of EV battery degradation have evaporated and firms are confident of keeping cars to eight and nine years, suggesting a third life may be possible.

Toby Poston, BVRLA chief executive, said: “The vehicle leasing sector continues to play a vital role in driving new vehicle registrations and delivering road transport decarbonisation. But any satisfaction from these achievements is tempered by the relentless pressure of compliance costs, cash-strapped customers and rampant EV depreciation.

“Our industry is agile, resilient and innovative, but it needs to work in partnership with the Government. The faltering used EV market and the badly designed and poorly timed eVED regime proposals are two prime examples where we need an urgent policy rethink.”

The full report can be read on the BVRLA website.