Secondhand EV leasing hits the fast lane as more UK drivers explore ways to cut motoring costs

In the UK, the number of individuals leasing used electric cars has surged by 170% in the past year, as drivers seek more affordable alternatives to combat skyrocketing petrol prices amid geopolitical tensions. The British Vehicle Rental and Leasing Association (BVRLA) reported a doubling of used electric car leasing among its members, who purchase roughly half of the UK's new vehicles annually to lease them out.

The supply of pre-owned electric vehicles is rapidly expanding, driven by early adopters' new cars entering the used market. Currently, over two million electric cars are registered in the UK, accounting for approximately 85% of all new vehicle sales, which are often financed through monthly payments rather than upfront costs.

However, the leasing sector for secondhand electric cars remained relatively underdeveloped until recently, with few providers willing to offer such services until sufficient inventory and reliable data on vehicle longevity became available. The surge in demand for used electric cars has been fueled by the steep rise in petrol prices following the US and Israel's military attacks on Iran in February.

Higher fuel costs have made electric cars a more economical choice for many motorists. Toby Poston, BVRLA's chief executive, emphasized that used electric car leasing now provides consumers with well-maintained vehicles equipped with the latest technology, offering a range of price points without the financial risk associated with new car purchases.

Salary sacrifice arrangements, which allow individuals to deduct car costs before taxes, have led to a fivefold increase in used EV leasing over the past year, according to the BVRLA. Personal contract hire for used cars has nearly sextupled, with businesses experiencing a 50% increase in contract hire for used EVs. The Electric Car Scheme, a salary sacrifice provider, noted a threefold rise in used EV leasing since its inception in 2024.

However, a tax break based on a vehicle's new value, regardless of its used status, remains a barrier to further growth in secondhand leasing. Octopus Electric Vehicles, a prominent player in the UK's electric vehicle market, observed a 122% year-on-year increase in secondhand leasing as of June. Gurjeet Grewal, the company's chief executive, highlighted that used EVs offer an excellent value proposition for transitioning to electric vehicles, with drivers attracted by substantial savings compared to leasing new models.