Social leasing: Making EVs affordable for people on lower incomes

Electric vehicles (EVs) might be the better option for the climate and path to net zero, but they are not the best option for the wallets of those on lower incomes affected by a cost-of-living crisis.

Despite moving closer in price to their internal combustion engine (ICE) counterparts, EVs still remain an out-of-reach luxury for many drivers.

In the largest European car markets, Germany and France, the market for BEVs is evolving rapidly with new registrations reaching 18% and 13%, respectively, in 2022. But low-cost BEV models are still rare compared to ICE vehicles.

Encouraged by government subsidies and the threat from Chinese EV brands entering the European BEV market, European car manufacturers are starting to introduce smaller and cheaper EV models.

Government subsidies across Europe are being launched to make these EVs more affordable to lower income people.

France, for example, plans a subsidy for EVs produced in France as they would have a lower carbon footprint than imported models, as well as an EV leasing plan, flagged in August 2022 by Budget Minister Gabriel Attal during a TV interview, offering EVs for around €100 per month to poorer households.

The social BEV leasing program, due to be officially launched in autumn 2023 for cars to be delivered in 2024, also follows an election promise by President Emmanuel Macron to offer a government-subsidised leasing scheme for low-income households to counter criticism that EVs are out of reach for many.

The leasing scheme stands to benefit European carmakers rolling out new smaller less-expensive electric models, with the French government pushing for more locally-made smaller EVs in addition to higher-end models.

The UK national government by contrast has no plans to support the sale of EVs to lower and middle-income households. Moreover, the continuing roll out of ULEZs by local governments effectively punishes drivers who can’t afford either an EV or a very new diesel or petrol vehicle. This is a developing social divide and surely an unintended consequence of what the government is trying to achieve.