Electric vehicles spur financing innovations

New cars don’t come cheap, but consumers today have a range of finance options available to help. Cash is still king in a few markets, but elsewhere the trend has favoured leasing or personal contract purchase (PCP). Some players have started dabbling in subscriptions, which can last anywhere from a few weeks to a year or more. But these financing methods have arisen from an industry based on diesel and gasoline vehicles: tried and true technologies with which drivers are very familiar. The advent of an electric vehicle (EV) fleet is shifting the economic equation and could prompt further financing innovations.

“EVs have a different economic profile than a traditional diesel or gasoline car,” says Ben Nelmes, Chief Executive and Co-Founder of New AutoMotive, an NGO promoting the transition to zero-emission vehicles. While they still carry a price premium, they promise significant savings in running costs. “That presents an interesting challenge for finance, prompting a number of different responses.”