In the UK, more than 80% of new company car orders in the first half of 2025 were for full battery electric (BEV) or plug-in hybrid electric (PHEV) vehicles.
Those companies leading the way in EV adoption tend to be the ones choosing contract hire as their preferred funding method, rather than outright purchase. In doing so, they are giving themselves financial peace of mind by fixing their costs and avoiding the risks of ownership.
According to Lee Brown, managing director of Grosvenor, the UK’s largest privately-owned contract hire specialist, based in Kettering, many companies are adopting EVs to meet environmental targets. Yet, their high upfront cost, combined with uncertainties around servicing, maintenance and their unpredictable used market values, is a cause for concern.
It is for that reason they are moving to contract hire, as this funding option offers low deposits, fixed monthly costs and no risks around ownership, maintenance or depreciation.
“Electric vehicles generally come with a higher initial purchase price compared to petrol or diesel cars and vans,” said Lee. “For companies buying fleets outright, this can put significant strain on capital budgets.
“Additionally, while electric vehicles have fewer moving parts, there are concerns around battery repairs, software updates and potential unexpected servicing bills. Many of these concerns are unfounded but are cited as reasons for businesses being cautious about EV adoption.
“Another problem is the fluctuating residual values of electric vehicles. The used car market for EVs will take time to settle, and factors like rapidly advancing technology and changing government incentives cause their depreciation rates to be unpredictable. There is also currently a well-documented imbalance between supply and demand for used EVs, and this has caused their resale prices to plummet. This has a knock-on effect by creating more uncertainty for companies ordering new electric cars and vans, as they are worried about the extent to which they may lose their value while on fleet.”
For these reasons, Grosvenor is seeing such high demand for contract hire.
“Contract hire allows businesses to move to a fixed monthly fee, which covers all servicing, maintenance and repair, as well as depreciation,” added Lee. “This moves all risks and responsibilities of ownership away from the company, providing certainty and easy budgeting.
“It is, therefore, a peace of mind way to move to EVs and is the reason why a very high proportion of our electric car and van orders are on contract hire, or are being ordered via our car salary sacrifice scheme which offers precisely the same fixed cost, no risk benefits.” Grosvenor’s salary sacrifice has soared in popularity in the last 12 months because drivers can save 40% on an electric car compared to a personal lease.
By sacrificing a portion of their gross salary, the employee can drive a fully funded, maintained and insured electric or plug-in hybrid company car. Once National Insurance and tax are accounted for, the employee’s reduction in payroll matches the lease cost of the vehicle which means there is no cost to the company.
For more information contact 01536 536536, emall info@grosvenor-leasing.co.uk or visit the website.
