Electric is reaching TCO parity

EVs are finally making their presence felt in the True Fleet registrations. By the end of 2019, electric cars will probably hit six figures in the EU18 market. On some markets, the TCO is on a par with ICE cars – all depends on discounts, subsidies and residual values.

Electric is finally appearing to make it presence felt in the True Fleet new car market during the first six months of 2019, already up by almost 27,000 registrations from 1st HY 2018. The momentum is finally building and at the present rate will probably see the fuel type hit six figures by the end of 2019. Hybrid has also increased but by a more sedate 1.7%. Already in the six-figure club, it could finish with close to quarter of a million registrations, Dataforce finds.

The Tesla Model 3 is the rising star – many corporates have been waiting to take delivery of the all-electric alternative to the German premium C and D segment saloons. Interestingly, Renault has been shifting a lot of Zoes in the first half-year of 2019 and the BMW i3 has climbed to number three, ahead of the Nissan Leaf and the VW Golf.

 EU18 – Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg (includes dealerships), Netherlands, Norway, Poland, Slovakia, Spain, Sweden, Switzerland, United Kingdom.

Discount is not to be discounted

One of the reasons why European fleets are starting to adopt all-electric vehicles is the fact that their TCO is finally flirting with that of ICE cars, especially on markets with high incentives. Still, Autovista Group’s Senior Data Journalist Neil King points at an element that should not be neglected: discounts on petrol and diesel cars.

His company drew up a comparison for the VW Golf in its home country. TCO data was collated from Autovista’s Car Cost Expert solution on the VW e-Golf BEV in Germany and its closest ICE equivalents in terms of price, trim level and power output. TCO is broken down into acquisition costs and utilisation costs, the latter consisting of insurance and fuel costs, utilisation taxes and costs for servicing, tyres and general wear.

“If you do not factor in discounts on the ICE models, the e-Golf performs very well. It has a TCO saving of over €800 compared to the diesel variant and €700 compared to the petrol model in a 36 month/45,000km scenario. This is based on a comparison of a similarly powered and equipped Golf 1.6TDi diesel and petrol-powered Golf 1.5TSi after 36 months and 45,000km,” Neil explains.

“Utilisation costs for the e-Golf are about €1,000 and €700 lower than for the petrol and diesel Golf variants respectively. Acquisition costs are only €300 higher than for the petrol Golf and are even €150 lower compared to the diesel and hence the TCO advantage.”

A key factor is the €4,000 incentive offered for BEVs in Germany. “However, discounts that buyers can negotiate on the petrol and diesel cars need to be considered too. Applying a 10% discount to the Golf TDi and TSi for example, acquisition costs of the e-Golf are more than €3,500 higher than for the petrol car and over €3,000 more than for the diesel. Consequently, both the petrol and diesel variants offer a €2,000 TCO saving over the electric Golf,” he concludes.

The risker takes it all

The situation could be entirely different with the new electric kids on the block – the Peugeot e-208, the Opel Corsa-e, but also the upcoming VW ID3. Their price-tag is more attractive and they boast stronger residual values, partially because their battery pack reassures the majority of prospective EV buyers. 340km (WLTP) is indeed better than the current B and C segment EV models, including the VW e-Golf (230km), BWM i3 120Ah (310km) and Nissan Leaf 40kWh (270 km) whereas their list price of roughly €25,000 excluding VAT is between €5,000 and €8,000 lower.

Logically, the TCO of these new EV models should dive below that of comparable ICE models. That’s the story PSA is selling with the Peugeot e-208, but does it hold water? A quick look at two online leasing calculators reveals a painful truth. In Belgium, for instance, even an EV-promoting lease company like LeasePlan (which is part of the EV100 initiative) asks 63% more per month for a Peugeot e-208 Allure than a 208 Allure 1.2 PureTech Automatic (based on 48 months/60,000km).

In EV-promoting Netherlands, Directlease asks €580 per month for a e-208 GT-Line. The comparable 208 GT-Line 1.2 PureTech 130 EAT8 is just €453. It is difficult to imagine that this difference can be offset by lower ‘fuel’ costs – which are not included in the offer – or fiscal discounts.

OEMs are sticking out their neck to get affordable and practical EVs on the streets. To make them sell on the fleet market, leasing companies need to do the same and increase their residual values for EVs. Today’s relatively small new car volumes combined with tomorrow’s increased demand seems to imply a limited risk. Besides, fortune favours the brave.

Image: the new Open Corsa-e, one of the latest batch of more affordable EVs.