DALLAS – Battery-electric vehicle affordability is a continuing problem, evidenced by a drop in BEV leasing presumably due to low lease incentives from OEMs. This echoes the drop in leasing and lease incentives for new vehicles of all types resulting from low inventories, according to Experian Automotive.
“You’re not going to see high leasing in electric vehicles until you see high inventory,” Melinda Zabritski, senior director of financial solutions for Experian Automotive, says in an interview at the 2023 NADA Show here. Until then, there’s little pressure on OEMs to move the metal.
Leasing accounted for only about 12.6% of new EV purchases in 2022, down from 26.5% in 2021, Zabritski (pictured, left) says. Lease share of new EV purchases has been up and down for the past five years. It was 18.6% in 2019, before the pandemic. But in 2017, it was 48.8%, according to Experian Automotive data.
Interestingly, credit unions are often out-competing banks and captive finance companies for share of EV financing, especially among used models, likely because credit unions are offering lower interest rates and longer terms on EVs, Zabritski says.
Credit unions averaged about 3.5% interest on new EV loans and about 4.5% on used EVs in 2022. Credit union rates for both new and used EV loans are lower than those of banks, captives, independent finance companies or buy-here, pay-here dealerships, Experian Automotive says.
Credit union share of used EV financing in 2023 is about 34.1%, behind banks at 41.9%. For new EV financing, banks are No.1 at 47.8% share. Captives are No.2, at 27.5%, and credit unions are No.3, at 21.5% for the year.
Used EVs are cropping up in auto finance more and more. Experian Automotive says over 91,000 used EVs were financed across the entire market in 2022, an increase of 45% vs. the prior year.
Tesla still dominates the EV finance market, for both new and used. But Tesla is losing share as traditional manufacturers offer more EVs. “The electric-vehicle market is growing, with increased consumer options,” Experian Automotive says.