Why Leasing Drivers Are Going Electric Faster Than Everyone Else

If you've been wondering whether now's the right time to go electric, you're in good company. It's one of the most common questions drivers are asking this year. But the latest numbers suggest plenty of people have already made up their minds. They've just done it in a way that doesn't make the headlines.

Almost three in ten new cars registered in August were fully electric. That's the figure that made the news. The more interesting one is tucked away in a leasing industry report: nearly half of all leased cars on UK roads are now electric.

So what's going on, and what does it mean if you're weighing up your next car?

What actually happened in August

The SMMT's August figures showed 94,236 new cars registered, up 13.7% on last year. That's the best August since the two-plate system arrived in 2001. Battery-electric cars made up 29.8% of those registrations, with 28,063 sold, up 27.7%.

That's genuinely good news. It does come with some context, though.

August is a small month for car sales. Lots of buyers hold off for September's new number plate, so August usually accounts for only around one in every 25 new cars registered in a year. With a smaller total, percentages swing more easily. The SMMT itself points out that EV share has jumped every August since 2023. It was 20.1% in 2023, 22.6% in 2024 and 26.5% last year. So this was a strong month rather than a turning point on its own, and the second-highest EV share of 2026 so far.

The steadier number is the year to date. Across the first eight months, 25.6% of new cars were electric. That's roughly one in four, and a record for that stretch of any year.

Where the ZEV mandate fits in

You might have seen that the Government's Zero Emission Vehicle mandate asks for 33% of new cars to be electric in 2026. That's the headline target. Manufacturers can also use built-in flexibilities, such as earning credits from lower-emission petrol and hybrid sales. So the effective figure they need to hit is lower. Analysts at New Automotive put it at around 24.6%.

The Government is currently consulting on how the mandate should work from 2027 onwards, with responses open until 23 October 2026. Nothing changes for drivers in the meantime.

For you, the practical upshot is simple. Carmakers are working hard to get electric cars onto driveways, and that's showing up in the deals. SMMT chief executive Mike Hawes said August showed motorists "responding to the huge choice and compelling offers available". The SMMT counts more than 170 zero-emission models now on sale, covering every type of car.

The number that tells the real story: 48%

Here's the bit that didn't get as much airtime.

The BVRLA, the trade body for the UK's leasing and rental companies, publishes a regular Leasing Outlook report. Its latest edition shows the combined car and van lease fleet sitting at just over 2.05 million vehicles, up 7.2% on a year ago. Of the cars in that fleet, 48% are fully electric.

Put that next to the new car market. Around one in four new cars sold this year is electric. Nearly one in two leased cars already is.

These aren't identical measures. One counts every car currently on a lease, and the other counts new sales month by month. But the gap is far too wide to be a quirk. Leasing is well ahead of the wider market.

Why leasing is ahead

Company car tax does a lot of the heavy lifting

The biggest reason is how company cars are taxed.

If your employer provides a car, you pay Benefit-in-Kind tax on it. For fully electric cars, that rate is just 4% of the list price in the 2026/27 tax year. It's set to rise to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. Petrol and diesel company cars sit much higher, with the top band at 37%.

Here's a rough example. On a £40,000 electric car, the taxable benefit at 4% is £1,600. A higher-rate taxpayer would pay £640 a year, or about £53 a month.

That's why salary sacrifice has taken off. It's the fastest-growing part of the leasing market, up nearly 165% in a year according to the BVRLA. Personal leasing grew far more slowly over the same period. 

Someone else carries the depreciation risk

With a lease, you hand the car back at the end. What it's worth at that point isn't your problem, as long as you've stayed within your agreed mileage and the BVRLA's fair wear and tear standards.

That matters more with electric cars than most. The technology moves quickly and used values have been settling, so plenty of drivers don't want to bet on what their EV will be worth in three years.

The risk doesn't vanish, though. It moves to the funder. The BVRLA has been open that falling EV residual values are putting real pressure on leasing companies' margins. Funders factor that into their pricing, which is one reason monthly costs can vary so much between similar-looking models. It's also a good reason to compare deals rather than taking the first quote.

Private drivers are catching up, often through the used market

This isn't only a company car story. The AA's analysis of DVLA data found that privately owned electric cars rose by more than 83,000 in the first three months of 2026, to 860,334. That's the biggest quarterly rise on record. The AA credits greater model choice, better batteries and a buoyant used EV market.

That growing used market is good news if you want an electric car without paying new-car prices. It means more choice in used car leasing and subscription, not just new.

What this means for you

Everyone's situation is different, so here's how the picture looks depending on where you're starting from.

If you get a company car, or your employer offers salary sacrifice, the case for going electric is at its strongest right now. Check which tax years your contract will span. A three-year lease starting this autumn would run across the 4%, 5% and 7% rates.

If you're a private driver who likes a new car every few years, personal car leasing gives you a fixed monthly cost and no worries about resale value. Be realistic about your mileage, and think about where you'll charge before you commit.

If you're genuinely unsure an EV suits your life, perhaps because you've no driveway, do lots of long trips or have a move or job change coming up, a car subscription with terms from as little as one month lets you try electric in your real routine. You can then move on to a longer lease once you know it fits.

If you like to keep a car for years, buying or PCP can still make sense. It's especially worth a look now that used EV prices have come down so much. The longer you keep a car, the less depreciation matters.

If you're a family, range and boot space matter more than headline 0–60 times. Home charging makes the biggest difference to running costs, so factor that in early.

If you're a business user, business car leasing on an electric car can be tax-efficient. It's worth running the numbers with your accountant, as the right setup depends on how your business is structured.

What to watch next

There are a few dates worth keeping an eye on this autumn:

• September registration figures, due in early October. September is one of the two biggest months of the year, and the SMMT has called it the real test.
• The ZEV mandate consultation, which closes on 23 October. Any changes would affect what manufacturers need to sell from 2027. They're unlikely to change the deals available today.
• This autumn's Budget, for any changes to company car tax or EV running costs. Pay-per-mile road tax for EVs is also on the way from 2028. 

The bottom line

The headlines focus on the new car market creeping towards its targets. Meanwhile, leasing drivers have already gone electric in big numbers, helped by low company car tax and the reassurance of handing the car back at the end.

If you're thinking about making the switch, start with three questions. Can you get a car through work? Where will you charge? And how sure are you about the next three years? Your answers will point you towards salary sacrifice, a personal lease, a subscription or buying. There's no single right route, just the one that fits you.

When you're ready, you can compare electric car leasing deals on Wagonex across hundreds of models, or check your eligibility first with no impact on your credit score.

FAQs

Is it better to lease or buy an electric car in the UK? It depends on how long you keep your cars. Leasing suits drivers who change every two to four years and want a fixed cost without depreciation risk. Buying tends to make more sense if you'll keep the car for five years or more.

What happens if my leased electric car loses value? On a personal or business contract hire agreement, the leasing company carries that risk. You hand the car back at the end and aren't affected by its resale value. You may be charged if you go over your agreed mileage or the car has damage beyond fair wear and tear.

How much company car tax will I pay on an electric car in 2026/27? The Benefit-in-Kind rate for fully electric cars is 4% of the list price in 2026/27. On a £40,000 car, that's £1,600 of taxable benefit a year: £320 for a basic-rate taxpayer or £640 for a higher-rate taxpayer. The rate rises to 5% in 2027/28.

Can I lease an electric car if I don't have a driveway? Yes. Many drivers rely on public, workplace or on-street charging. It usually costs more than charging at home, so it's worth mapping out chargers near you and factoring that into your budget before you commit.

Is the ZEV mandate changing? The Government is consulting on how the mandate should work from 2027 onwards, with the consultation closing on 23 October 2026. The 2026 rules stay in place for now, and nothing changes for drivers while the review takes place.

Can I try an electric car before committing to a long lease? Yes. A car subscription with terms from as little as one month lets you live with an electric car day to day. If it suits you, you can then move on to a longer lease.