The motoring industry is currently experiencing an unprecedented situation, with a lack of essential materials and closures to key factories in eastern Europe together creating (and adding to) an unheard-of shortage of vehicle availability.
The result is a world in which fleet businesses need to plan further ahead than ever before when it comes to vehicle lease contracts.
“Manufacturers used to batch build boat loads of certain specs and types of cars,” says Sam Young, Business Development Manager at GKL Electric. “Now manufacturers build cars to order. If there’s one thing I try and stress to customers, it’s that they have to act now. The longer you leave it, the longer you’ll wait. That’s true for vehicles of all kinds, including available EV cars.
“I appreciate it looks a bit weird from the customer perspective,” admits Sam. “Especially as there are still vehicle manufacturers pushing new designs, when we know for a fact they haven’t got the parts to meet demand for even their current models. But lead times on those brand-new vehicles can be 12 months away or more. So for those who go for that option, they end up having to work with us to extend their current lease by another 12 months in the interim.
“What people really want right now is a vehicle sooner rather than later,” Sam continues. “So our message to customers is to contact us a good 6-9 months before the end of your current rental contract, or the date you’ll need the new vehicle. That’s how badly vehicle availability – including sourcing available EV cars – has been affected.
Are EVs affected by the chip shortage?
As purely electric vehicles, EVs are highly reliant on semiconductors – which are of course in short supply for every industry the world over. So naturally, you’d expect that the chip shortage for electric vehicles has had a sizeable impact.
Curiously though, despite the shortage of chips for EV cars, EV lead times are actually currently shorter on the whole than those for internal combustion (ICE) vehicles.
“Some available EV cars can be sourced currently around 5-6 months for existing models,” explains Sam. “Which at present is far better than the 9-12 months for petrol and diesel ones. So with where we are now in April, you’re more likely to get an EV this year than an internal combustion engine (ICE) car. The list of available electric cars is also likely to be longer – particularly from the pure EV manufacturers like Tesla and Polestar.
More reasons to lease electric
“The big reason for the better availability over combustion fuel cars is the average CO2 targets manufacturers have to hit,” explains Sam. “If they don’t, they get fined millions and millions by the EU. Because of that, the majority of them would rather put the small number of parts they are able to source into EVs. In the current market, that’s now a major reason for people to look at leasing electric vehicles for the first time. “
“Another of the big reasons for fleets in particular to move to EVs is fuel costs,” says Sam. “For most fleets the fuel bill is the second largest cost outside the costs of the vehicles themselves. So whereas previously the move to EVs was driver driven, based tax benefits to individuals, now we’re finding a lot of finance directors and company decision makers are starting to ask if EVs can help keep their costs down – or at least taking time for the first time to understand full life costs.”
At GKL Electric, we put you first
“There are a lot of leasing companies – especially the larger ones, who have a rigid process – who are insisting customers return vehicles at the end of their leases, so they can lease them out elsewhere at the higher price,” explains Sam. “We don’t do leasing by numbers. We do leasing by people. As a completely independent leasing company we can make independent decisions, and we prioritise keeping our customers mobile.
“With chips for EV cars in short supply and the list of available electric cars being what it is, we’re doing whatever we can to get people through,” he continues. “Our advice is: do not wait. Get in touch with us asap – but also act on that conversation we have quickly.
“We’ve found a lot of our customers are talking to us, going away, having a think, then coming back a few weeks or a few months later, and expecting the same terms that we discussed originally. But the situation is so fluid, they’re unlikely to be available. We recently had one customer do that, and the wait on their Polestar EV we’d originally discussed had gone from weeks to months.
“Current electric vehicle availability means that if you can come to us in good time, be decisive, and act on things quickly, you’ll put us in the best position to help. We’re absolutely here to support you, but the more proactively you work with us, the more help we can be.”