What affects EV pricing? What you need to know

The great thing about EVs is that the technology and market are evolving all the time, and overall, the trend is positive. More manufacturers, more cars, and better tech are all strong signs of a healthy, growing market for EVs.

Generally, as tech becomes more widespread and manufacturers invest more in it, it becomes more affordable for more people. Once upon a time, only the flashest person you knew had a flatscreen telly. Now, you cannot buy a TV that isn’t flat screen because the tech has moved on so much. 

It’s the same with EVs. Overall, EV prices are trending downwards as the tech becomes more affordable – though of course there will be fluctuations depending on a variety of factors. 

Here’s how it all works. 

As a leasing business, our prices reflect pricing trends in every stage of the EV manufacturing and purchasing process before us. 

We buy EVs from manufacturers and lease them to you. Manufacturers have to buy the parts they need to build the EVs. Parts are supplied by a complex global supply chain that can be affected by local and global economics. 

Labour shortage at a component factory in China? Production goes down, prices go up. Global shortage of materials due to political instability? Production goes down, prices go up. You get the idea. 

‘Residual value’ is the estimated worth of a vehicle at the end of its lease term. It can fluctuate based on tech advancements, supply, demand, and existing market conditions.

If a car is expected to lose its value quickly, lease prices will increase to cover the cost of depreciation. If the car is expected to hold its value, lease prices will decrease.

Save even more money with our Used EVs

As interest rates change, so does the cost of a monthly lease payment. When interest rates increase, so do leasing payments, as they need to accommodate the increased borrowing costs.

If everyone wants an EV and there are comparatively few being made, prices will go up. 

If there are more EVs on the market than there is demand for, prices will go down. 

Demand can be affected by a huge range of factors. For example, during COVID there were global shortages and delays in shipping several key EV components. Supply could not keep up with demand, so prices went up. Now, things have evened out again. 

The ZEV mandate became Law in Great Britain on 3rd January 2024. It requires all new cars and vans to be zero-emission by 2035. It also requires 22% of new car sales to be Battery Electric Vehicles (BEVs) by the end of the year, or face hefty fines. 

This has encouraged the production of more EVs and further investment in the area, resulting in lower prices. Prices will undoubtedly be influenced by further political developments as time goes on.

In summer 2025, the UK Government introduced the Electric Car Grant Scheme, which offers discounts of up to £3.750 on eligible EVs. Yes – it includes EVs on lease, and no, you don’t need to do anything to claim it!

Read more about the Electric Car Grant.

This could bring the price of EVs down further, as manufacturers whose models aren’t eligible for the grant try to compete – watch this space. 

As well as established UK manufacturers offering more EV models, new faces like BYD, JAEGOO, and Omoda are making a name for themselves with competitive prices and futuristic tech specs. 

These cars are high-quality and affordable in themselves, and they both encourage competition in the market and increase the supply of EVs available, resulting in downward trends in prices overall. Win-win. 

EVs are becoming more affordable, and that’s a great thing. 

If now’s the time you want to make the switch to electric driving, leasing with Octopus EV makes it easier and (crucially) more affordable to do so. 

Why? We offer a range of energy savings and other discounts that save you money across your entire EV lease, including:

• A choice of the latest, smartest EVs, as picked by our experts
• Cheap home charging and energy savings via Intelligent Octopus Go
• Discounts on public charging via the Electroverse app
• Servicing and maintenance are included in your monthly payment
• A host of other goodies – including £500 off green home tech via Octopus Energy