Affordable EVs: Social leasing opens doors for many
Social leasing schemes have the potential to help up to 3 million European low-income households switch to electric mobility.
Published on May 28, 2025
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Mauro swapped Sardinia for Eindhoven and has been an IO+ editor for 3 years. As a GREEN+ expert, he covers the energy transition with data-driven stories.
The cost of electric vehicles (EVs) has been a significant hurdle to widespread adoption in Europe. Although cheaper options are entering the market, a gap remains, leaving less affluent people behind. A recent analysis by Europe’s leading mobility NGO, Transport & Environment (T&E), revealed that up to 3 million households in the five largest EU countries— Germany, France, Italy, Poland, and Spain —could switch to electric vehicles (EVs) by 2032, thanks to social leasing.
Social leasing is a government subsidy scheme to make EVs accessible to middle and low-income classes. The goal is to democratize electric mobility, helping those who can’t afford an EV get one as the market matures–analysts predict price parity to happen by 2028.
T&E’s analysis underlines how social leasing schemes could be financed in member states using the revenues from the buildings, road transport, and additional sectors Emission Trading System (ETS2) and the Social Climate Fund (SCF). The SCF, which will kick off next year, aims to help the transition to climate neutrality. According to the NGO estimates, up to €16 billion will be available across the five countries through these schemes by 2032. France is leading the way.
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View Behind the Figures SeriesThe French social leasing model
In December 2023, France launched its social leasing program, making electric vehicles (EVs) available for €49 to € 150 per month. To be eligible for the program, applicants must have a per-unit reference fiscal income (RFR) below €15,400 and prove that they drove over 8,000 kilometers per annum commuting to work. Applicants could include a purchase option after three years of the contract.
The French government's dedicated platform received over 90,000 applications in a month and a half. Although the budget was earmarked for 25,000 beneficiaries, 50,000 requests were accepted. The scheme, which only subsidized cars built in Europe, closed at the beginning of 2024 and is set to reopen later this year, although under different conditions.
At the end of the program, the French Ministry of the Ecological Transition presented some of the figures related to the initiative's outcome, which proved to open up the EV market to new buyers.
- 61% of the beneficiaries have a reference annual income of between €10,200 and 15,400
- 40% of beneficiaries have an income of less than €10,200 net
- The average age of the first 25,000 beneficiaries is around 40, 9 years younger than the average for EV purchasers in 2023, and 14 years younger than the average for buyers of new cars overall
Unlocking electric mobility for millions
Drawing from the French example, T&E conducted its analysis. The NGO found out that in the five largest EU countries, there are 20 million low and medium-income individuals living in rural areas who depend on combustion engine cars. That’s why the organization calls for action to help everyone make a smooth transition.
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© T&E
T&E suggests that member states include social leasing in their National Social Climate Plans, funding it using the ETS2 revenues. This new carbon market makes polluters, such as fuel suppliers, pay. Yet, there are concerns that these polluters might pass these costs to consumers, further affecting the most vulnerable.
T&E assumed a €5,000 subsidy over a six-year period. The NGO estimates that this way it would be possible to offer lease rents between €180 and €215 per month on a €25,000 EV. In addition, as €20,000 models are expected to hit the market in the coming two years, such as the Renault Twingo and Volkswagen ID.1, lower rates could be offered with the same subsidy level. This proposal takes into account a reduced 6% VAT rate and no deposit for the first rent, similar to the French scheme.
Stimulating EV demand
The organization underlines how this subsidy scheme would reach 27% of low and medium-income households in rural areas. Moreover, if national schemes were to favor cars produced in Europe, local manufacturers could benefit.
In addition, it could unlock demand in the smaller EV segments. The non-availability on the market of cheap-to-buy EV models has often been seen as one of the causes of the slow adoption. As shown in the bar chart below, none of the top ten most sold battery electric vehicles sold in Europe in 2024 belong to the A segment–compact city cars.
To this extent, carmakers launched, and are launching, more under €25,000 EVs, such as the Renault 5 e-tech, the Fiat Grande Panda, or the Leapmotor T03. As options expand, T&E also calls on the European Commission to set up an ‘affordable EV platform’, so as to aggregate demand and supply information for social leasing. This tool would allow to get the best possible deals. And give everyone the opportunity to transition.
