Diverging captive PCP APRs for BEV and ICE underline the growing role of finance policy — not just pricing — in influencing retail demand.

Diverging Finance Support to Sustain EV Affordability

 

Alongside changes in transaction pricing, manufacturers used captive finance to materially influence EV affordability during a period of elevated interest rates. The evolution of PCP APRs highlights a clear divergence in how electric and ICE vehicles were supported through 2024 and 2025.

 

Between early 2023 and late 2024, BEV PCP APRs fell sharply from approximately 7.8% to a low of 2.8%, despite the Bank of England base rate rising to and remaining at 5.25% for much of the same period. At their widest point, BEV finance rates sat more than 3 percentage points below prevailing monetary conditions.

By contrast, ICE PCP APRs declined more gradually, falling from around 7.6% in early 2023 to approximately 5.0% by Q4 2025, remaining consistently above BEV rates throughout the period. While ICE finance benefitted from easing conditions into 2025, the relative level of support remained materially lower.

 

This sustained decoupling of BEV finance rates from broader monetary conditions underscores the role of captive finance as a deliberate affordability lever. As pricing intervention, residual value pressure, and regulatory alignment converged, finance became a central mechanism for managing monthly payments and sustaining EV demand.