Still not convinced to buy an electric-vehicle? How about a six-month rental to try one out?
German tech startup FINN is betting that it can get more people to go electric with its six- to 18-month subscription service, letting consumers try before making a permanent switch to electric. Founded in 2019, it has 25,000 subscribers, around 40% of whom opted for EVs. Most of those people are in Germany, but it also has about 2,000 subscribers in the U.S. East Coast and hopes to expand into California and Florida. Around 7.5% of FINN’s American customers have opted for an EV.
“What this does is allow you to kick the tires in your real life,” said Maximilian Wühr, CEO of FINN. Wühr said subscribers are often hesitant to commit to new technologies and that one of the most common concerns is range anxiety—the worry of being left stranded with a dead battery and without a charger. FINN’s subscriptions are shorter and more expensive than leasing, which are typically a three-year commitment and about 10% cheaper according to Wühr.
Governments are spending billions of dollars to encourage the shift to EVs, a central part of many of their decarbonization plans. Uptake is growing—in the U.S. and Canada, 1.7 million battery EVs and plug-in hybrids were sold last year, up from just over 1.1 million in 2022, according to Rho Motion, an electric mobility consulting firm.
However, the rate of growth is starting to slow and many U.S. carmakers have recently moderated their EV expansion plans. Potential buyers are held back by the high upfront costs for new EVs and anxiety about the technology and infrastructure, as well as by the lack of a substantial second hand market, according to Ian Plummer, commercial director at Auto Trader, a British online marketplace for those buying and selling cars in the U.K.
In the U.K., for example, a new electric car is still 36% more expensive than a gasoline or diesel equivalent and 47% of consumers believe there aren’t enough charge points, according to a recent Auto Trader report. In the U.S., EV prices have come down considerably in the past year: In January 2023, the average EV premium was 19%, but by December, it had fallen to 4%, according to Kelley Blue Book, a vehicle valuations firm.
Other efforts to let traditional car drivers try EVs before they buy have struggled. Rental company Hertz is selling 20,000 EVs, including Teslas, from its U.S. fleet and adding gasoline-powered cars, because of weak demand and high costs for EVs maintenance and repairs. Hertz in 2021 had committed to buying 100,000 Tesla vehicles.
British EV-subscription business Onto went into administration in September 2023, because of what it said was the sharp fall in the resale values of EVs alongside rising interest rates. Auto Trader estimates EV values roughly halve within three years compared with a traditional combustion engine only losing a third of its original price.
FINN says it mitigates the risk of low resale prices by bulk buying cars directly from the manufacturer, pricing each subscription so that every car is profitable and agreeing a resale price with car dealerships ahead of time. “A lot of companies have had quite a tough time. It’s not an easy nut to crack,” Wühr said. “Many started with a hyper scale approach—[but, for us] being profitable on a unit basis is common sense.”
In Germany, FINN’s gas and diesel vehicles are priced from €409 to €2,399 a month, equivalent to $443 to $2,598, and the electric and plug-in hybrids range from €449 to €1,699, or $486 to $1,840. Comparing prices for one make, the gas-powered Fiat 500 is €409 and the Fiat 500e is €459.
In the U.S., customers can choose a range of gas or mild-hybrid vehicles for between $579 and $900 a month, with EVs for between $869 and $1,199 a month