Government ‘must act’ to stabilise used EV market
The UK government should act to avoid further volatility in used electric vehicle (EV) values, which are making the transition more expensive and damaging confidence, the British Vehicle Rental and Leasing Association (BVRLA) has claimed.
The BVRLA made the warning following used EV falling 50% in the 24 months, with the sector seeing further drops without action.
Although the association admitted there was a “short term benefit” to used EV buyers from the falling value, it came at a “huge cost” to finance companies and dealers looking to sell the “rapidly depreciating assets”, according to the BVRLA.
As a result, it said confidence in how EVs will perform in the used market is “waning”, and “putting pressure on finance companies to increase the monthly lease rates for new EVs to cover their potential losses”.
The BVRLA described this as a “negative loop” that was “set to accelerate in the coming years” as more EVs hit the used market, with “insufficient demand to absorb it”.
It is also believed the imbalance is hampering demand for new EVs, and by 2027, according to Oxford Economics, there could be “a collapse in used EV values” which will result in nearly 300,000 fewers new EVs being sold.
BVRLA Chief Executive, Gerry Keaney, said:
“Vehicles start depreciating as soon as they are sold, particularly over the first few years. This is a fact of life and the cost of this loss in value is absorbed into the vehicle finance agreements that are responsible for around 90% of all new car and van sales.
“What is unprecedented and unsustainable is the scale of depreciation we are now seeing. Over the last two years, used EV values have dropped by 50% and are set to fall even further.
“These losses are being swallowed by the leasing companies and fleet operators that have championed the switch to zero-emission vehicles. They cannot continue to bear this burden alone. The Government needs to intervene now to help bring confidence and stability back to this vital part of the automotive ecosystem. Together, we can deliver a ‘Happy EV After’.”
The warning comes ahead of the BVRLA launching a full report exploring the used EV market this week.
Image from BVRLA
