From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
Now they want the taxpayer to subsidise the second hand market for EVs!
From GB News:
Labour has been urged to intervene and offer more support for used electric vehicles, with experts warning that without support, the car finance sector risks losing “hundreds of millions” of pounds due to lapsing driver demand.
The need for intervention comes as experts warned that due to interest in used electric cars falling, car finance companies have been forced to pass on higher interest rates and car financing costs to consumers.
Earlier this month, the British Vehicle Rental and Leasing Association (BVRLA) sent a letter to the Government stating that demand for used EVs is “struggling to keep pace” with supply, which could rise to 178 per cent over the next three years.
The letter stated that the imbalance has meant that EV residual values have dropped by 50 per cent in the last two years, with it expected to decline by a further 28 per cent by 2030.
But the BVRLA warned that weak residuals in the used electric car market have created “financial pressure” on car finance firms, which base their pricing models on optimistic residual value forecasts. This, in turn, has meant that used EVs are worth much less now than expected.
The letter stated: “The difference between the price of the new vehicle and its value on disposal determine the cost of financing, leasing or rental for a customer. This depreciation is costing fleets hundreds of millions and being passed on to new buyers in the form of higher motor finance costs.”
It noted that the second-hand EV market remains under pressure, before calling on the Government to provide residual value support across the automotive value chain.
This could help keep new electric vehicle retail sales lagging behind fleet levels, “straining the automotive ecosystem”, the letter claimed.
It added: “Without a stronger used BEV market where values are stable, the future of the entire transition to electric vehicles is at risk. Cars, vans and trucks all require used market demand at levels that create pricing stability.
“For the transition to electric commercial vehicles to hit its stride, the current position must be improved. There are no silver bullets, and this change can be delivered only through wide-ranging and aligned policy steps.”
Read the full story here.
I have been warning about the looming losses for leasing companies, who are now attempting to sell EVs at the end of leases. As with the new car market, private buyers are simply not interested in the useless things, so second hand prices are going through the floor. Remember that only one-in-ten private buyers went electric last year.
To make matters worse, there will be a flood of EVs hitting the second hand market in the next year or so, and the flood will get bigger year on year. Three years ago, for instance, new EV sales were much lower than they were last year.
But will demand for second hand EVs be any greater than today? It is hard to see why it should be. Indeed as the 2030 deadline approaches there is likely to be strong demand instead for petrol/diesels, as buyers will want to get hold of one before they are gone for good.
Leasing companies have gambled that second hand values for EVs would be as strong as for conventional cars. It is a gamble that could cost them billions.
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