BVRLA: Used EV Crisis Impacts Fleet Lease Rates and Decarbonisation.

The BVRLA has issued a dire warning that the uptake of electric vehicles in fleets and the UK’s decarbonisation goals are in jeopardy unless immediate action is taken by the government to boost demand for used EVs.

The industry body is raising red flags over the significant and unpredictable depreciation of used EVs, which is driving up lease rates for new vehicles and dissuading potential consumers from transitioning to zero-emission driving.

Furthermore, the BVRLA predicts that without intervention, the value of used EVs will continue to plummet, leading to even higher lease rates.

Over the past two years, the value of used EVs has dropped by a staggering 50% as a flood of electric vehicles enter the market at the end of their initial lease term without adequate demand from second-hand buyers.

The urgency for government intervention has been underscored by new forecasts from Oxford Economics, which indicate that the prices of used electric vehicles will continue to decrease throughout the remainder of the decade.

Between 2024 and 2030, it is projected that used EV car prices will decrease by an additional 28%, while the electric van market, which is already fragile, will see a 12% reduction in used prices.

While the declining values of used EVs may benefit buyers, it poses a serious threat to the vehicle leasing industry, which facilitates 75% of new EV registrations.

This situation will have direct implications for fleets as the depreciation of EVs rises, leading to higher leasing costs for new vehicles.

Oxford Economics’ modelling suggests that this combination of diminishing trust and escalating lease rates could result in nearly 300,000 fewer new EV registrations between 2023 and 2027. Last year, annual new EV registrations barely crossed the 300,000 mark.

Gerry Keaney, BVRLA Chief Executive, expressed grave concerns over the state of the used EV market, stating that it poses a direct threat to the Government’s ambitious Zero Emission Vehicle (ZEV) mandate and the phase-out of internal combustion engine (ICE) vehicles.

He emphasised the discrepancy in pricing between new and used EVs, pointing out that while new EVs are costly, used EVs are becoming increasingly affordable – but someone must bear the cost of this price gap.

Motor finance companies and new EV drivers are absorbing the impact through extensive depreciation and escalating lease rates. These are the very fleets and consumers who have been instrumental in driving the demand for EVs thus far, and it is crucial to maintain their confidence in the transition.

In response to this crisis, the BVRLA initiated the #happyEVafter campaign at its annual Parliamentary Reception, collaborating with partners such as Auto Trader, EVA England, and the NFDA to outline six crucial steps that the UK must take to bolster the used EV market and sustain the momentum towards zero emissions.

These measures include proposing a special 0% Benefit-in-Kind tax rate for used EVs over a four-year period, implementing a targeted Used EV Plug-in Grant, and introducing new regulations to enable the Civil Service to access used EV salary sacrifice schemes.

Moreover, the BVRLA advocates for the government’s backing of standardised battery health certificates to reassure used EV buyers, in alignment with its manifesto commitment, and urges the launch of an information campaign to dispel negative myths surrounding EVs.

Fleets can lend their support to the BVRLA’s #happyEVafter campaign by sending a pre-written message to their MP, urging them to endorse these efforts. More information can be found here.