‘Decarbonisation targets at risk without high demand for used EVs’

The Government’s decarbonisation goals are in jeopardy unless immediate action is taken to bolster the demand for second-hand electric vehicles, as highlighted by the BVRLA.

In a recent statement, the leasing association emphasised the importance of implementing measures such as Used EV grants, tax incentives, and a confidence-building campaign to stimulate demand and stabilise prices in the market.

This plea comes at a crucial time when the prices of EVs have experienced a decline due to the influx of first-wave vehicles reaching the end of their leasing agreements.

The BVRLA has underscored the urgent necessity for intervention, citing projections from Oxford Economics that indicate a continued drop in used electric vehicle prices throughout the remaining years of this decade.

According to the forecasts, between 2024 and 2030, prices for used EV cars are expected to plummet by an additional 28%, while electric vans will witness a 12% decrease in their resale value.

While the decrease in used EV prices may benefit potential buyers, the leasing industry – responsible for 75% of EV registrations – is grappling with substantial “value destruction” that is deemed unsustainable by the BVRLA.

The diminishing confidence in the resale value of used EVs has already led to an increase in lease rates, deterring prospective customers. Oxford Economics’ modelling indicates that this combination of reduced trust and rising lease rates could result in almost 300,000 fewer new EV registrations between 2023 and 2027.

Gerry Keaney, BVRLA Chief Executive, issued a stark warning, stating:

“The crisis unfolding in the used EV market poses a direct threat to the Government’s ambitious ZEV Mandate and ICE Phase Out targets.

“New EVs come with a high price tag, while the prices of used EVs are significantly lower and continuing to fall. However, the cost of this price disparity must be addressed.

“It is the motor finance companies and new EV drivers who are absorbing the impact through substantial depreciation and increased lease rates. These are the fleets and customers who have been instrumental in driving the demand for EVs thus far. It is imperative that they do not lose faith in the transition.”

Image courtesy of Shutterstock

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