Used EV-targeted grants, tax incentives and a confidence-building communication campaign would increase demand and stabilize prices, which are slumping as a wave of electric vehicles hits the market at the end of their first lease.
The urgent need for intervention has been highlighted by new forecasting from Oxford Economics, which shows that used electric vehicle (EV) prices will carry on falling over the rest of this decade.
Between 2024 and 2030, used EV car prices are predicted to fall by a further 28 percent. This fall is on top of an existing slump that has already seen them lose half of their value over the last two years. The fragile electric van market will also see used prices drop, by 12 percent.
While good news for used EV buyers, the scale of value destruction being absorbed by the vehicle leasing industry, which is responsible for 75 percent of new EV registrations, is unsustainable. Lease rates on new EVs are priced on the loss of value or depreciation a vehicle will experience over the length of a contract rather than its total cost. As the depreciation experienced by EVs increases, so does the price of leasing a new one. Falling confidence in used EV values is already pushing up lease rates and deterring potential customers from taking the leap to zero-emission motoring.
Oxford Economics modeling estimates that this combination of reduced trust and rising lease rates will result in nearly 300,000 fewer new EVs being registered between 2023 and 2027. Annual new EV registrations only just reached the 300,000-milestone last year.
“The crisis we are seeing in the used EV market is a direct threat to the Government's ambitious ZEV Mandate and ICE Phase Out targets” said BVRLA Chief Executive, Gerry Keaney. “New EVs are expensive while used EVs are stunningly cheap and getting cheaper, but someone needs to pay for this price gap. It is motor finance companies and new EV drivers that are running the bill, through massive depreciation and increased lease rates. These are the fleets and customers that have been responsible for driving demand for EVs up to now. “We cannot afford them to lose confidence in the transition.”
Last week the BVRLA launched the #happyEVafter campaign, in conjunction with Auto Trader, EVA England and the NFDA. Together, the organizations, which represent a wide spectrum of EV owners as well as the wider automotive supply chain, are calling for targeted intervention from the Government to restore confidence in the used EV market by boosting demand.
The coalition is asking the Government to:
Launch an information campaign to counter negative EV myths
Support standardized battery health certificates to reassure used EV buyers
Launched a targeted Used EV Plug-in Grant
Cut VAT on used EVs by 50 percent for four years
Provide a special 0 percent Benefit-in-Kind tax rate for used EVs for four years
Allow the Civil Service to access used EV Salary Sacrifice schemes
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