Residual values of electric vehicles (EVs) are under pressure as Government incentives to boost new sales risk further weakening the used market, according to Cox Automotive.
The company’s data shows EVs up to 24 months old are now retaining 46% of their original cost new when sold through trade in July 2025. This compares to 85% for similar vehicles in 2022.
Philip Nothard, Cox Automotive insight director, said the sharp decline in residual values is directly linked to the heavy discounting seen in the new EV market.
He explained that while the Government’s latest incentives will help reduce the upfront cost of a new electric vehicle, they do little to support the second-hand market, which plays a vital role in industry profitability.
Nothard said: “Residual values for EVs up to two years old are now at greater risk of further depreciation if the Government fails to extend support to used vehicles.
“The strength of the used sector is critical to the success of net zero ambitions.”
His comments follow this week’s announcement that buyers can receive up to £3,750 off the price of a new EV through a the Electric Car Grant.
The Department for Transport has now published guidance on how to use the portal to record eligible EV sales and points out to OEMs and franchised dealers that all claims must be verified before grants are paid out.
Real EV affordability is below £20k
Fraser Brown, managing director of consultancy MotorVise, believes the scheme falls short of making a meaningful difference.
He said” “The grant only applies to a narrow selection of around 30 models and most buyers using PCP finance won’t see a major drop in monthly payments.
“The majority of EVs on sale today will not qualify, and most discounts will likely be closer to £1,500 than £3,750.”
Brown added that the Government would have made a stronger impact by supporting the used EV market instead.
With 40% of used EVs selling for under £20,000, he said that is where real affordability lies for everyday buyers.
He added: “Helping the used market would lift residuals for new EVs and reduce finance costs more broadly.
“Instead, we risk a slowdown as buyers wait for clarity on the scheme.
“The intent is positive, but the execution needs to go further to benefit the average motorist.”