The government needs to take immediate action to prevent further instability in the used electric vehicle (EV) market which is undermining confidence in the transition to electric cars and driving up the cost of new EVs.
Over the past 24 months, used EV values have plummeted by 50%, according to the British Vehicle Rental and Leasing Association (BVRLA).
Without intervention, this decline could continue, impacting the financial health of leasing companies and dealers who are already struggling with the rapid depreciation of EVs.
The uncertainty surrounding used EV performance is causing finance companies to raise monthly lease rates for new EVs in order to offset potential losses, creating a negative feedback loop that could worsen in the coming years.
The market is facing a growing surplus of second-hand EVs, with demand not keeping pace. This imbalance is already affecting demand for new electric cars.
By 2027, Oxford Economics predicts that this collapse in used EV values will lead to 300,000 fewer new electric cars being sold.
BVRLA chief executive Gerry Keaney, stressed the urgency of the situation: “Vehicles naturally depreciate, especially in their first few years. But what we are seeing now is unprecedented and unsustainable. Used EV values have dropped by 50% over the last two years, and further declines are expected.”
Keaney warned that leasing companies and fleet operators, who have been instrumental in promoting zero-emission vehicles, cannot continue absorbing these losses.
He urged the government to intervene, saying: “The government needs to step in now to restore confidence and stability in this crucial part of the automotive market. Together, we can ensure a ‘Happy EV After.’”
This call to action came at the BVRLA’s annual parliamentary reception, where it launched the #happyEVafter campaign.
In partnership with Auto Trader, EVA England, and the National Franchised Dealers Association (NFDA), the campaign aims to promote policy changes, targeted incentives, and collaboration between government and industry to create a smoother transition to electric mobility.
Poor residual values and the subsequent inflation of new EV lease rates have already led to the loss of 220,000 EV registrations, leaving millions of tonnes of CO2 in the transport network.
The #happyEVafter campaign focuses on three key areas: boosting consumer confidence, balancing the cost of ownership, and expanding accessibility.
Next week on September) 17, the BVRLA will release a comprehensive report, compiled by Oxford Economics, detailing the challenges facing the used EV market and offering potential solutions.