News analysis
Used EV market running flat
Fleets are facing problems caused by falling used EV values. Sean Keywood reports.
Both the Association of Fleet Professionals (AFP) and Cox Automotive have raised the issue, amid reportedly falling residual values.
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AFP chair Paul Hollick said RV reductions of 10-20% had not been uncommon over the past 12 months for some of the most popular fleet EVs, and that this trend had clear repercussions.
He said: “Until perhaps a year ago, it was possible to make a convincing financial case for EVs at board level. Yes, they were expensive to buy new but residual values were remarkably strong and charging was cheap. Now, the second and third parts of that argument have started to fall away. “Of course, fleets are still going to want to continue the process of electrification thanks to BIK advantages for drivers, the 2030 [new petrol and diesel car sale ban] deadline edging closer, and for environmental reasons.
“However, as AFP members continually testify, being able to back all of this up with a sound financial argument has always made the process much easier.”
Hollick said that the question facing fleets and the wider motor industry now was what could be done to help strengthen RVs and reduce the cost of power?
He said: “The latter problem is potentially the easiest to resolve. Fleets that concentrate on home charging are still benefitting from lower costs and, over the next year or so, we can expect to see electricity prices fall to a level that, if not comparable to before the war in Ukraine, will be at least much more competitive than today.
“However, addressing the used EV market is going to be more of a challenge. How do we change the perceptions of used car and van buyers, convincing more of them that these vehicles are desirable?
“It seems to us that doing so centres around making EVs more affordable while ensuring that consumers view them as practical propositions on a day-to- day basis.”
Also considering the question of used EVs, Cox Automotive has called for government intervention and industry knowledge sharing.
The data firm said that only 64% of franchise dealers stocked used EVs in 2022,
while nearly 90% of independent dealers did not have them in stock, with the knock-on effect being uncertainty regarding pricing and availability, which it said could lead to cautious buying behaviour from both retailers and consumers.
The company’s insight and strategy director Philip Nothard said there was an opportunity for the UK Government to stimulate demand for used EVs by following the example of other countries.
He said: “In the US, the Biden administration has introduced a $4,000 tax credit for the purchase of used EVs under $25,000, which has led to a significant increase in their adoption.
“It is essential that similar initiatives are implemented here to encourage the adoption of used EVs and support the growth of this market. Until then, there will only be more instability and volatility.”
The AFP’s Hollick also said that government support for the market would be welcome. However, he added that practical issues around EV adoption probably needed greater attention.
He said: “The UK simply doesn’t have enough chargers of the right types in the right places, and despite infrastructure growth, it’s not clear that this will change at any point soon.
“It’s not just pictures of queues for “The UK
simply doesn’t have enough chargers of the right types in the right places.”
chargers in the news that make this situation apparent to used car buyers but many people have come back from Easter breaks in France and Germany, and noted how much more advanced and useable their networks appear to be.”
Cox Automotive’s Nothard said there was a clear discrepancy between the demand for EVs and their availability in the used vehicle parc.
He said: “I think a powerful antidote to this clash would involve improving awareness, more knowledge-sharing in the industry and, of course, legislative change that makes the process of stocking buying BEVs both more affordable and streamlined.” The AFP’s Hollick said that many of the issues facing the market were likely to resolve over time, but said for now they were proving unreasonably problematic. He said: “Ultimately, it is probable that power will become cheaper, the charging infrastructure will improve, mass production will help to bring down the price of new EVs, and used prices will therefore fall to a level that is closer to traditional ICE options. “However, it does feel as though there is limited recognition at a government level that taking greater control over the process of electrification in the short term could make EV adoption much easier for fleets and used car buyers.”
www.businesscar.co.uk | May 2023 | 15
ction needs to be taken to improve the prospects for EVs in the used market, it has been said.
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