The motor finance sector is facing a critical challenge as the British Vehicle Rental & Leasing Association (BVRLA) warns that government decarbonisation targets could be jeopardised without immediate action to bolster demand for used electric vehicles (EVs).
Oxford Economics forecasts a continued decline in used EV prices, potentially leading to nearly 300,000 fewer new EV registrations by 2027.
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Oxford Economics’ new forecasting reveals a concerning trend for the used EV market, with prices expected to drop by 28% between 2024 and 2030.
This follows a significant slump over the past two years, where used EVs have already lost half of their value. The electric van market is not immune, facing a predicted 12% decrease in used prices.
The vehicle leasing industry, which accounts for 75% of new EV registrations, is under strain as the depreciation of EVs drives up lease rates.
BVRLA CEO Gerry Keaney emphasised the severity of the situation, stating: “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.”
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By GlobalDataHe also highlighted the price gap between new and used EVs, stating: “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 footing the bill, through massive depreciation and increased lease rates.”
In response to the looming crisis, the BVRLA has initiated the #happyEVafter campaign alongside Auto Trader, EVA England, and the National Franchised Dealers Association (NFDA).
This coalition is advocating for government interventions such as an information campaign to dispel EV myths, standardised battery health certificates, and a targeted Used EV Plug-in Grant.
Further measures proposed by the coalition include a 50% VAT reduction on used EVs for four years, a special 0% Benefit-in-Kind tax rate for used EVs over the same period, and the inclusion of used EVs in Civil Service Salary Sacrifice schemes.
These initiatives aim to restore confidence in the used EV market and encourage sustained demand.
