Falling EV Values Problematic for UK Fleets

Falling electric vehicle residual values (RV) are “problematic” for fleets and action must be taken to improve their prospects in the used car market, finds an article in Business Motoring.

Paul Hollick, chair of the Association of Fleet Professionals (ATP), said the most popular fleet EVs have seen RV reductions of 10-20% over the past 12 months.  

“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,” he told Business Motoring.

He stressed fleets would still want to continue moving toward electrification to take advantage of its many benefits. “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,” he added.

Fleets, and the industry overall, must consider what can be done to strengthen RVs and reduce power costs, Hollick noted.

“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,” he said.

However, he stressed addressing the used EV market would be a challenge. “How do we change the perceptions of used car and van buyers, convincing more of them that these vehicles are desirable?” he asks.  “It seems to us that doing so centers around making EVs more affordable while ensuring that consumers view them as practical propositions on a day-to-day basis.”

Affordability is a key consideration. Some countries provide government subsidies for the used EV market, giving consumers everything from low-cost loans to lump sums. Hollick said adding those measures in the UK would help.

But, he added, an issue that needs greater attention is that 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.”

Hollick said the AFP welcomed the formation of ChargeUK, a new industry body for charging providers, and hoped it would work closely with government.

“It has appeared to us for some time that a much stronger sense of direction is needed than is currently being seen with charging,” he said.

AFP has lobbied for a charging czar for some time. But if that’s not possible, Hollick said “an industry body working alongside government is the next best solution. Without visibly viable public infrastructure in place, used EV buyers are being asked to take a chance on simply being able to charge their vehicles out on the road, which is simply unreasonable.”

Hollick stressed these issues will probably resolve over time. But currently, they present many hurdles to used EV sales.

Eventually, he predicts:

• Power will get cheaper
• Charging infrastructure will improve
• Mass production will lower EV prices, and
• Used prices will fall to a level more in line with that of gasoline-powered vehicles.

But right now, he admitted, it feels “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.”