Fleets demand used EV purchase incentives as values slump

Car fleet operators are pressing Chancellor Rachel Reeves to implement a package of measures to boost the values of used EVs, saying the slump in values is unsustainable for leasing and rental companies bearing the brunt of depreciation losses.

A recent forecast by Oxford Analytics for the British Vehicle Rental and Leasing Association (BVRLA) predicts that used electric car values will fall by a further 28 per cent between now and 2030, on top of the slump that has seen values of EVs registered in 2022 fall by more than half.

The data predicts what the average price of a car (with the age held constant) will be in 2030, compared to its value in 2022. While there’s no comparable data for internal combustion (ICE) cars, the BVRLA says the used ICE market is “much more stable and less prone to significant drops, with no plummeting slump in values seen in the last 24 months.”

The BVRLA says this is good news for those buyers looking to pick up used EV bargains, but “the scale of value destruction being absorbed by the vehicle leasing industry, responsible for 75 per cent of new EV registrations, is unsustainable”.

The fleet trade body says that while current incentives for new EVs have proven demonstrably effective, with strong registrations on behalf of corporate users, if similar incentives aren’t made available for the flood of EVs now entering the used sector, the market will be unable to absorb the supply. The knock-on effects will be lease companies hiking the cost of new EV finance deals, leading to fewer EV registrations and the failure to meet government Zero Emissions Mandate targets.

According to the BVRLA, high depreciation is already pushing up EV lease rates and deterring potential customers from making the transition to zero-emission driving. Oxford Economics forecasts that rising rates will directly impact the EV transition with 300,000 fewer new EVs being registered between now and 2027 if the Chancellor fails to heed industry warnings.

“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,” said BVRLA Chief Executive, Gerry Keaney, who has called the slump in values a crisis that is a direct threat to government targets for the phase-out of petrol and diesel cars.

“New EVs are expensive while used EVs are stunningly cheap and getting cheaper, but someone needs to pay for this price gap,” he says.

“It is motor finance companies and new EV drivers that are footing the bill, through massive depreciation and increased lease rates. These are the fleets and customers that have been responsible for driving demand for EVs up to now. We cannot afford for them to lose confidence in the transition.”  

The package of budget measures the BVRLA is calling for to stabilise the used EV market includes a cut on VAT payable from 20 to 10 per cent, used EV purchase grants for consumers of up to £1,500, and a zero percent benefit-in-kind rating for used EVs on salary sacrifice schemes.

The BVRLA also wants to see a government-backed ‘myth-busting’ campaign around used EVs, and changes to the expensive car road tax supplement.

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