Electric vehicles (EVs) may become more expensive to lease in future if residual values (RVs) continue their present downward decline. Prices of used battery electric vehicles (BEVs) have been in freefall for a year, tumbling by more than 30%, and there are growing fears that the fleet and retail markets are following very different trajectories in their adoption of zero emission vehicles.
This has led to mounting calls among industry players for Government intervention to stimulate demand for new and used BEVs to avoid a glut of unwanted plug-in vehicles developing.
In its latest Industry Outlook report, the British Vehicle Rental and Leasing Association (BVRLA) says the Government’s recent decision to extend the deadline for the sale of petrol and diesel models until 2035 has diluted any sense of urgency about the transition to zero emission vehicles.
Current data indicates that only when used BEV prices fall to the same level as used internal combustion engine (ICE) equivalents do they find buyers.
If this trend continues, the BVRLA says lease rentals of BEVs will rise sharply to cover higher depreciation costs, given their higher acquisition prices.
Neither leasing nor rental customers are showing much desire for battery-powered light commercial vehicles (LCVs), it says, and even less appetite apparent among used van buyers.
The leasing industry is clear that the negative narrative surrounding EVs needs to change, ideally backed by financial support from the Government in the form of interest free loans, VAT exemption for used EVs or a scrappage scheme. Otherwise, it says used EV values will remain at the same level as used petrol and diesel car prices, spelling much greater depreciation for battery powered models, and therefore higher lease rates.