Electric vehicle defleet to drive down used values

Thanks to company-owned electric cars entering the second-hand market, the past six months has seen the median price of used electric vehicles (EVs) drop by £10,000, according to new data from New AutoMotive.

Used hybrid vehicles have seen an equally dramatic decline of £9,000, it says. 

With fleets operating around 475,000 electric cars, and 200,000 plug-in hybrids, most of which will be held for 2-4 years before being sold into the second-hand market, New Automotive claims that used prices could decline further as corporate leases come to an end.

Ben Nelmes, CEO of New AutoMotive, said: “It’s no surprise that since 2020 - when the tax rate on company purchased electric vehicles dropped to 0% - there’s been a huge uptick in the number of corporate electric vehicles on our roads.

“The Government’s strategy was to encourage companies to be the early adopters of electric cars. As the first wave of company-owned electric cars are starting to flow into the used car market, motorists are reaping the rewards of the Government's strategy.

“It’s a trend that’s set to accelerate as more second-hand vehicles appear on the market, forcing the price down even further and accelerating the UK’s transition to electric.”

Nelmes added: “The benefits of going electric will be increasingly available to people up and down the country, and it’s great to see that so many people are now able to purchase ex-corporate fleet cars on the growing used EV market.”

The latest used values from Cap HPI show that for the second month in a row, EVs were the best-performing fuel type in terms of value movements, with an average drop in October of 2.4% or around £650.

Petrol cars dropped by an average of 4.6%, diesel by 4%, hybrids by 4.1% and plug-in hybrids by 3.9%.

Cap HPI told Fleet News that remarketers reported healthy demand from many retailers to source EVs, but businesses continue to take the strategy to replace rather than stock up.

The two models that performed well are the Renault Zoe and Nissan Leaf due to the attractive, relatively low, retail price points. Both models saw an increase of around 2% at three years old.

The Cox Automotive Insight Report 2023/24, published last week, says that the current monetary value of used cars continues to cause alarm, indicating a situation that might not be sustainable in the long term.

Cox Automotive expects a gradual stabilisation of battery electric vehicle (BEV) used residual values as they move closer to parity with internal combustion engine (ICE) vehicles.

The report suggests that this shift is an encouraging sign for the future of the EV market.

However, it acknowledges that the outlook for EV values is unclear. The wholesale market is seeing a growing number of EVs, and as battery technology improves, offering greater range and affordability in new vehicles, fluctuations in BEV values should be expected.

“The leasing companies kind of know what's coming and (in some cases) they are going for that secondary lease,” said insight report author and Cox Automotive’s insight director, Philip Nothard.

“It's all about depreciation protection and the leasing companies will manage that.”