Government warned EV switch at risk unless it helps ease RV volatility

The Government is being warned that a failure to support the used battery electric vehicle (BEV) market will stop the transition to zero-emission vehicles in its tracks.

Used BEV values having fallen by 50% over the past two years and are forecast to fall a further 28% by 2030.  

In an open letter to the Transport, Environmental Audit and Business Select Committees, the industry is calling for measures that support household and small and medium-sized enterprise (SME) access to BEVs, as well as mitigate the volatile residual values (RVs) denting market confidence.

Coordinated by trade body, the British Vehicle Rental and Leasing Association (BVRLA) and signed by more than 25 organisations, including fleets, vehicle rental operators, leasing companies and trade bodies, the letter says that, while most new vehicles are bought by businesses, the majority of UK consumers only buy on the used market. 

Those buyers currently have no support to make the shift to BEVs, creating a chasm between supply, due to increase by 178% by 2028, and demand. 

This gap, says the letter, has put values of second-hand electric vehicles under enormous pressure.

The BVRLA says that relying on the industry to shoulder that impact on a long-term basis is unsustainable and will see new vehicles become more expensive to access or limit supply. 

Without intervention, forecasts suggest the UK could lose out on 290,000 new EV registrations in the next two years. 

Signatories are calling on the Select Committees to urgently engage with this issue.

Solutions suggested by industry include targeted grants, measures to mitigate the volatility that residual values are experiencing, and the introduction of clear and standardised battery health information.

BVRLA chief executive, Toby Poston, said: “The used car market is nearly four times the size of the new one. Maintaining healthy demand and values for second-hand electric vehicles is essential if we want to deliver a sustained transition.  

“A lack of Government incentives or affordable public charging infrastructure means that too few used car buyers or dealers are seeing the benefit in going electric. 

“As a result, used BEV supply is outstripping demand and prices are continuing to fall. This depreciation is costing fleets hundreds of millions and being passed on to new buyers in the form of higher motor finance costs.

“To restore confidence in the net zero transition and sustain a healthy electric vehicle ecosystem, the Government needs to intervene.”

The letter was delivered to members of the Transport, Environmental Audit and Business Select Committees on Thursday (April 3) and invites further dialogue with the automotive industry to develop a supportive used EV environment. 

Signatories to the letter included: the BVRLA, the Association of Fleet Professionals (AFP), the Vehicle Remarketing Association (VRA), Alphabet (GB), Arnold Clark Finance, Arval UK, Ayvens UK, Cox Automotive Europe, Kinto UK, Leasys, Select Lease by Mobilize, Novuna Vehicle Solutions, Octopus Electric Vehicles, Pendragon Vehicle Management, SG Fleet, United Rental Group (URG), Zenith, The AA, Amey Group, Autoglass and Laddaw, AXA UK and Ireland, Clarion Housing Group, MJ Quinn, NG Bailey, Sanctuary Housing and Speedy Hire.