Over recent weeks, the decline in used EV values has been a significant talking point in the trade. It is little surprise because, in January, CAP HPI reported EV values fell -6.6 per cent. The trend has trade buyers naturally cautious. Similarly, lenders will be mindful of the falls, notably when assessing residuals and GFVs.
As with so many things, it is essential to get behind the potential reasons for the change. Some are more obvious than others. The most obvious is that the supply of used EV stock has been gaining momentum, but other factors include:
- A little over a year ago, used EV prices were rising ahead of ICE values
- Discounting of new models in January by Tesla and then by Mercedes due to over-production
- The cost of living crisis that has seen consumers switch to cheaper, sometimes older stock
- The pace of adoption of used EVs. Many early adopters are on board, but the ‘early majority’ may take a little longer to persuade that the charging infrastructure and high utility prices make now the time to switch, let alone at a premium price
With significantly more new EV products set to hit forecourts this year, and with production ramping up as manufacturers get to grips with the semiconductor shortages, the pricing of EVs, new and used, will be an interesting dynamic. Used car buyers, more usually known for their inherent agility, are being understandably cautious right now. However, I have little doubt that trade buyers will be ready and willing to jump back into the market when EV wholesale values stabilise.
Umesh Samani is the owner of Specialist Cars in Stoke, as well as current Chair of the Independent Motor Dealers Association. As an acknowledged Used Car expert and renowned industry commentator, I would wholeheartedly agree with his recent quotes published in the Car Dealer Journal:
“The current price drops are merely a realignment of their (EV) true current values. Maybe once the market has stabilised for EVs, the values may start to go up a little as demand starts for them at realistic and affordable prices.”
Used EV prices will find their level arguably sooner than later, and EVs will be a significant part of the used car landscape sooner that we might realise. Already, new EV sales comfortably exceed diesel sales. Over half of all new cars sold in the UK are EVs, and Battery Electric Vehicles continue to see the greatest growth.
To provide some context. In May last year, the SMMT reported that 748,349 EVs were on the road in the UK. If, conservatively, half of all new cars sold over the next three years are EVs, then at least an additional 2.4 million EVs will be on the road. A significant part of the N-3 used car parc will be EVs. In the coming months, I’m sure EVs will find their level.
Chris Rowthorn, Director of Motor Sales Operations