The ZEV Mandate accelerates the need for Government support to create the used BEV market
The Zero Emission Vehicle (ZEV) mandate will be a challenge for some OEMs, which could affect the used BEV market.
Under the government’s ZEV Mandate, 22% of new car sales need to be zero-emission at the tailpipe, and this number will continue to increase in the coming years, with 80% of new cars and 70% of new vans sold in Great Britain to be zero emission by 2030.
Missing the target will mean a £15,000 fine per non-compliant car sold for missing the target for OEMs. For vans, the fine is £9,000 in 2024, rising to £18,000 after that. The concern is that OEMs, accounting for 75% of new car sales, missed the 22% target level last year. In the year to September 2023, only Tesla, MG, and Geely, which includes Polestar, Volvo and Lotus, BMW and Mercedes-Benz, achieved the level of Battery Electric Vehicle (BEV) sales required.
Industry data experts Indicata are concerned that the push to achieve the ZEV targets could negatively impact the used BEV market, with dealers choosing to stock lower priced models to protect their cash flow and avoid falling prices. There is some early evidence that this might be the case.
January data from Cap HPI revealed that used car prices dropped by 0.1% in the month after falls of 10.5 per cent in Q4. Within this, diesel and petrol cars saw values rise by an average of 2%. However, BEVs fell by 1.8%, as did hybrid vehicles. The situation may not be fuel-dependent; demand is at ‘the cheaper end of the market’ according to Cap HPI, and because there are very few older BEVs, the average value of all-electric cars is at the high end where consumer demand across all fuel variants has been struggling.
Yet again, it is another reason why MotoNovo continues to call on the government to incentivise used car buyers to buy a BEV, not just new business customers. Whole-life support for BEVs is needed because of the close and long-term relationship used cars have on new car monthly payments. The industry needs a booming used BEV market to match the targeted 22% market share expected this year. Without significantly increased demand for used BEVs, monthly payments for new BEVs could increase as residual values fall.
Debbie McKay, Commercial Sales Director