Battery concerns said to be blunting EV residuals
Registrations of electric vehicles grew significantly during the first half of 2014, up from 1,049 units in 2013 to 2,558 this year, but the used market is still unreliable, the company explained.
Low residual values, primarily caused by uncertainties about the longevity of batteries and the cost of replacing or maintaining them, is affecting contract hire rates and whole-life costs for early adopters, the company said, with the knock-on effect that dealers are reluctant to stock them.
Lithium-ion batteries lose some of their capacity in normal use, and although most are designed to last for the lifespan of a vehicle – between 10 and 15 years – the technology is still new to the used market and there is an uncertainty about how much range will be lost in normal use. With replacement batteries estimated to cost between £8,000 and £10,000, there is the potential for buyers in the 4-10 year-old vehicle bracket to be worth more than the car itself.
A battery leasing or warranty scheme, priced between £40 and £100 per month, could provide the peace of mind needed to stabilised used demand, the company said. This could also reflect the cost of reconditioned batteries, though these are reliant on supply, which in turn means ongoing growth of new electric vehicle sales.
Alex Wright, managing director of Shoreham Vehicle Auctions, said: ‘The new electric car market is growing, but manufacturers must look to when these cars move into the second hand market and if they look after the needs of the used car buyer of seven to 10 year old models, then the longer term needs of buyers of three to five year old cars will look after themselves.
‘By ensuring used buyers are given enough information and support will ensure the market continues to grow. The benefits of electric vehicles are plentiful and with customer perceptions changing for the good, manufacturers need to act quickly to ensure this level of positivity continues.’
Nissan North America already has a scheme in place, allowing LEAF customers who lose more than 30% of the vehicle's battery capacity to lease or purchase a replacement regardless of the age of the car. Pricing of $100 (£58) per month is expected to be finalised soon, while the $5,499 (£3,214) for an outright purchase was announced last week.
Although this isn't available in Europe, Nissan offers warranty replacements for batteries which lose more than 25% of their capacity in the first 60,000 miles or five years.