Government intervention and industry knowledge sharing could help counter volatile used electric vehicle prices and inform buyers on the benefits of going electric.

Cox said falling values and uncertain demand could be eased by offering incentives and discounts for those planning to buy a used BEV, stimulating the market

Cox Automotive’s latest AutoFocus insight update highlights that the most significant “gear change” in the used car market of late has been the rise of battery electric vehicles (BEVs).

It warns that the number of used BEVs entering the market is outstripping the development of supporting infrastructure.

By the end of 2023, more than a fifth of new vehicles in the UK (up to a year old) are expected to be BEVs. That figure should more than double (for cars up to three years old) by 2027.

According to industry reports, just 64% of franchise dealers stocked used BEVs in 2022, while nearly 90% of independent dealers did not have them in stock. The knock-on effect has been uncertainty regarding pricing and availability, which could lead to cautionary buying behaviour from both retailers and consumers.

Latest SMMT used car market figures for Q1 show that BEV demand is climbing but conventional powertrains remain dominant.

Earlier this week, the Association of Fleet Professionals (AFP) warned that falling electric vehicle residual values (RVs) were proving “problematic” for fleets; it said RV reductions of 10-20% haven’t been uncommon over the last 12 months for some of the most popular fleet EVs.

But Cox said falling values and uncertain demand could be eased by offering incentives and discounts for those planning to buy a used BEV, stimulating the market.

And insight and strategy director Philip Nothard said there was an opportunity for the UK government to follow the example of countries such as France, Germany, the Netherlands, and the US – where ownership makes more financial sense in comparison.

He commented: “In the US, the Biden administration has introduced a $4,000 tax credit for the purchase of used BEVs under $25,000, which has led to a significant increase in their adoption.

“It is essential that similar initiatives are implemented here to encourage the adoption of used BEVs and support the growth of this market. Until then, there will only be more instability and volatility.”

Nothard added: “It’s clear that there’s a discrepancy between the demand for BEVs and their availability in the used vehicle parc. I think a powerful antidote to this clash would involve improving awareness, more knowledge-sharing in the industry and, of course, legislative change that makes the process of stocking buying BEVs both more affordable and streamlined.”

The AFP has also said that fleets and the wider motor industry need to explore measures that could help strengthen RVs and reduce the cost of charging. But while the latter problem is potentially the easiest to resolve – energy prices are expected to fall from July – AFP chair Paul Hollick said addressing the used EV market would be more of a challenge – and would centre around making EVs more affordable while ensuring that consumers view them as practical propositions on a day-to-day basis.

Hollick has also pointed out the government subsidies in other countries that are aimed at the used EV market, ranging from low-cost loans to lump sums, which have proven effective.

Auto Trader has also recently warned of the need for action on incentives for both new and used EV buyers in its Road to 2030 Report. It’s called for the Government to step in with a detailed programme of tax incentives to improve the affordability of BEVs and support the industry’s efforts in driving mass consumer adoption.

Its list includes fairer charging costs through equalising VAT on public and private charging; more incentives to make EVs affordable for all, such as reducing VAT on used EVs and lower or interest-free rates on EV financing deals; and initiatives to build both buyer and seller confidence in used EVs with a focus on battery health – as already spotlighted by the Vehicle Remarketing Association (VRA) and currently being explored by the Government.