This week’s introduction of new car grants has now made government support for the used electric car sector now “essential”, the Vehicle Remarketing Association (VRA) says.

Bringing down the price of electric cars in the new market has underscored the need for corresponding action in the used sector, chair Philip Nothard elaborated.

The newly announced grants will slash electric car prices, saving UK households up to £3,750 when they upgrade or switch to eligible brand-new fully electric cars costing up to £37,000.

But the VRA said the key point here is to recognise that the entry point to the electric car market is, for most motorists, a used electric car.

Nothard continued: “Yes, it’s a positive move that new electric car prices will be brought down by the new grant but it’s something that will have a limited immediate effect because used car buyers outnumber their new car counterparts by almost five to one.”

Nothard also warned of the heightened impact to used EV prices following the depression in values that has been seen over the last couple of years; some EV models are now cheaper than petrol equivalents, despite the much higher purchase prices.

Data cited by the BVRLA indicates that the average used EV price fell 46% between 2021 and 2024, compared to 19% for ICE.

Latest residual value analysis from Cox Automotive reveals that EVs up to 24 months old are only holding 46% of their original cost new (OCN) in July 2025. This is a stark comparison to 2022 where vehicles of the same age retained 85% of OCN.

And the VRA has warned fleets and the used car market could see the values of used electric cars further depressed by the new car grants.

Nothard said the actual repercussions were difficult to predict because used electric car values are already very low but added that if a dealer owns a 12-month-old example of a particular model and the new version is suddenly £3,750 cheaper, it’s likely to impact on its value.

Instead, he said the new car grant scheme had made it more obvious that the market needs a similar form of support for the used sector.

“To our minds, this is not only essential but is a more effective use of government money. There are many more buyers in the market for a sub-£20,000 used electric car than a £37,000 new one. A grant of £1,000 on a two-year-old electric SUV priced at £18,000 is arguably much better value than £1,800 on a £35,000 new example.

“There are, of course, other possibilities for intervention. The used car market doesn’t have to be supported with grants. For example, zero-interest loans have been offered in some countries to encourage used buyers into electric cars, which is an option that could cost the Government relatively little to adopt.”

The wider fleet and leasing sector has been calling for months for action to stabilise used car values.

An open letter, coordinated by the BVRLA and signed by more than 30 companies – was sent to Transport Secretary Heidi Alexander last week, highlighting how the Government can best direct the £1.4bn that was committed in the Spending Review in June to support continued uptake of electric vehicles. Signatories say targeted grants and subsidies, supporting the used EV market, would help more households and SMEs access an electric car.

The VRA also said there were some questions around the electric vehicle infrastructure announcement the Government made last weekend.

“After price, dealers will tell you the biggest single obstacle to buying an electric car is access to charging, especially for the roughly half of the population living in terraced houses or apartments. However, only £25m of the £63m allocated by the Government will be going to local authorities to install on-road and cross pavement solutions. More emphasis is needed on this area.”