Fleet uptake of electric vehicles and UK decarbonisation targets are at risk unless the Government acts now to strengthen demand for used EVs, the BVRLA has warned.

The BVRLA says further used EV value drops are likely if no government action is taken, increasing leasing rates further

The industry body is warning that “massive, unpredictable depreciation” on used EVs is already pushing up lease rates on new vehicles and deterring potential customers from taking the leap to zero-emission motoring.

And the BVRLA says further used EV value drops are likely if no action is taken, increasing leasing rates further.

Used EV values have fallen 50% over the last 24 months as a wave of electric vehicles hits the market at the end of their first lease without sufficient demand from used buyers.

The urgent need for intervention has been further highlighted by new forecasting from Oxford Economics, which shows that used electric vehicle prices will carry on falling over the rest of this decade.

Between 2024 and 2030, used EV car prices are predicted to fall by a further 28% while the electric van market – already very fragile – will see used prices drop by 12%.

Such used value “destruction” might be good news for used EV buyers but is unsustainable for the vehicle leasing industry, which is responsible for 75% of new EV registrations.

It will also directly impact fleets. As the depreciation experienced by EVs increases, so does the price of leasing a new one.

Oxford Economics modelling estimates that this combination of reduced trust and rising lease rates will result in nearly 300,000 fewer new EVs being registered between 2023 and 2027. Annual new EV registrations only just reached the 300,000-milestone last year.

“The crisis we are seeing in the used EV market is a direct threat to the Government’s ambitious ZEV mandate and ICE phase-out targets,” said BVRLA chief executive, Gerry Keaney.

“New EVs are expensive while used EVs are stunningly cheap and getting cheaper, but someone needs to pay for this price gap.

“It is motor finance companies and new EV drivers that are footing the bill, through massive depreciation and increased lease rates. These are the fleets and customers that have been responsible for driving demand for EVs up to now. We cannot afford for them to lose confidence in the transition.”

The BVRLA launched its #happyEVafter campaign earlier this month as part of its annual Parliamentary Reception.

Along with campaign partners Auto Trader, EVA England and the NFDA, it’s set out six ways that the UK must support the used EV market now to maintain zero-emission momentum.

Key measures include a special 0% Benefit-in-Kind tax rate for used EVs for four years as well as a targeted Used EV Plug-in Grant and new regulations that allow the Civil Service to access used EV salary sacrifice schemes.

The BVRLA also says the Government should support standardised battery health certificates to reassure used EV buyers, as per its manifesto commitment, and should also launch an information campaign to counter negative EV myths.

Fleets can support the BVRLA’s #happyEVafter campaign by sending a pre-written message asking their MP to back the work. More details are here.