Plummeting values of electric vehicles (EVs) are causing ripples in both the new and used car markets, leading to concerns among drivers and challenges for lease companies.
Some potential buyers are hesitant to invest in an electric car due to fears of significant depreciation when it comes time to trade it in. Meanwhile, existing EV owners are dismayed to discover that their vehicles are worth far less than anticipated.
This issue is particularly troublesome for lease companies, which base their rates on the projected depreciation of a vehicle. Lower-than-expected resale values leave these companies at a financial loss. Consequently, lease companies are pressuring automakers to compensate them for the shortfall in residual values, as outlined in a recent Bloomberg report.
European leasing giant Ayvens, boasting a fleet of 3.4 million vehicles, including 505,000 EVs, has already begun receiving financial compensation for the declining values of its electric vehicles, according to Tim Albertsen, the company’s CEO.
During a recent earnings call, Albertsen emphasized the need for manufacturers to continue selling EVs and called for protection from automakers to maintain future pricing stability. This protection could take the form of agreements where automakers commit to repurchasing EVs to safeguard residual values.
See also: Hertz to Sell 20,000 Electric Vehicles, Including Teslas, Citing Rising Expenses and EV Demand Shift
Without such assurances, large corporate customers, a significant portion of the car market, especially in Europe where company cars are common, may be deterred from adopting electric vehicles.
Already, some companies have ceased offering Teslas to employees due to fluctuating values. Rental firms Hertz and Sixt have also announced cutbacks to their EV programs, particularly those involving Tesla cars. Tesla’s aggressive price cuts on new EVs, aimed at boosting demand, have triggered a price war that has further reduced the value of used electric cars.
