Overview
The British Vehicle & Rental Association (BVRLA) has urged government action to support the used electric vehicle market, citing a multi-year collapse in residual values that is straining company balance sheets and pushing up new-vehicle lease prices. During a Downing Street visit, BVRLA leaders argued that weak second-hand values are undermining confidence across the EV transition despite upbeat headlines about sales volumes and quick used-vehicle turn times.
Why it matters
- Residual values underpin pricing for new EV leases and the viability of fleet investments.
- Sharp declines force finance providers to recoup more through monthly payments, eroding affordability and slowing adoption.
- Investor confidence weakens when resale performance is inconsistent, tightening assumptions behind lease deals and fleet purchasing.
What BVRLA is seeing
- Over two years, used EV values have fallen by about 50% (as highlighted in September 2024), with further declines feared.
- Dealers face write-downs as list prices and forecast residuals diverge from real-world used prices.
- Leasing companies and fleets are absorbing balance-sheet hits on vehicles returning below expected values.
The “negative loop” risk
As more first-cycle battery models return to market, supply of second-hand EVs could outpace demand, driving values lower and prompting higher prices on new EV contracts—further slowing adoption.
- Growing volumes of returning EVs meet insufficient demand.
- Falling prices deepen losses for finance houses and operators.
- Higher new-vehicle lease rates deter buyers and delay fleet renewal.
- Slower refresh limits the flow of newer models into the used market.
Policy focus signaled
BVRLA did not list specific measures, but it called for support targeted at the second-hand market. By stimulating demand for used electric models and stabilizing residuals, policymakers could help lower the cost of new EV finance, ease pressure on fleets and finance houses, and rebuild investor confidence.
Context and debate
While some indicators—such as rising used EV sales, fast conversion rates, and attractive pricing—look positive for consumers, the association warns these mask deeper issues in the financial plumbing supporting the UK’s electrification goals.
Outlook
The government has not publicly responded to the latest lobbying. Without intervention, BVRLA expects the described negative loop to accelerate as more second-hand EVs enter the market with demand lagging supply.
