Widespread uncertainty about the cost of ownership and residual values in the ever-growing market for used electric cars could be eased by government intervention and industry knowledge sharing, according to Cox Automotive’s most recent analysis of the UK auto sector.
While automotive has faced various challenges in recent years, not least pandemic-related supply chain disruptions and changing attitudes towards ‘ownership’ impacting financing and leasing models, the most significant gear change in the used car market has been the unstoppable rise of Battery Electric Vehicles (BEVs).
Cox Automotive’s latest AutoFocus insight update highlights that the number of used BEVs entering the market is outstripping the development of supporting infrastructure and the looming 2030 Net Zero deadline.
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.
The UK government offers multiple incentives and discounts for those planning to buy a new BEV. For example, the Plug-In Grant offers a discount of up to £2,500 on new BEVs. But there is no such incentive for their used equivalent.
Cox Automotive’s Insight and Strategy Director Philip Nothard says there is an opportunity for the UK government to stimulate demand for used BEVs by following the example of countries such as France, Germany, the Netherlands, and the US – where ownership makes more financial sense in comparison.
Sold price as a percentage of original new price - BEVs only
He said: “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.”