Industry calls for used EV market support to enable green transition

The BVRLA is coordinating calls from a host of fleet operators, vehicle rental and leasing companies, and trade bodies, for the government to support the used market, warning that without support, it will stop the zero-emission transition in its tracks.

Writing to the Transport, Environmental Audit and Business Select Committees, signatories are calling for measures that support household and SME access to electric vehicles, and mitigate the volatile residual values denting market confidence.
 
Registrations of new battery electric vehicles (BEVs) are on an upward trajectory, led by the fleet and leasing sectors and pushed by the Government’s Zero Emission Vehicle (ZEV) Mandate. The size of the new market (≈2m annually) is dwarfed by that of the used market (≈7m annually), although current support measures focus entirely on pockets of new registrations. The terms of the Mandate increase the proportion of new car and van sales that are for zero-emission vehicles each year, with all those vehicles set to reach the used market in the months and years ahead.
 
While most new vehicles are bought by businesses, the majority of UK consumers only buy on the used market. Those buyers currently have no support to make the shift to BEVs, creating a chasm between supply, due to increase by 178% by 2028, and demand. This gap has put values of second-hand BEVs under pressure, seeing them fall 50% over the last two years and forecast to fall a further 28% by 2030. This leaves the automotive supply chain to absorb the heavy financial impact of incentivising that demand.
 
The open letter to the Select Committees highlights that relying on the industry to shoulder that impact on a long-term basis is unsustainable and will see new vehicles become more expensive to access or limit supply. Without intervention, forecasts suggest the UK could lose out on 290,000 new EV registrations in the next two years. Such an outcome would be at odds with the ambitious decarbonisation targets set by government and prevent progress from accelerating.
 
Signatories are calling on the Select Committees to urgently engage with this issue. Solutions suggested by industry include targeted grants, measures to mitigate the volatility that residual values are experiencing, and the introduction of clear and standardised battery health information.
 
Delivering the letter in Parliament today, BVRLA Chief Executive, Toby Poston said: “The used car market is nearly four times the size of the new one. Maintaining healthy demand and values for second-hand electric vehicles is essential if we want to deliver a sustained transition.  A lack of government incentives or affordable public charging infrastructure means that too few used car buyers or dealers are seeing the benefit in going electric. As a result, used BEV supply is outstripping demand and prices are continuing to fall. This depreciation is costing fleets hundreds of millions and being passed on to new buyers in the form of higher motor finance costs.
 
“To restore confidence in the net zero transition and sustain a healthy electric vehicle ecosystem, the Government needs to intervene.”