Electric vehicles (EVs) have had a rough ride over the decades with little investment in their design, as most major manufacturers considered the product too niche. However, since the emergence and increased prominence of high levels of air pollution and the effects of global warming, the car industry has focused much more resource on developing EVs. This has intensified recently as manufacturers aim to reduce the average CO2 output across their ranges, in line with stricter targets.
Although the products on offer are much more appealing in both design and functionality now, the list price remains high compared to petrol and diesel equivalents, with the need for government incentives to get consumers to join early adopters.
Historically, convincing consumers that EVs were a viable alternative to the internal combustion engine (ICE) was challenging. Range anxiety, charging times; charging point availability and insufficient knowledge of the technology from both consumers and the dealers have hindered new and used retail sales. Despite low volumes of EVs hitting the used car market, demand has been poor for a number of years.
This led to very little demand in the used car market for even the smallest volume of stock on offer in the wholesale market, for a number of years. Some early EVs had a battery lease agreement in addition to the sale price, which meant that when they returned to the market as a used car, dealers had to take the contract on before selling the car to the consumer. Battery leases proved very unpopular with dealers and consumers alike.
Within the last five years, more manufacturers have started producing electric cars across the full spectrum of the market, which has inevitably enhanced product offerings as the technology improved. There has also been increased government and council ICE legislation and tax increases. When combined, the improved offerings and better understanding of the benefits by both the dealer network and customers, has seen an upsurge in demand. At the same time, supply has remained low which has led to a strong improvement in residual values. Over the last few months, demand has increased further, as seen in the chart below, which shows Glass’s Trade value expressed as a percentage of original cost new price. This trend is likely to continue in the near future with little improvement in used supply expected.