Whenever a new model hits the used car market for the first time there’s uncertainty because there’s no previous sales data to provide an indication of its value. With low volume, the prices on the first few sales will bounce around until the market finds its rhythm.
This will be the scenario for electric vehicles when the first wave of ex-fleet cars hit the used market in the next few years. History has shown that there will always be a mix of age and kilometres as some fleets turn cars over quickly to capitalise on high prices, and other hold onto them for five years to maximise depreciation.
Consumer demand could support higher residual values on the first wave of used fleet EVs if petrol prices remain high and increased education creates more confidence in the longevity of the batteries.
There is a potential risk that government agencies will flood the market with used electric cars. They will be the initial buyers of EVs in bulk and with limited model choice it could result in a large number of similar vehicles at auction which will drive the used values down which is what the state government policies are trying to achieve.
When talking to the leasing companies and Fleet Managers that will make these decisions, they always lean on fundamentals and the principles that have guided them with over the years.
Things to consider when setting residual values on your electric car fleet:
- Model cycle and volume sold
- Battery technology (V2G/V2L) and vehicle range will be a big factor for EVs
- Body style and shape
- Will the market want their EVS to a passenger car or SUV?
- Options and accessories
- Some EVs are have higher specifications than similar ICE models
- Application during service
- Was it charged with a fast charger or managed to maximise battery life?
- Was it a pool car with multiple drivers?
- Rental company activity
- Did the manufacturers offer big discounts to move volume?
- Manufacturer reputation
- There are new brands entering the EV market that don’t sell ICE cars
- Market liquidity
- Can you get a new EV quickly?
- Maintenance costs later in life
- This is an unknown factor with EVs
