Discrepancies between predicted values and true used values for electric cars is causing a major headache for leasing companies, Bloomberg reports
https://www.carscoops.com/author/chris-chilton-cc/
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by Chris Chilton
2 hours ago
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Plummeting EV values are causing problems in both the new and used car markets. Some drivers looking for a new vehicle are being turned off by the idea of purchasing an electric car due to worries about how much they’ll lose when it’s time to trade it in down the road. And buyers who’ve already bought an EV are horrified to find that their car is now worth far less than they imagined.
That’s bad news for any private individual who’s bought a single EV, but imagine if you’d bought thousands of them. That’s the situation lease companies find themselves in. Because lease rates are calculated based on the predicted depreciation of a car during the lease period, a final value lower than anticipated leaves the lease company out of pocket. So it’s no wonder lease companies are demanding automakers compensate them for their cars’ lower-than-expected residual values, as per a recent Bloomberg report.
European leasing giant Ayvens, whose website claims its 3.4-million-strong fleet includes 505,000 electric vehicles, has already started receiving financial compensation for falling EV values, according to comments from its boss, Tim Albertsen.
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Related: These Are The Biggest Losers In The Used EV Market
“Manufacturers today need to keep selling EVs,” Bloomberg reported Albertsen saying during the company’s earnings call this month. “We then need some kind of protection from the manufacturers in terms of their future pricing.”
Protection could come from agreements from automakers that they will buy back EVs to safeguard residual values. Without that reassurance, big corporate customers who make up a large chunk of the car market, particularly in Europe where many people are offered a car as part of their work package, may be forced to turn away from electric power.
Some firms have already stopped offering Teslas to employees because of changing values, and rental firms Hertz and Sixt recently announced they were scaling back their EV programs, particularly those involving Tesla cars. Tesla’s decision to aggressively cut the prices of its new EVs to stimulate demand helped ignite a price war that has forced the values of used electric cars down.
