Residual value EV shock?
June 2nd, 2010 by Richard Aucock
GLASS’S has warned of ‘dramatic falls’ in electric car RVs unless innovative solutions are adopted.
The used car valuation experts warn secondhand values could be well below conventional petrol and diesel models if key concerns are not addressed.
These are currently focused on battery life and performance. In-house methodology developed by Glass’s has indicated car makers need to address these worries before customers will accept EVs.
Ironically, EV values themselves will be above the sector average in terms of pound values during the first year, says Glass’s MD Andy Carroll.
‘But, if the battery is owned rather than leased, and lacks the appropriate extended warranty, the value of the typical EV will then fall dramatically until the vehicle is 5 years old.’
At this point, he says, ‘the car will have a trade value little more than 10 percent of the list price.’
Customer fears driving values
Customers recognise batteries will typically have a useful life of 8 years and will cost £8k to replace.
‘Potential used EV buyers fear this cost, but the key issue is that buyers will assume that their specific battery will need replacing in the near future regardless of the manufacturers’ predictions of battery life.
‘Our RV predictions are therefore based on this worst-case scenario – which is exactly how we believe that prospective customers would perceive the costs of owning an EV.’
The solution? Lease batteries rather than buy them outright – and take the £8k battery price off the up-front list price of the car. This will turn potentially one of the worst-performing used cars into one of the best, says Carroll.
There would be additional benefits for car dealers, too. ‘The dealer network could play a key role in the management of battery upgrading and replacement on behalf of the lease providers.
‘This would be welcome news for the trade, since the projected income from service and repair work for EVs is predicated to be low compared to that for vehicles with an internal combustion engine.’
What are your views on Glass’s EV predictions?
Tags: electric cars, ev, glass's, retained value, rv
June 2nd, 2010 at 5:29 pm
This is ridiculous. I guess this gent hasn’t looked at prices on evtradingpost.com or ebay.com. Old toyota Rav 4 ev’s and production models of gm and ford trucks go for well more than a similar year petrol car with and without batteries. Probably 10 times the value. Replacing the batteries is nothing when you consider the lack of overall other maintenence. It is similar to expect to pay for a battery and expecting to pay for a transmission, carburettor, etc etc.