Companies with fleets of electric vehicles (EVs) on their books need to prepare themselves for a bumpy ride ahead. The slump in demand for new EVs, tumbling prices for used models and the offloading of end-of-lease vehicles by fleet operators has sent residual values skidding.
New approaches to managing EV residual values and associated risk are essential. Conventional practices struggle to accommodate the short-term volatility of EV residual values. They also cannot properly account for the multiple lifecycles of electric vehicles.
“There's a lot of pressure on the prices of new and used electric vehicles. This is challenging for vehicle OEMs but also for finance providers that have to write new contracts, book values for existing contracts and manage the risk attached to EVs in their asset portfolios,” says Markus Collet, Partner at Corporate Value Associates (CVA).
Collet expects uncertainty surrounding EV residual values to continue for a considerable time. “Everyone is looking for a way forward. We’re at the beginning of a phase of exploration.” Many other executives who attended the event share Collet’s assessment. When polled about likely developments in EV markets, 47% of respondents expect them to remain challenging into the mid-term. And 19% think they’ll get worse. A more optimistic 28% believe the next 12 months will be difficult but anticipate EV markets will then improve.
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