The crash in value of electric vehicles has been startling but it will not continue as the perfect storm that saw prices plummet by as much as 40% begins to pass.
This is according to Derren Martin, Director of Valuations at cap hpi, who said the rare circumstances that converged to disrupt the EV market are now easing.
He was speaking during ARC360’s specialist EV event, EV-olution; Gaining Ground Together, which was held at the Manufacturing Technology Centre, Coventry this week.
Opening the day with a session entitled, Vehicle Market Intelligence, Derren provided an overview of the market in recent years, revealing the substantial impact of Covid-19 on both sales and values, but said that trading conditions were finally beginning to settle again now and EV momentum should pick up again as we move towards 2030.
Volumes up
Data revealed that just 36,444 EVs were sold in the UK in 2019, but this figure rose to 266,896 in 2022, representing a seven-fold increase in four years. There are now nearly 800,000 pure EVs on UK roads, but that figure will inflate to more than 2.5 million by 2026, which equates to a seven per cent share of the vehicle car parc.
Driving this, apart from environmental regulations and increased consumer choice, is the fall in prices of EVs. While they were up to £10,000 more expensive than ICE equivalents, some models are now about £5,000 cheaper, with average values collapsing by 37% in the last eight months alone.
Values down
Derren said, “They’ve gone absolutely through the floor. Supply increased, electricity prices went up and petrol prices went down. It was a perfect storm. I spoke to one dealer group who sold five EVs for a loss of £26,000. We don’t expect to see prices go up again, and if they do it will be slowly.”
This has had a knock-on effect on the used EV market, with many drivers now reluctant to sell their vehicles and incur a substantial loss.
However, Derren says the market is realigning and has warned repairers to expect more and more used EVs in their shops, saying that when owners do sell again, the models will be older, with more mileage, and likely to need more repairs and servicing.
Used cars
But while the EV market is still volatile, the wider used car market is booming. Sales in the first five months of this year were already 70% of last year’s total volume. This is despite an almost unprecedented spike in values during 2021.
Derren explained that, typically, values of used cars depreciate three per cent, but Covid-19 turned the market upside down with demand increasing as supply decreased, resulting in a staggering 29% rise in average values.
This was recorded across all fuel types, and while the price of used EVs has collapsed, used petrol and diesel models have held their values and are expected to remain strong into the future.
ARC360’s specialist EV-olution event was sponsored by Thatcham Research and ControlExpert, along with ARC360 Corporate Partners: BASF, CAPS, Copart, Entegral, Enterprise, Mirka, Nationwide Vehicle Recovery Assistance, S&G Response, and Solera Audatex, and Partners: Gemini Accident Repair Centres, Repairify, and Prasco UK.
