Collapsing electric vehicle prices are leaving a growing number of drivers in negative equity, a top dealership chain has warned. The Telegraph has more.
Vertu Motors said on Wednesday that car retailers were coming under pressure as EVs coming off financing agreements were found to be worth less than the loan they are attached to.
In most car finance deals, this is not a problem for drivers as – provided they have kept up with their payments – they can hand back the keys and walk away.
The lender that funded the leasing deal then typically takes the financial hit.
However, the issue creates a headache for dealers that often allow customers to “roll over” positive or negative equity into new financing deals to win repeat business.
The steep drop in electric cars’ value is being partly fuelled by the discounts offered on new vehicles, as manufacturers attempt to boost sales to hit legally-binding government targets.
Rob Forrester, Vertu’s Chief Executive, said: “We all know that battery electric vehicles have depreciated at a significant rate, and that tends to feed into the creation of negative equity.
“If you think about when many cars were bought two to three years ago, new car prices were quite high because of supply constraints, but since then there’s been a reduction in used car value.”
It follows warnings last month that so-called fleet operators, such as car leasing firms and rental companies, were having to swallow large losses when reselling EVs because of “accelerated, exceptional depreciation”.
In the past two years, the British Vehicle Rental and Leasing Association (BVRLA) said the average amount of “residual value” left over at the end of a car’s lease period had plunged from 60% to 35%.
Worth reading in full.
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Electric cars have come along leaps and bounds in the last few years. However, this is mainly due to government led market distortion, the outcome of which is playing out in front of us. Anything that you are compelled to do by government is a lousy marketing pitch.
Agree on all points.
Yes EVs having come along in leaps and bounds. In the same way that horse drawn transportation solutions would come along in leaps and bounds if the government forced car manufacturers to make horsecarts.
But no-one would want overly fancy, super expensive horsecarts, either. But no problem, at least the manure could be put to good use, eh.
I hate it when cars do that. Though I reckon it’s usually the fault of the driver.
Unless it’s a Tesla.
Water in the fuel tank in some cases.
Leaps and bounds? As high as jumping two year olds?
Normally this sort of thing would mean great opportunities for cash rich individuals looking to scoop up fantastic deals from distressed sellers.
Except this time the goods on offer are worse than worthless.
What’s gonna happen to all those nasty, dangerous batteries? An ecological disaster waiting to happen. Whoops.
OT – but important to get this info out:
From the Freedom Alliance (small political party)
Dear Members
Freedom Alliance have been asked on to a panel at the Cambridge Union on Thursday 17th October to debate the motion ‘This House would Make Vaccinations Mandatory’.
Our stand point is that they SHOULD NOT.
Our Deputy Leader Earl Jesse will be standing against mandatory vaccination.
We would like as many people as possible that agree with us to attend the event as there will be a vote at the end. It seems clear that mandatory vaccinations are what the establishment want – we must tell them there are many people who disagree. and why this is a heinous intrusion on our freedoms and health that must never be allowed.
Please share this event on social media on telegram, Twitter, Facebook, etc. and follow us back if you have not already.
https://cus.org/event/this-house-would-make-vaccinations-mandatory
Let them do it, I say. Cambridge deserves to be trashed.
The “University”, I mean. Not the city.
Wild horses would not drag me anywhere near that place, and I would advise any friend or relative of mine to do the same. I’ve visited the city a couple of times – lovely place but just going there gives me the willies these days.
The Cambridge Union website, https://cus.org , has a link in the footer of each page to “Competitive debating”.
https://cus.org/debating-at-the-union
“Oops… It appears we are unable to find what you are looking for.”
FAIL
Lol – maybe it’s going out of favour…
The city is full of illiberal undemocrat bstards. Maybe it shod be destroyed (politically and economically) it’s a God awful place to travel to unless you use the communist mandated and expensive trains.
Maybe the subject of the debate should be…if anyone tries to force me into any medical procedure, am I justified in attempting to kill them?
But just like last time, Parliamentarians will have an exemption!
Anyone who supports mandatory forcing of people to have medical interventions is nazi scum. We fought a war against this evil, and now our own government and people seem to support forcing people to do medical things against their will. Dr Mengle and the other Nazi filth would be pleased as punch. Christ, what have we become.
The term “negative equity” reminded me of the housing market a few decades ago. ISTR that some of my colleagues had, err, acquired it then, with mortgages being in excess of the value. Capital loss would have been more logical, but that’s psychology for you.
Oh well, never mind.
If the population doesn’t want to learn that the things the government tries to force on us end up badly us, then what can one do.
You know, like lockdowns and experimental jabs and “clean” energy etc etc
The general population believe BEVs to be a product of the Free Market; they are totally unaware of the legal obligations forcing car manufacturers to produce the bloody things.
Are you sure? I reckon most people are at least vaguely aware that petrol and diesel cars are.going to be phased out by a certain date.
And they’re very aware of the favouritism given to electric cars. That’s pretty hard to miss.
I suspect they’re just acting with the same demented logic as with the jabs. If the government is strongly pushing it, then it must be necessary and those who resist are anti-social, fascist, conspiracy theorists, far right, or some combination of those.
Oh yes they are aware that:
the government cares for our health and is thus getting rid of nasty, smelly, noisy, wasteful, unhealthy, bad-for-the-planet ICEs.
\sarc
But they are not aware of the daedaelian machinations and corruption which all that “benevolence” is justifying.
If they knew how much of their energy bills and other taxes went into subsidising they might think differently, sadly, most people don’t seem to want to know
Yes, I have family members who are wilfully ignorant and delight in staying so and will be having their next round of medical experimentation without a clue what it could do to them.
I disowned all those basket cases in my extended family long ago. I tried not to. And failed. Goodness knows what’s happening with them these days.
Thankfully my immediate family members are on the same page, more or less.
Vertu Motors. I didn’t get any further than that before my empathy ran out faster than an EV battery.
Wait for it, BTL commenter Insurrectionist will interpret that as irrational hatred for rich, intelligent capitalists!
Refer my earlier exchange with him/her on the subject of the Arch Grifter in the global BEV arena (and many other arenas), Mr Elon Reeve Musk!
Oh…shame eh? In other news, it seems a Tesla kindly incinerated all four occupants when it decided to self-combust.
This has been happening a lot, for years. Martin Tripp used to work for Tesla and tried to blow the whistle on the terrible battery assembly process which was leading to punctured cells being placed in the packs. Elon called the police on him, had him arrested as a terrorist. I kid you not. Martin’s life was destroyed.
If the MSM has ever reported these Tesla fires, it has always done so in manner which is extremely favourable to Tesla. It’s always the driver’s fault, even if they weren’t in motion at the time.
The main battery guy at Tesla,a real expert called Doug Field, resigned in protest in 2018. Elon dragged him onto the stage to publically invent some personal reason for his resignation. Elon never accepted his resignation, but Doug soon returned to Apple.
The scary thing is that these cars are allowed to have door systems that stop the occupants getting out in an emergency. I don’t know the make of the car that hit a tree in Germany and ignited where only a child in the back could be rescued while the parents burnt to death in the front.
In the Tesla Model 3 and Y, in the event of any electrical failure, the rear doors can only be opened from inside by revealing and pulling on a hidden catch, near the floor I believe. It has already proved fatal in several cases. Add to this, as you say, that none of the doors can be opened from outside by firefighters, and it becomes a coffin.
The other car manufactures receive no such leniency. For example, the mere possibility that an ignition switch may not function in certain cases wiped 30% overnight off the share price of one car manufacturer. Nothing bad had even happened. Hundreds of thousands of costly recalls.
It is things like this which make me certain that Elon has been protected, for many years.
There is an entire catalogue of serious safety failings in Teslas: underweight suspension struts which fail completely when driven over a small pothole leading to complete loss of control; touchscreen which stops working in elevated temperatures; unscheduled over-the-air updates preventing use of the car leaving mothers stranded with babies…. Any one of which would prove terminal for the incumbent ICE manufacturers.
Don’t get me started on the Cybertruck. How that thing has been allowed near the road is a complete mystery.
And if you mention Autopilot to me I will spontaneously combust.
Had an old SKODA FABIA do that to me once, but that was a wiring problem. Could only open the doors from the inside with the key in the ignition and turned on. I didn’t keep it much longer.
Maybe that was the one I bought – and fixed. ~£60 and a lot of swearing.
Or otherwise that’s a problem that’s affected two Fabs.
Quite a few of my colleagues have an EV.
My impression is that their entire life seems to revolve around charging their vehicles.
We have chargers at work – but they need to be booked!
So you have to download an app and find a slot when nobody else is using the charger.
The charger is frequently broken or the app doesn’t work.
I arrive at work and invariably there is one of them poking at his/her mobile phone, frowning and looking baffled.
So from what I have seen, I’m in no rush to replace my old banger.
From the article I gather it’s mostly the lease companies which hold the negative equity, not the drivers. Of course, private owners who have used conventional loans or intended to buy the car on the final optional payment of a PCP might feel they’re missing out.
I don’t have a lot of sympathy for the lease companies. They bet. They lost. Tough.
My main question is what will happen next? Now the lease companies realise that the residual value is too low to make as much profit as they would like (or maybe even a loss) will they raise the contract prices to make sure they don’t get left with negative equity vehicles in future? In other words, will they be allowed to demand realistic prices or will TPTB demand that they cross-subsidise from ICE sales/leases – or worse yet, give them a bung from taxation?
God only knows – I think I read people with the bridging insurance, or whatever it’s called, were also getting caught out as it in no way covered the loss… usually they’d roll from one newish car to another new one with no bother – not in the clown world of ev
In recent years the motoring industry in the UK has grown to depend on leased corporate sales then feeding into a healthy secondhand market. For many years the family cars we have had have been ex-lease cars and they have been all been very good cars and a great deal.
However, an industry that relies on this sort of model for selling its products was always going to be vulnerable. Even if EVs were the best thing since sliced bread it was always going to be difficult to switch the secondhand market to EVs. As we all now know, there are many adverse issues with regard to EVs and these get worse with secondhand EVs, consequently it is hardly surprising that the demand for secondhand EVs is so poor. I gather that some corporate lease companies are looking to extend the lease deal to 4 or 5 years to reduce their losses. If people will not buy 3 year old ex lease EVs, they certainly are not going to be very keen on 4 or 5 year old EV’s with a dying battery
I suspect that this is how the EV World in the UK will go, EVs leased to the corporate sector on 5-6 years leases with the cars written of and scrapped at the end of the lease deal. In that way EVs will be one owner throwaway commodity items, like toasters. Although of course if I am correct and EVs have a much shorter life-span than ICE cars then the whole environmental advantage of an EV is blown away.
And you could argue the ‘whole environmental advantage’ was a load of bollocks to begin with, even before this lifecycle issue has become crystal clear
Or look at other industries, like the commercial bus trade, or indeed the railways. Not much second hand market there; longish service life compared with car lease deals – and a really volatile market for the manufacturers, as well as the leasing firms.
Oh dear, never mind!
Sadiq Khan in hot water after unpaid Ulez fines reach £376m with TfL in huge debt (msn.com)
Unpaid fines are not actual debt to TFL though surely, or do they mean the TFL financial position generally, which I recall was waaaaay overspent in the past, one of the real reasons ULEZ came about
Socialist governments meddle in the market, and this is what happens. They will just double down on their intellectually retarded thinking and force us to get scrap all cars over a certain age, just you watch. Communists. Communists. Communists. Everywhere. Times are utterly grim. We will collapse. Standby for civil disorder
Nothing good about EVs.
we are being forced to buy them.
They cause range anxiety.
They are environmentally worse than ICE cars and the massive batteries are very difficult to recycle.
They catch fire and are incredibly difficult to put out, whilst producing copious amounts of very toxic fumes.
Very dangerous on ships, ferries and in tunnels.
They cost a fortune to insure.
They depreciate faster than a stone sinking to the bottom of the ocean.
They are sold using taxpayers money to subsidise them.
They are destroying what was left of our car industry as we are unable to compete against China.
Our electricity prices are the highest in the world making them more expensive to run.
Make a mistake under the bonnet and you get electrocuted.
They are a nightmare for garages to service and repair.
People can’t hear them coming and get run over.
The main issue with EVs are the batteries are not up to the job they are being called to do. They are a huge expense and can be a maintenence nightmare. Evaluating the condition of the battery pack on used EVs is a guessing game that brings high risks. The other big issue is the all manufacturers are inflating their stated achievable range by up to 50%. Even Tesla inflates their ranges.
“Collapsing electric vehicle prices are leaving a growing number of drivers in negative equity…”
Good. Since I have been robbed to subsidise these virtue signalling, greedy opportunists I feel slightly better.