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The government’s £5,000 electric vehicle subsidy is having a negative impact on residual values, according to research carried out by CAP Consulting.
The research, Impact of Government Subsidies for Electric Vehicles on Used Market Values, analysed the used market performances of the Nissan Leaf in the UK and France, where the vehicles qualify for government subsidies, and compared them with Germany and Italy where there are no grants.
The study found a direct correlation between stronger used values in Germany and weaker values in the UK and France. It also found that France, which offers the highest subsidy, also has the lowest residual value.
It concluded that the removal of subsidies will widen the gap between new and used values threatening the economic viability of choosing a new EV in the future.
“Government subsidies for new plug-in car purchases merely serve to create cheaper used electric vehicles,” said CAP Consulting analyst Mark Norman.
“Our analysis shows that grants are ineffective as a means of reducing ownership costs and, worse still, their inevitable eventual removal will cost new EV owners thousands in additional depreciation. The used value is now established in each market and when the subsidy is removed in the UK and France, the additional cost of a new vehicle will never be retained by a higher residual value.”
CAP Consulting is urging the government to consider alternatives to the subsidy including green badge parking schemes, permission to use bus and multi-occupancy lanes and exemption from many city centre driving restrictions. It cites the example of Norway, where Europe’s largest penetration of electric vehicles has been achieved partly through such incentives.