Leasing companies extend EV contracts to reduce losses

Leasing companies are “actively encouraging” businesses and drivers to extend their contracts on electric vehicles for another 12 or 24 months.

The aim is to stop the cars coming to market and further reducing prices in an oversupplied used car market. Prices have have fallen 58% in 22 months.

The BVRLA said the oversupply was a consequence of the ZEV Mandate with carmakers pushing car to market, company corporate environment requirements and benefit in kind taxation. It said the marekt as stimulated to “unnatural levels.”

“Unless this supply-demand equation achieves a better balance and EV residual values stabilise, leasing companies face an ‘existential threat’, the BVRLA has warned.

“The scale of the problem is evident in the results of companies required to publish their financial results, with one major player posting an additional charge of £100m in its Q2 results, due to “declines in used electric car prices”.

“Anecdotal feedback supports this, with one contributor indicating they had lost an average of £2,750 per BEV terminated in the first quarter of this year.

“Worryingly, their forecasts anticipate a further seven percent reduction in EV prices during the second half of this year, followed by a two to three percent decline in 2025,” it said in its Leasing Outlook for September.