The value of batteries set to boost second-hand EV appeal
29 November 2017
Author: Debbie Wood
As EVs become more widely known, they are being embraced across the motoring industry by car buyers. However, for fleets, a big drawback has been weak residual values, which can sometimes make EVs more expensive on a whole-life cost basis than petrol and diesel equivalents, despite the significant savings on offer from running costs.
That's all set to change, though, as residual values for EV's are on the up. According to Mark Jowsey, director of manufacturer liaison at KeeResources, later models with larger electric ranges have seen a real boost over the past 12 months.
"The emergence of vehicles with significantly greater than 100-mile ranges has reignited buying interest in EVs overall," he tells BusinessCar. "However, now more than ever, an EV can already make good sense when deployed on a horses-for-courses/appropriate use basis, and within easily achievable ranges that make 'range anxiety' much less of an issue."
This view is shared by Chris Chandler, principal consultant at Lex Autolease, who states that it's still very model-specific, though.
"The threshold where EVs make financial sense for fleets is really model dependent. For instance, for the Nissan Leaf and e-NV200, we're already there. These particular EVs are more cost-effective than many similar, traditionally fuelled models over a typical three to four-year lease. Many other EVs currently retain a significant price premium versus their traditionally fuelled counterparts, so it is important when assessing EVs to not just consider one or two specific models."
Although still relatively small in the used-car market, sales of EVs are growing. According to a report from Aston Barclay, the number of used hybrid and electric vehicles passing through auction halls has doubled in just over a year, now accounting for 2% of total lots sold in the third quarter of this year. Meanwhile Chargemaster, the UK's largest provider of EV charging infrastructure, has predicted that the UK will be home to more than one million electric cars by 2022, based on recent market developments.
Battery technology also appears to be standing the test of time, and the potential to resell these batteries will provide a further boost for residual values, according to Jonny Berry, Renault's EV sales manager.
"We have some great case studies with companies that run EVs, and the wear and tear on the body of the car is great, and they run for over 150,000 miles," he explained at a recent Roundtable event. "Batteries have a large second-hand value, and can be used for ten years plus as a home storage or as a battery grid system once their time with the car comes to an end.
"Your ten-year-old diesel car in the end may be worth nothing. With that knowledge, they have great value after the timeframe, and after wear and tear on the car. We've had no battery replacements in the UK today and we're six to seven years in at the moment."
Bob Murphy, EV administrator at Edinburgh College, agrees and has actually found that the cars themselves are ready to be replaced long before the batteries are. "It's important to try and convince people to buy EVs, because they do have a long battery life. I was on-site the other day when a technician from Nissan came down to plug the battery in from a car with 200,000 miles on the clock, two years into its life. The car came off the road because the doors were falling off, not because of anything wrong with the batteries," he explained.
EVs are on the cusp of making a great deal of financial sense for fleets, and, according to Jowsey, the previous whole-life cost argument could very soon be non-existent. "If the batteries hold up well to greater mileage use - and our belief is that they will - then they are not likely to be prohibitive in terms of cost per mile, and the significantly lower SMR costs will help to bolster this argument further," he concludes.