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Glass's calls for leasing solution to EV residual problem

Date: 03 June 2010

Residual value expert Glass's Guide is calling for manufacturers to lease the batteries for electric vehicles, to prevent a huge drop-off in residual values compared to petrol or diesel equivalents.

"After one year of ownership we would expect EV residual values to be above the segment average expressed in terms of pound values," said Andy Carroll, managing director at Glass's. "But, if the battery is owned rather than leased, and lacks the appropriate extended warranty, the value of the typical EV will then fall dramatically until the vehicle is five years old, at which point the car will have a trade value little more than 10 per cent of the list price."

Glass's has been working closely with three of the manufacturers at the front of the queue to launch EVs in to the UK, and is pushing for the £8000 cost of the battery to be taken off the list price, and offered on a long-term lease of £100 per month instead, which it claims would make the vehicles among the best performing vehicles in their segment rather than one of the worst. That would dispel any worries about battery life, as minimum battery performance would be a clause in the monthly contract.

Carroll is also advocating a leasing approach to the car and battery combined as an initial method of enticing fleets and individuals into the new technology. "For a limited period car makers should consider underwriting the capital cost of the vehicle, the battery lease, and servicing, as one package to bring on board early adopters and win over a sceptical buying public," he said. "We have over a hundred years of experience of owning vehicles with internal combustion engines. Until the facts prove the manufacturers' claims regarding battery life and performance in real world conditions, they need to put their money where their mouth is, and take all risk and uncertainty away".

Despite the fears over battery life, Carroll is predicting electric vehicle demand will outstrip supply over the next few years, especially in the used market.

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