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Fleet and business buyers accounted for 66.7% of battery-electric vehicle registrations in 2022 and 74.7% of their volume gain. We could kid ourselves all we liked that every single one of those was an altruistic decision; that every single business car customer cares so much about the environment that they have eschewed anything other than a zero-emission vehicle.
If we did, we would be ignoring the enormous tax perks in favour of EVs. Our readers will probably not need reminding of the 2% versus 24% difference in benefit-in-kind for a car with 0g/km of CO2 and one emitting 95-99g/km.
We are not suggesting the corporate sector does not care about the environment, and we know that many are following strict corporate social responsibility policies, which promote the use of cleaner transport, but we are also realistic. If the boot were on the other foot, and BIK were 2% for a diesel car, you can bet your bottom dollar that registrations would not have fallen by almost 40% last year.
There is no such incentive for second-hand car buyers. Used EV values may have fallen, but many are still comparatively expensive next to petrol and diesel equivalents which, along with high electricity prices, have blunted their appeal.
Put yourself in the shoes of a buyer considering a used EV for the first time: it will cost you more of your own hard-earned to buy, it requires a change of behaviour, additional home infrastructure, and - depending on how you use it - might deliver negligible running cost savings. The clean air argument is really the only one it wins hands down.
This is a problem, claims the Vehicle Remarketing Association (VRA). Highlighting the "imbalance" in government incentives between new and used EVs, and "more needs to be done to ensure a healthy market for the latter".
"Manufacturers are transitioning to EV. [and] they've been going through the leasing and contract hire sector first," says Philip Nothard, VRA chair and insight and strategy director at Cox Automotive, "that's where the tax benefit is. What you've also got within that is a driver who doesn't really care because, it's not their car, it's not their money - it's someone else's.
"The general customer in the used vehicle marketplace that has been owning used ICE vehicles for years - what's their incentive to go into a used battery-electric vehicle? We've got the energy crisis, we've got public infrastructure challenges and, in the main, it's more costly to get a used battery electric vehicle than it is one with a combustion engine."
The proportion of EVs can only rise in tandem with new registrations. Cap HPI says EVs made up just over 1.3% of used car transactions it recorded in 2022, up around half a percent year-on-year. For vehicles up to three years old, the same figure was 8.5%, up 2.1% year-on-year.
"One leasing company I spoke to last week said they will have a 50% fleet of EVs by next year," says Nothard, "70% of their orders are EVs now, so they are very quickly becoming the dominant share of new registrations."
According to research by Auto Trader published in February, 36% of franchised retailers and 89% of independent used car dealers did not stock used EVs. It also predicted the following: 22% of used cars up to a year old will be electric in 2023; compared with 2019, there will be 29% fewer cars under five years old by 2024; 41% of one-to-three-year-old cars will be electric by 2027; and 38% of three-to-five-year-old cars will be EVs by 2029.
"I call it the potential 'valley of death' for used battery-electric vehicles - when they come into the used car market and over a third of franchise dealer groups don't have a used EV for sale," says Nothard, "many have still got a used buying ban on battery-electric vehicles. If they didn't have it pre-October, they've definitely got it now with the price drops."
Time is running out for used car buyers and sellers to get on board with EVs. Company car drivers may feel blissfully shielded from such concerns, but the fleet industry is utterly dependent on appetite for its used vehicles.
In February, the VRA called for government support for used electric vehicles ahead of the March Budget, but none was forthcoming. In response, the organisation issued the following statement: "We remain hopeful that the government are listening to the points we are making and will take action relatively soon. This is something that is very much needed to ensure the smooth electrification of the used EV sector."
"There's still a big job to do to transition the general consumer into electrification," adds Nothard, "you need to think about your journeys [and] there are still challenges in the infrastructure for battery electric vehicles, but it is accelerating. We know that they [EVs] work new because of the taxable benefits, so why don't we apply that to the used marketplace if we know that is a trigger for them?"
In its pledge to the Treasury, the VRA also pointed out that government schemes to promote used electric vehicle uptake exist in other areas. The Netherlands offers buyers ?2,000 off the price of used EVs. Funding is allocated on an annual basis, and it runs alongside a subsidy for new electric cars - similar to the UK government's former Plug-in Car Grant. France has a similar scheme, with a ?1,000 bursary available for those buying a used electric car older than two years.
The US arguably has one of the world's most generous - and most recent -incentives for new and used electric cars. The Inflation Reduction Act, signed by President Biden in August 2022, included a federal tax credit for EV customers, which began at the start of this year. New car buyers get a $7,500 tax break and there is a $4,000 equivalent for used cars worth up to $25,000.
A government-run subsidy for used electric cars actually exists in the UK, but it is limited to one of the union's four countries. Scotland offers second-hand EV buyers an interest-free loan of up to £30,000 towards the purchase cost of a used electric car or van or up to £5,000 for an electric motorcycle or moped. The scheme was launched in October 2020 in conjunction with the Energy Saving Trust (EST), which manages the loans on behalf of Transport Scotland, and is available to private buyers and to businesses.
According to EST data, Scottish local authorities collectively issued used EV loans of £16,700,617 to private buyers and £1,550,590 to businesses between their inception and the end of December 2022.
At the time of writing, the scheme was closed to new applications, but a spokesperson for Transport Scotland told Business Car it was "not unusual for our loan schemes to close towards the end of the financial year," and added that "grants for 2023/24 will be confirmed in the new financial year."
The VRA believes the UK's remaining three countries need to get in on the act if electric vehicles are to successfully take hold in the used car market and avoid further drops in value. It also thinks the industry itself would do well to embrace EVs, because it is going to have to at some stage.
"There's a whole piece of education, both from the remarketing sector through to the dealer sector around EVs," says Nothard, "the government have got to acknowledge that, if they are not careful, the lack of adoption of used EVs will hinder the take up of new ones, because if people are not buying them. it will start to crash the residual values. Therefore, affordability and ownership of a new battery-electric vehicle will start to become out of reach. and it will slow down the transition to EVs.
"Really they've got to acknowledge that, if they are going to do it properly, then we've got to hit back pockets, and give the general driver of a used vehicle some kind of initiative or incentive for driving green vehicles."
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