Battery health and durability standards can help to build consumer confidence in used EVs, and in turn address fleet industry concerns about residual values, a government minister has said.
Future of Roads Minister Lilian Greenwood, addressing the BVRLA’s Fleets in Charge conference, said that she appreciated concerns raised by the fleet industry about the difficulties facing the used EV market.
The UK Government’s ZEV mandate requires that manufacturers offer an eight-year/100,000-mile EV battery warranty, with batteries to be replaced if they fall below 70% of their original capacity.
The government also said in April that it was analysing options for the implementation of Global Technical Regulation (GTR) No. 22, which requires EVs to have easily accessible, accurate, and comparable information on the battery’s state of health, in the UK.
Greenwood said: “I appreciate we need to make sure the residual values [of EVs] don’t drop too fast. So, we’re already closely working with you and with others in the industry to monitor the health of the used EV market and how those residual values are moving.
“Obviously government is offering significant financial incentives, such as charge point grants and the tax incentives to support the new ZEV market and increase the supply of EVs feeding through.
“But we know that we need to do more, particularly to boost consumer confidence in used electric vehicles, and in part, that’s obviously through implementing battery, health and durability standards, which are incorporated into the ZEV mandate regulations.
“All of us who have got mobile phones worry because we know how the battery life of your iPhone starts to deteriorate, and I think people are worried that their car might be the same, and obviously that isn’t the case.”
Greenwood’s comments came after BVRLA chief executive Toby Poston, in his speech opening the conference, highlighted the used market as the biggest challenge facing the EV transition.
He said: “Used EV values are falling relentlessly, and that is destroying value on an epic scale. This death by a thousand cuts is costing fleets hundreds of millions of pounds, and it’s eroding confidence across the industry.
“This is not normal market behaviour. Traditional financial risk models are struggling to cope with this scenario, and the banks and investors that have piled billions into the electric vehicle revolution are beginning to get spooked.
“This should worry everybody, because it has the potential, not just to slow down the transition, we could begin to see some wheels coming off in some areas.”
The subject of battery health was also raised at the conference by Jason Symes, sales director of digital marketplace Dealer Auction, who said that battery health certificates could potentially help to raise prices of used EVs that received good ratings.
He said: “Battery health keeps coming up. We recently carried out a survey for one of our sellers … and from a battery health point of view, as you can imagine the vast majority [of buyers] said that if it had a battery health certificate to say how good or bad that battery was, that would give them much more confidence to go and bid on that vehicle, because when you look at the wholesale market, if it’s a ICE vehicle, they’ll have a basic check on that vehicle, i.e. lights and levels or sometimes a full mechanical check at end of life.
“So, I think just having that in parallel for an EV would certainly be able to stimulate [demand], and then on top of that, they sort of said, actually that probably will increase the amount that we pay for that.
“So, when we think about residual values and values of cars at end of life, that’s one thing we need to promote, having that to say, actually, this is a car that’s got a really good battery, so can you pay a bit more for it. And then, likewise, to be able to pass that confidence from wholesale, to dealer, into consumer – a consumer then can come in and go, you know what, that car has got a really good battery, and in turn then hopefully it should stimulate some consumer confidence as well.”
Also addressing the subject of residual values, Auto Trader commercial director Ian Plummer argued that some of the terminology the industry applied to the issue was inaccurate.
He said: “On the RV point, I think personally our view would be that it’s less a question of volatility than a number that just isn’t as nice as people would like it to be.
“It is a big percentage [fall], because it starts very high and it drops like a stone. From the point when the vehicle has dropped like a stone as a used EV it generally performs very much in line with a two, three, four, and five-year-old ICE vehicle.”
