The used EV market currently has a “bright horizon” following a period of turmoil – but risk factors persist, it has been said.
Auto Trader commercial director Ian Plummer discussed the situation while addressing a Westminster Energy, Environment and Transport Forum policy conference on the next steps for zero-emission vehicles in England, Scotland and Wales.
Explaining how the market has developed over the past couple of years, he said: “The supply of electric vehicles leapt forwards in the winter of 2022-23, just at the same time as demand fell because petrol prices fell and energy prices rose in the Ukraine crisis.
“That led to a slowdown in sales. And if retailers hold a vehicle that is no longer selling as quickly as it was – they had been the fastest-selling fuel type – they will discount at some point at which they are able to regenerate activity and stimulate demand to turn those cars out of their stocks. That’s what led to the very significant price falls.
“I think we should be relatively confident right now that electric vehicle pricing is completely stabilised and is now performing in line with the rest of the market, the ICE vehicles. At, no doubt though, a lower level, and we wouldn’t expect that level to rise significantly.”
Among the factors that Plummer warned could destabilise the market was new EVs no longer being exempt from the expensive car supplement, applied to new cars which cost more than £40,000, from 1 April.
He said: “The expensive car supplement [is] euphemistically known as a luxury car tax – it’s not really a luxury when you think that the majority of the electric vehicles fall into the category of cars that will be taxed with this new measure.
“I’m pretty sure when it was announced originally, several years back now, it wouldn’t have been envisaged that it would be penalising electric vehicles to this degree, and excessively so compared to the rest of the market.
“When you consider that a new car overall is around £42,000-£43,000 on average at the moment, and a new electric car is around £53,000 pounds … that just shows that maybe there’s a rethink needed here.”
Plummer said the tax change could aggravate a pre-existing problem around EV affordability.
Referring to the new market, he said: “Although the number of more affordable vehicles [under £30,000] being available as electric has grown from nine a year ago to 29 now – that’s a great and positive trend – it’s still well behind the level of affordable vehicles in the equivalent ICE market.
“Quite simply to achieve the high levels of ZEV penetration that are now required from all brands, being outside of these volume segments – the city car segments if you like – can definitely no longer be a viable solution.”
Plummer explained that affordability was also a problem for the used EV market.
He said: “The affordability point is summarized quite neatly when you look at the sub-£20,000 category, [which] is the core of the used vehicle market generally.
“[Around 80%] of ICE vehicles that are sold as used vehicles are sold below the £20,000 category. Less than half of the EVs out there that are sold in that same category. Only 5% of used EVs are below £10,000 – that’s a core category for most customers.”
