Sparks will fly over EV residuals, say rival valuers
publication date: Aug 7, 2010
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author/source: Robin Roberts
| Glass’s is predicting that hybrid cars – which combine
an internal combustion engine with an electric motor – will represent
the dominant ‘green’ powertrain technology until 2019, after which they
will be overtaken by electric vehicle sales. |  |
| Glass’s
forecasts UK registrations of ‘green’ powertrain technology in 2020 will
be just under 2.4 million vehicles, of which 11 per cent (274,000
units) will be electric vehicles (EVs), and 10 per cent (235,000 units)
hybrids. As part of its report, entitled ‘Alternative Powertrain Vehicles in Europe’ to be published this month, Glass’s predicts that the combined 21 per cent market share for EVs and hybrids in the UK in 2020 will be lower than in Germany (26 per cent of total new car sales) but the same as in France and Italy. Of the five biggest markets in Europe for car sales, Spain is expected to see the lowest adoption of ‘green’ car technologies by 2020, with a combined market share of 20 per cent for EVs and hybrids. A key issue for many vehicle manufacturers, who face increasingly tough targets for reduction in their overall CO2 emissions, is the proportion of electric vehicles that make up their overall sales mix. | |
 | Andy Carroll, Managing Director at Glass’s ( left) said, "One of
the central issues for the vehicle manufacturers is encouraging consumer
adoption of electric and hybrid vehicles, including plug-in hybrids. “The basic framework for dealing with these issues remains pretty much the same, but how the industry responds to the battery residual value issue will be key to consumer confidence and the adoption rate of electric vehicles.” |
| Glass’s recognise that the industry is still evolving the
best way to deal with predicting the residual value impact of the cost
of batteries, the risk of substitution with improved technologies and
the end of life disposal / secondary use options. Glass’s, in the report, state that assessing the residual value of an electric vehicle largely depends on its relative total cost of ownership compared with alternatively powered vehicles and the newer models entering the market when it is first sold as a used vehicle – the methodology is, in principle, no different to assessing any other vehicle today. Glass’s suggest that to drive adoption, vehicle manufacturers will need to develop strategies to remove most of the residual value risk of the battery from the consumer. | |
 | Glass’s recommend a number of alternative strategies that
could be adopted by the vehicle manufacturers to achieve this,
depending on whether the vehicle is being purchased by a consumer or
leased and suggests: • Long Warranties – Long warranty periods (8 years +) are key. Create a standard for battery quality measurement linked to minimum charge levels (80% certified capacity or replacement). • Battery Buy Back – Schemes allowing early adopters to swap the battery units to newer technology at a reduced cost. • Manufacturers leasing the battery – The manufacturer effectively underwriting some of the residual value risk on the battery, though this raises ‘shared ownership’ issues that need to be resolved by the industry. |
A spokesman for rival valuer CAP says it has a different approach to the EV battery issue. "We will not be valuing any Electric Vehicle where the battery in not included in the price and is subject to a separate Finance Agreement another bank or leasing company. "The vast majority of manufacturers will be selling their EV’s with battery included, and possibly only one that insists, for now, in selling their EV’s where the battery will be owned by one company, a leasing company, and the car owned by another leasing company / bank or the owner of the car. "It will get particularly ‘messy’ when it comes to selling the vehicle as a used car or van. There are legal implications on having two finance agreements on one vehicle, and potential problems with insurance – who insures which bit of the car. If the car is written off or stolen who pays out which proportion of what they have insured and how much is each part worth. Its messy and unworkable." | |