Four years ago, only a handful of different plug-in cars were available to buy. Today, depending on where you live, there’s anything from ten different plug-in models to choose from to more than thirty.
To date, that explosion in choice — combined with improvements in battery chemistry, lower sticker prices, incredible lease deals and improved charging capabilities — has meant that buyers have tended towards new rather than used plug-in cars. And that has had the unfortunate effect of pushing down residual values on first-generation plug-in cars like early 2011 Nissan LEAFs or Mitsubishi i-Mievs.
It’s also meant that anyone financing the purchase of a brand-new plug-in through a hire-purchase scheme has found themselves paying higher-than-usual interest rates on their new car loan, resulting in higher monthly payments and potentially, staying in vehicular negative equity longer than they’d like.
But that’s starting to change, says European valuation firm Glass’s, with residual value forecasts for plug-in vehicles moving closer to those for diesel-powered vehicles.
In an official press release yesterday, the firm — which produces an automotive trade pricing book similar to the Kelley Blue Book in North America — said that concerns over battery pack longevity in used plug-in vehicles have abated of late, helped in part by replacement battery programs from companies like Nissan.
“Residual Values of the [Nissan]LEAF are among the poorest of the EVs at around 29% at three years, 60,000 miles because there are quite a number around,” said Rupert Pontin, head of valuations at Glass’s. “However, removing the mystery surrounding the battery pack pricing took away a large degree of uncertainty from forecasting its residual values.”
Late last year, Nissan announced a replacement battery program across Europe. For €5,000 following trade-in rebate, customers can replace an aged, battery pack in a LEAF electric car or e-NV200 electric van with a brand new one, made to Nissan’s latest specifications and using the latest battery chemistry.
Although that’s an expensive cost, Pontin explained, it’s also a known constant which can be added to any residual value calculations.
Of all the plug-in vehicles on sale today, Pontin says that the Tesla Model S has the highest residual value after three years and 60,000 miles at around 43 percent of its new sticker price. That’s about the same residual value you’d find on a BMW 5-Series 535D M Sport.
Other cars are also benefiting from increased residual values, says Pontin. Even though it will cease sales this year, a Vauxhall Ampera in Electron trim — the UK-market rebadged version of the Chevrolet Volt — is expected to retain around 27.58 percent of its value after 3 years and 60,000 miles. The Insignia SRI CDTi — a diesel version of a European-market GM car known to U.S. readers as the Buick Regal — has a residual value of 34.56 percent.
The BMW i3 REx meanwhile, is predicted to have a residual value of 39.11 percent after three years and 60,000 miles, just shy of the 43.46 percent residual value given to the BMW 3-series 320d Sport.
In other words, while residual values for most plug-in cars are still a shade under that of comparable diesel models, they’re inching ever closer to parity and are far higher than they were just a few years ago.
The challenge now? Improve on battery range and buyer familiarity, says Pontin. While the former is already happening with consecutive generations of plug-in vehicles, the latter will happen as more and more plug-in vehicles make it to market.
“EVs of one kind or another currently account for about 2 percent of the [UK] market. However, if the UK is to meet its 2020 emissions target of 95g per kilometre per vehicle, their penetration must increase quite rapidly,” he said. “As this happens and they become a more familiar part of our daily lives, we expect EV residual values to firm up and stabalise.”
As that happens, we can all look forward to improved lease and finance packages with lower interest rates, as well as both better trade-in or private-market values for existing owners.
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