DALLAS — Electric-vehicle values have been on the rise in part due to rising gas prices and greater acceptance of the technology, but the category still faces roadblocks in residual retention, panelists said at the Auto Finance Performance and Compliance Summit.
“Over the last three to six months we have seen an uptick in almost all of the EVs,” said Eric Ibara, director of residual value consulting at Kelley Blue Book. “It’s not rebounding back to where internal combustion engine is but it has ticked up.”
Gas prices have risen to a national average of $2.80 per gallon and in California — the largest state for both electric and combustion engine vehicle sales — gas is nearly a dollar more.
“If you get to that psychological hurdle of $3 per gallon nationally or $4 per gallon in California, then you could see more and more consumers going after electric vehicles and hybrid vehicles,” Anil Goyal, executive vice president of operations for Black Book National Auto Research, said during the panel discussion. “There is good demand for hybrids with gas prices going up.”
Yet, EV values are still around 20% – 30% of original MSRP after three years compared to 40% or higher for comparable combustion engines.
The exception use to be Tesla Inc. because used supply was low and the company’s marketing strategy created a lot of demand. However, as more cars slowly enter the market and the company increasingly receives more scrutiny, those advantages have waned, panelists said.
“Tesla’s [values] were retaining on par or above with some of the highest retaining vehicles out there, but that was a couple of years ago,” said Laurence Dixon, senior director of business development and valuation services at J.D. Power. “We have additional volume coming back to the market now, the aura around Tesla has started to fade away, and now residuals have come back down and fallen quite a bit from the lofty heights they initially had.”
RVI has insured electric vehicle collateral and found that the segment has over a 90% return rate after three years, largely because consumers want updated batteries with better range, said Rene Abdalah, senior vice president at RVI Group.
“Consumers want the latest and greatest every year, and that’s going to be quite common for electric vehicles,” he said. “Every year, there is going to be a new electric vehicle with bigger batteries that are cheaper.”
Source : AutoFinanceNews
