KBRA Releases Research – European Auto ABS: Battery Electric Vehicles Ready for a Recharge?

LONDON--(BUSINESS WIRE)--KBRA UK (KBRA) releases a research report exploring the residual values (RV) of battery electric vehicles (BEV) and hybrid electric vehicles (HEV) in the European Union (EU) and UK auto market. Notable growth in BEVs and HEVs has been observed across European Union (EU) and UK auto markets, as discussed in several KBRA research reports (see European Auto ABS: Accelerating Towards Green and Europe’s Electric Auto Revolution: Gaining Power, but Long Road Ahead). The question remains as to whether these vehicles retain their value in the secondhand market after several years of growth. Although data is lacking―owing to low transaction volumes―compared to that available for traditionally powered vehicles, the growing amount of secondary market transactions and data can help provide insights. In this report, we review the recent value—often referred to as RV in the context of securitisations—trends of used cars in the European auto market to date.

Key Takeaways

• Pandemic-related supply-and-demand dynamics continue to impact secondary market values for vehicles. Disruption of new vehicle supply during the pandemic increased the demand for used vehicles as buyers shifted their attention to available products. As a result, values for most secondhand cars have increased and remain elevated.
• However, values for used BEVs have sharply declined in both the UK and EU, partly due to increased secondary market supply for these vehicles, new vehicle incentives such as grants and tax breaks, technological advances increasing ranges for newer vehicles, and infrastructure and industry challenges involving charging, repairs, and insurance.
• Values for three-year-old used vehicle powertrains, which are jurisdiction- and powertrain-dependent, are mostly above their pre-pandemic January 2020 levels.

• RVs for EU and UK petrol vehicles are up 16.5% and 27%, respectively.
• RVs for EU and UK BEVs declined 6% and 31%, respectively.
• HEVs held secondhand values better than BEVs, with RVs for the EU and UK up 7.5% and 11.3%, respectively.

• Despite strong growth in new vehicle sales over recent years, BEVs and HEVs remain a small part of the overall secondhand market. Transaction volumes for secondhand BEVs and HEVs represent 3.8% and 12.2% of EU market sales, respectively, and 3.7% and 13.3% of UK market sales.

Click here to view the report.

Related Publications

• European Auto ABS: Accelerating Towards Green
• Europe’s Electric Auto Revolution: Gaining Power, but Long Road Ahead

• European ESG Regulation Part 1: An Overview of the European Green Deal
• European ESG Regulation Part 2: An Overview of the Green Deal Industrial Plan
• Auto Loan ABS: EPA Greenhouse Gas Score: Second-Quarter 2022

About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.