Leasing Companies Struggle with Low Residual Values of Second-Hand Electric Cars
Leasing companies across Europe are encountering significant challenges due to unexpectedly low residual values of electric vehicles (EVs). Tim Albertsen, CEO of Ayvens—one of Europe’s largest leasing providers—recently voiced concerns over this issue. The unpredictability surrounding the future residual value of EVs raises financial risks that could deter companies from fully embracing electric fleets.
Ayvens manages approximately 3.4 million vehicles across Europe, ten percent of which are electric. Residual value—the expected value of a vehicle at the end of its lease period—is critical for leasing companies, as it directly influences lease affordability. Higher residual values reduce monthly leasing costs, making leases more attractive. While residual values remain largely stable and predictable for gasoline and diesel cars, this predictability does not extend to electric vehicles.
Initially, the expectation was that electric cars would maintain higher residual values due to lower wear and tear, a belief supported by the high resale values of early Tesla models. However, the EV market landscape has evolved rapidly. The influx of more affordable EV models, especially from China, combined with swift technological advancements, has depressed demand for older second-hand electric cars.
As the first generation of electric company cars reaches around four years of age and enters the used-car market, leasing companies report returns significantly below earlier predictions—35 to 40 percent less. This decline is not attributed to vehicle condition, but rather to consumer preference for newer, modern EV models.
This developing trend puts pressure on leasing firms like Ayvens, which must rethink their residual value strategies and manage financial exposure as the market adapts.
Read the original article in Dutch here.