This week I attended the BVRLA Parliamentary Reception at the House of Lords. It marked the launch of the BVRLA (British Vehicle Rental and Leasing Association) campaign to lobby the Government to introduce measures to support electric vehicle residual values.
The full report will be published next week but the headline actions being requested by the BVRLA include:
- Introduction of standardised battery health certificates
- Used EV plug in grants
- VAT cut of 50% for 4-year-old ex-lease vehicles
- Zero Benefit in Kind tax for employees driving used BEVs for four years
- Allow the Civil Service to access used EV salary sacrifice
Gerry Keaney addressing the reception. Image: All rights reserved, Ian Hare
Launching the campaign, BVRLA Chief Executive, Gerry Keaney explained that a 36-month-old EV retains only 35% of its price when new compared to petrol vehicles retaining over 50%. He also informed the meeting that, based on Oxford Economics research, the situation is likely to get worse if measures are not taken.
Used EV supply will double to 100,000pa in just two years and demand will need to keep pace. Right now, there is no sign of this happening. Used EV values are expected to drop another 28% from 2024 to 2030.
Fewer used EV sales combined with the ZEV mandate could result in new registrations falling by 246,000 units from 2025 to 2027. In addition, slumping residual values could further reduce new EV sales by 290,000 between 2023 and 2027.
The CO2 impact of the lost EV sales could be as much as 10.5Mt CO2 over their lifetimes: a total reversal on what the ZEV Mandate is intended to achieve.
The full report will be published next week; but I was intrigued to learn more about the proposed VAT cut for four year old ex-lease vehicles while at the meeting. VAT can be recovered on new cars used exclusively for business purposes. This includes VAT recovery for leased and rented cars similar to commercial vehicles. When the vehicle is sold by the leasing company VAT is therefore chargeable on the used price. The BVRLA is proposing that 50% of the VAT charged should be recoverable.
Richard Bruce, Director of Transport Decarbonisation at the DfT was in attendance and spoke briefly. He will be closely involved with the BVRLA during the consultation this autumn regarding the revisions to the ZEV mandate.
Ian Hare 11/09/2024.
