Leasing companies in Europe are grappling with soaring costs for electric vehicle (EV) leases, driven by low resale values and changing market conditions. Industry executives warn that the sector may face significant upheaval if regulatory pressures to transition to electric cars too swiftly continue.
The increase in lease prices over the past three years reflects a broader trend of rising costs linked to EV depreciation. According to industry data, lease rates for electric cars have more than doubled in Germany since August 2021, while prices for traditional fossil-fuel vehicles have fallen. For instance, a lease on a €45,000 electric car has surged from €284 to €621 per month, contrasting with a decline in the lease price for an equivalent fossil-fuel vehicle from €473 to €468.
Tim Albertsen, CEO of Ayvens, a major European leasing firm, expressed concern that aggressive regulatory demands for rapid EV adoption could push his company out of the market. “If we were pushed very, very hard, that everything has to be electric too soon... my shareholders will say ‘we don’t want to take the risk’ and we’d be out of the market,” Albertsen said. His firm, which is majority-owned by Societe Generale, currently operates a fleet of 3.4 million vehicles, with about 10% being electric.
Leasing firms are vital to Europe's auto market, with 60% of new cars leased, and up to 80% of new EVs leased, according to Transport & Environment. However, recent cuts in EV subsidies in major markets like Germany have hit sales and threaten to stall Europe’s transition to electric vehicles.
The decline in second-hand EV prices is attributed to several factors, including Tesla’s price cuts, concerns about charging infrastructure, and the influx of more affordable Chinese EVs. Data from Autovista shows that resale values for EVs in Germany are 24% below pre-pandemic levels, and 30% lower in the UK, while used petrol cars have retained more value.
Leasing companies are experiencing financial strain as a result. Hertz reported significant writedowns on EVs sold at reduced prices, and Sixt’s earnings were affected by lower residual values. “Like other leaders in the market... Arval has been forced already to increase prices because of lower residual values,” said Bart Beckers, deputy CEO of Arval.
Some automakers, such as Tesla, have attempted to mitigate these losses through discounts and other measures, though the overall risk remains high. To address the financial impact, leasing companies are extending lease periods and leasing out EVs for longer durations.
Looking ahead, leasing firms are concerned that potential European Commission mandates on EV adoption for corporate fleets could exacerbate their challenges. Richard Knubben of Leaseurope highlighted that increasing the share of EVs in leasing portfolios could further strain the industry. The Commission’s recent consultation on accelerating EV adoption has raised concerns about mandatory targets, which could potentially drive up lease rates and discourage corporate fleets from leasing EVs.
Stef Cornelis from Transport & Environment advocates for mandatory EV targets to increase the availability of used EVs and accelerate the transition. However, the outcome of the consultation remains uncertain, especially following the poor performance of pro-green parties in recent European elections. Leasing companies are wary of the potential implications of such mandates and the additional financial pressures they could impose.
(Source:www.reuters.com)
The increase in lease prices over the past three years reflects a broader trend of rising costs linked to EV depreciation. According to industry data, lease rates for electric cars have more than doubled in Germany since August 2021, while prices for traditional fossil-fuel vehicles have fallen. For instance, a lease on a €45,000 electric car has surged from €284 to €621 per month, contrasting with a decline in the lease price for an equivalent fossil-fuel vehicle from €473 to €468.
Tim Albertsen, CEO of Ayvens, a major European leasing firm, expressed concern that aggressive regulatory demands for rapid EV adoption could push his company out of the market. “If we were pushed very, very hard, that everything has to be electric too soon... my shareholders will say ‘we don’t want to take the risk’ and we’d be out of the market,” Albertsen said. His firm, which is majority-owned by Societe Generale, currently operates a fleet of 3.4 million vehicles, with about 10% being electric.
Leasing firms are vital to Europe's auto market, with 60% of new cars leased, and up to 80% of new EVs leased, according to Transport & Environment. However, recent cuts in EV subsidies in major markets like Germany have hit sales and threaten to stall Europe’s transition to electric vehicles.
The decline in second-hand EV prices is attributed to several factors, including Tesla’s price cuts, concerns about charging infrastructure, and the influx of more affordable Chinese EVs. Data from Autovista shows that resale values for EVs in Germany are 24% below pre-pandemic levels, and 30% lower in the UK, while used petrol cars have retained more value.
Leasing companies are experiencing financial strain as a result. Hertz reported significant writedowns on EVs sold at reduced prices, and Sixt’s earnings were affected by lower residual values. “Like other leaders in the market... Arval has been forced already to increase prices because of lower residual values,” said Bart Beckers, deputy CEO of Arval.
Some automakers, such as Tesla, have attempted to mitigate these losses through discounts and other measures, though the overall risk remains high. To address the financial impact, leasing companies are extending lease periods and leasing out EVs for longer durations.
Looking ahead, leasing firms are concerned that potential European Commission mandates on EV adoption for corporate fleets could exacerbate their challenges. Richard Knubben of Leaseurope highlighted that increasing the share of EVs in leasing portfolios could further strain the industry. The Commission’s recent consultation on accelerating EV adoption has raised concerns about mandatory targets, which could potentially drive up lease rates and discourage corporate fleets from leasing EVs.
Stef Cornelis from Transport & Environment advocates for mandatory EV targets to increase the availability of used EVs and accelerate the transition. However, the outcome of the consultation remains uncertain, especially following the poor performance of pro-green parties in recent European elections. Leasing companies are wary of the potential implications of such mandates and the additional financial pressures they could impose.
(Source:www.reuters.com)