“The time for electric vehicles has come,” said rental startup Onto.
< p>“As soon as you Once you get behind the wheel and experience what they're capable of, we'll know there's no going back.”
A Warwick company has combined words with action to create one of the UK's largest electric vehicles. — fleets with a total of 7,000 vehicles only.
Instead of renting or selling vehicles, customers were offered 'hassle-free subscriptions' which included a car, insurance, servicing and even a fee from £359 per month.< /p
However, customers are greeted with another message today, explaining that Onto Holdings Limited went into administration in September.
According to accounts for the first seven months of 2023, Onto was forced to write down the value of its electric vehicle fleet by 21 million pounds sterling — more than her total income for the same period.
Onto administrators blamed the company's collapse on a «steep fall» in the cost of electric vehicles, rising interest rates and the impact of the cost of living crisis on drivers' disposable income. As a result, the company was unable to obtain additional funding from its shareholders, Teneo administrators added.
Onto is far from alone in facing these problems.
Prices for used electric vehicles have fallen sharply in the past year as manufacturers including Tesla slashed prices and a wave of leased and leased vehicles flooded the market.
As experts say, this has long been predicted and is generally good for consumers, the vast majority of whom buy only used cars.
But the trend has also dealt a blow to other companies, namely the companies and pioneers that paid higher prices and will now see a lower return on their investment.
For now, prices for used electric cars are stabilizing again as affordable deals drive strong demand, says Mark Palmer, head of research at Auto Trader.
But with new car competition intensifying the market, there are concerns that Chinese brands will seek to undercut their European rivals by further cutting prices, leading to further discontent among second-hand sellers.
“It's a big question: will the Chinese come cheap anymore?” says Palmer.< /p>
“We think they could because they sell their cars cheaper in China than in Europe. So they have the opportunity to start pricing more aggressively.
“And if new cars become more affordable, then used car prices may have to come down a bit to ensure they continue to benefit consumers.”
This could spell an even bleaker forecast for existing EV owners who were already crashed last year.
Based on data from December, Auto Trader found that a £50,000 electric car is currently expected to lose around £24,000 of its value after just three years on the road, significantly more than the typical £17,000 depreciation sterling, observed in gasoline cars.
Among the worst-hit cars is the Renault ZOE, which has lost an average of 56% of its value and is now selling for £7,700, according to separate data from Motorway.co.uk. Meanwhile, sales of the Volkswagen ID3 fell 41 percent and the Nissan Leaf by 40 percent.
Much of the turmoil last year was the result of fleet owners such as car rental and leasing companies simultaneously unloading large numbers of vehicles . These businesses often buy cars in bulk at a discount, hold them for up to two years, and then make a profit by selling them.
Previously, supply chain issues kept the EV market relatively tight, which helped keep prices high. But last year the influx of supply from fleet sellers was not matched by demand, causing prices to fall to «unsustainable» levels, Auto Trader found.
That's what mortally wounded Onto, which blamed its massive deterioration on «the market decline in EV residual values.»
Ultimately, the price declines sparked record demand for used electric vehicles as drivers struggled to ditch them. make huge deals. For the full year, used electric vehicle sales were up 91 percent to 118,973, according to the Society of Motor Manufacturers and Traders (SMMT).
However, with more than 800,000 electric vehicles registered between 2020 and 2023, Auto Trader warns the price rollercoaster may not be over yet.
Some of this volatility is due to other factors, such as the small (but growing) size of the used electric vehicle market. Electric vehicle sales account for just 1.6% of total used car sales, according to SMMT.
But Alex Battle, co-founder of Motorway, says related issues such as sky-high insurance premiums and The government's decision to delay the ban on the sale of new petrol cars from 2030 to 2035.
“If there is no demand, prices naturally fall,” he adds.
Richard Peberdy, head of KPMG's UK automotive division, says the resulting price fall created upside potential for consumers but is more difficult to reverse. swallow for manufacturers and dealers. He adds that this poses «a major challenge when it comes to convincing consumers of the value of new electric vehicles.»
However, this is not necessarily a disaster for investing companies. While some may be forced to raise prices to cover the depreciation costs of electric vehicles, others are addressing the problem by holding on to cars longer.
This is because cars tend to lose the most value in first time. in a few years, and then the pace will stabilize.
For example, electric vehicle leasing company Octopus Energy, which is believed to operate the UK's largest dedicated fleet of 14,000 vehicles, recently began offering used electric vehicles for lease alongside new ones.
This allows the company to which leases cars through a workplace wage sacrifice scheme, recoup most of the cost of the car before eventually selling it, says boss Fiona Howarth.
“The used car market was actually very buoyant, unusually buoyant, about a year and a half ago,” Howarth says. “It was a bit of a bubble in that regard, so there has been a correction over the last year.”
However, she argues that electric vehicles are actually better suited for longer fleet ownership periods than petrol cars, as their batteries often come with a warranty of eight years or up to 100,000 miles.
At the same time, there is less movement. parts — electric cars have about 20 of them, compared to the thousands in many petrol cars — meaning they should theoretically need repairs less frequently.
“Many leasing companies typically give leases for two, three or four years because of the guarantees,” Howarth adds. “So it actually makes a difference and there are a lot fewer problems with an electric car.
“It helps because it gives us a second life for this car, even if it comes back. We can find him another home with another buyer.”
All this means that for consumers looking to make the switch to an electric vehicle, now is the ideal time to buy, argues Battle at Motorway.co.uk.
«With prices looking much better year after year in the new and used car markets, savvy car buyers can get a good deal,» he adds.
However, if you're not willing to risk losing much of your investment, Howarth (perhaps unsurprisingly) suggests that leasing may be a safer option for now.
“I think the whole market will go through this. will change in the next few years,” she adds.
“In fact, this is a great way for leasing companies to support clients, as we can professionally manage the residual value of all our fleets… so the client I do not accept bear that price risk.”
With prices for used electric vehicles currently stable, drivers can get a good deal. But with the future uncertain, many will hope they can avoid Onto's fate.
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