Help needed from lenders for EV finance
58% say more support is required from motor finance providers to finance EVs, according to May’s Startline Used Car Tracker
41% believe their lenders are less keen to finance EVs than petrol or diesel cars and 11% say higher deposits are being asked
5% report their lenders won’t finance EVs at all
Almost six out of 10 dealers (58%) believe that more support is needed from their motor finance providers to retail electric vehicles (EVs), new research shows.
May’s Startline Used Car Tracker reports that 41% say their lenders are less keen to finance EVs, 10% want higher deposits from buyers and 5% charge higher interest rates. A further 5% say their lenders simply won’t touch EVs at all.
Just 10% say that their motor finance providers are happy to finance EVs and none of those surveyed believe that their lenders treated EVs the same as petrol and diesel cars.
Paul Burgess, CEO at Startline Motor Finance, said: “This is something of a thorny issue. Purchase prices of used EVs tend to be around 30% higher, model for model, than comparable petrol and diesel cars, so getting the motor finance element right is crucial to their affordability for car buyers.
“However, motor finance companies are in a tricky position. The residual values of EVs are among the most important metrics when it comes to making a lending decision but they have been extremely unpredictable over the last year, with falls of 25% not unknown on popular models. This makes financing EVs quite difficult.
“Most dealers understand these background problems but this doesn’t change the fact that, in a retail environment, dealers are having trouble finding finance for EVs which, of course, makes them less likely to offer these cars for sale at exactly the point in time when they are probably looking to start adding them to their stock mix.”
The situation would have to change over the next few years, Paul added, as higher numbers of EVs make their way onto the used market in the run-up to the government’s 2030 production deadline.
“The truth is that motor finance companies are just going to have to finance EVs because, over relatively few years, they are going to become the market norm. This, in turn, will lead to a maturing of the used EV market with residual values becoming much more stable.
“Certainly, we are in a position as a company where we have held back from financing EVs because of the volatility of the market but are planning to change our position later this year, beginning to add them our books.”
The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This time, 302 consumers and 59 dealers were questioned.