Car leasing companies are feeling the pinch as resale prices for electric cars fall, prompting compensation demands from automakers trying to meet tough emissions targets.
luck report The used electric car market has been hit hard since Tesla cut prices last year, forcing other manufacturers to follow suit. This has implications for companies such as Ibens and Arval, Europe’s largest multi-brand leasing companies, which act as intermediaries in the important corporate car market, which accounts for around 60% of European sales. .
Ivens CEO Tim Albersen said the company has already received compensation checks from automakers in recent weeks to cover the value of crates of leased EVs that will be returned at the end of the contract. Lease agreements typically take into account an estimated residual value and payments are designed to cover expected depreciation. However, because prices have fallen more than expected, leasing companies will incur losses when selling those vehicles.
Now, companies like Avens are looking to manufacturers for protections like buyback guarantees to prevent further erosion of the $1.2 trillion used EV market. “Manufacturers today need to continue selling EVs,” Albertsen said. “In that case, you will need some protection from the manufacturer regarding future pricing.”
The pressure is increasing as automakers face tougher emissions regulations and potential fines if they fail to meet zero-emission vehicle fleet targets. Europe aims to phase out sales of new internal combustion vehicles by 2035, but volatile used EV prices threaten this transition, said analyst Philippe Huchois.
Major corporate customers have already begun rethinking their EV products amid uncertain values. SAP will stop providing Tesla cars to employees over concerns that price fluctuations will complicate plans. Car rental companies Hertz and Sixt have similarly moved to offload Teslas from their fleets.
As Breitbart News previously reported about Hurts,
In a blow to President Joe Biden’s green energy policies, rental car company Hertz is selling tens of thousands of electric vehicles (EVs) and buying gas-powered ones, citing lack of demand.
Hertz executives announced Thursday that the company will sell 20,000 EVs, about 33% of its total EV fleet.
In return, Hertz will use the money it makes from EV sales to sell gasoline-powered cars, which executives say are in much higher demand.
Manufacturers are responding by guaranteeing stock buybacks and shifting risk into the future. But automakers are ultimately responsible for finding buyers for used EVs at fair prices, or writing down write-downs. Automotive expert Ursula Weigl said this distorted dynamic poses serious challenges, as incentives fuel demand “artificially” and demand ends when the used market ends.
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Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship issues.
