The electric car market is getting started in fits and starts. Continued price drops at market leader Tesla and a low residual value of used electric vehicles (EVs) are causing doubts among potential car buyers.
This is evident from recent reports from accountants and others KPMG and research agency Indicata. Consumers and leasing companies shy away from the low residual value and they expect that much cheaper and better electric cars will be available in the foreseeable future.
For example: anyone who bought a Tesla Model Y in the US at the beginning of this year paid for it up to 25 percent more before then at this moment. The price reduction is also noticeable on the European market. For example, Tesla dropped the ‘Y’ to just below the subsidy limit of 45,000 euros. It makes new customers wary, and customers who paid full price for a car are left with a hangover.
Germany is also heading for a ‘Electro hangover‘, wrote the business newspaper Handelsblatt Monday, on the eve of a meeting between Chancellor Olaf Scholz and the top of the German car industry. According to Scholz’s plans, fifteen million electric cars should be on German roads by 2030, but the car industry thinks that a maximum of nine million is feasible.
The automakers give the reason that the charging infrastructure in Germany is not yet in order, with only 100,000 charging stations. By comparison: the Netherlands is much smaller and has 140,000 public charging places, according to the ANWB.
‘Uncertainty is temporary’
The German car manufacturers cannot participate in the price war between Tesla and cheap Chinese manufacturers such as BYD. Volkswagen, Germany’s largest automaker, temporarily halted production of some electric models in October because the demand is simply not there.
According to Stijn de Groen, strategic expert at KPMG Netherlands, there is temporary uncertainty about EVs. “In the long term, almost everyone will drive electric, but major European countries such as Germany, France and Italy must accelerate much more to achieve their climate goals.”
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Second-hand EVs were hard to come by, but there are actually too many. The residual value therefore decreases. Indicata, for example, predicts an abundance of used Tesla Model 3s from the end of 2024. They will then have been in use for five years and will be sold en masse by the leasing companies.
“Lease drivers choose the lowest additional tax. They are not brand loyal but tax loyal. Private motorists have different considerations than lease drivers when buying a car,” says Frank Tanke of Indicate. Private individuals, Tanke expects, are not yet keen on the abundance of second-hand Teslas.
He does expect prices to stabilize again in 2025. This will be followed by a new peak when the second-hand Model Ys come out of lease again after five years.