Andy Shields explains the BEV pricing fluctuations over the last year

Written by Autorola in category 
March 31, 2022

Andy Shields, the business unit director of INDICATA, has given a talk for the Fleet Europe Remarketing Expert Track.

In a short, fact-packed talk, Andy explains the market forces that were in play at the beginning of 2021, which caused a marked weakness in BEV values early in the year.

Oversupply of BEVs affects market forces
This initial weakness in values was at first hard to understand, as BEVs as a segment had experienced a high year on year sales growth between 2020-2021, although prices had failed to rise to match the market demand.

One of the main drivers behind the lack of price growth was the oversupply of BEVs by manufacturers at the start of 2021, which flooded the market and suppressed the used process.

Response to EU CAFE rules

This oversupply was a response to the introduction of the EU’s CAFE rules, in which overall C02 emissions were capped for manufacturers across their entire vehicle ranges. With strict financial penalties being enforced for every gram of C02 produced above the limit, many manufacturers turned to an oversupply of BEVs at the start of the year as a means of lowering their average emissions.

Two main factors have been behind the value recovery in BEV values over the course of 2021, the easing of the CAFE targets, and the simultaneous global microprocessor shortage.

Reduced pressures to produce EVs

The easing of the CAFE targets for years 2021-2022, coinciding with many manufactures having updated engines and drivetrains across their model ranges for greater efficiency has meant that the pressure to produce zero emissions vehicles to meet the stringent first-year targets has lessened.

At the same time, the microprocessor shortage which has hit global manufacturing in the last 12 months has been felt more keenly across the manufacture of BEVs than traditionally ICE engined vehicles, which has led to supply of these vehicles now lagging demand.

As a result, used BEV prices have stabilised over the last 12 months, and with research from the Boston Consulting Group suggesting that microprocessor production will not recover fully until 2024, BEV prices will remain stable for the next 24 months, if not longer.

To watch the video in full and hear Andy’s insights in greater detail, please see the video in full here:

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