The future of the car market is undergoing a significant shift, as the value of remaining combustion-engined models surpasses that of their electric counterparts in the second-hand market. This trend is evident as electric vehicle (EV) values continue to decline for the 21st consecutive month. However, amidst this decline, a two-tier narrative is emerging, highlighting that newer and more technologically advanced electric cars are retaining their value better than their earlier counterparts.
According to Andrew Miller, CEO of Motability Operations, the gap between residual values of ICE (internal combustion engine) vehicles and EVs is quite substantial. As legislation continues to push car manufacturers to sell fewer combustion-engined models, this gap is expected to widen even further. This prediction suggests that the demand for combustion-engined vehicles will decrease, leading to increased scarcity and subsequently driving up their value in the second-hand market.
One possible explanation for this trend is the rapid advancements in electric vehicle technology. Newer electric cars offer improved range, faster charging capabilities, and more sophisticated features compared to their predecessors. These advancements make them more attractive to buyers, increasing their desirability and helping them retain their value better over time. As consumers become more aware of the benefits and convenience of EVs, they are willing to pay a premium for these newer models.
Another factor contributing to the discrepancy in residual values between ICE and EVs is the evolving regulatory landscape. Governments worldwide are implementing stricter emissions standards and incentivizing the adoption of electric vehicles. This has resulted in a growing number of countries announcing plans to ban the sale of new combustion-engined vehicles in the near future. With the inevitable phasing out of ICE vehicles, their value in the second-hand market is likely to rise due to limited supply.
The shift towards electric vehicles also aligns with the global push towards sustainability and reducing carbon emissions. As more individuals and businesses prioritize environmentally friendly transportation options, the demand for EVs is expected to continue growing. This sustained demand, coupled with the limited supply of combustion-engined models, will further contribute to the widening gap in residual values.
In conclusion, the car market is witnessing a divergence in residual values between combustion-engined vehicles and electric cars. While EV values are experiencing a decline, newer and more advanced electric models are bucking the trend and retaining their value better. This can be attributed to the rapid technological advancements in electric vehicle technology, increasing buyer desirability, and shifting regulatory landscape favoring EV adoption. As the world moves towards a greener future, the value of combustion-engined vehicles in the second-hand market is expected to continue rising due to their decreasing availability.