By Dylan Setterfield, head of forecast strategy at Cap HPI

The used values of numerous battery electric models have stabilised following substantial decreases in used values over the past 12 months.

Some range’s values continue to struggle and appear to have some way to fall, with no common denominator or central theme governing how individual ranges perform.

However, many models now look excellent value compared to internal combustion engine (ICE) equivalents or competitors.

Although there is potential for some to increase from their current used value position, Cap HPI generally assumes that there will be further deflation in future and has applied negative adjustments in most cases.

There are minor positive adjustments for the handful of models that have seen the heaviest falls, and in these cases, values are expected to increase slightly over the next 12 months.

In February, battery electric vehicles (BEVs) dropped by an average of 1.7% (with plug-in hybrid electric vehicles (PHEVs) 1% better at 0.7%) compared to the small positive movements for other fuel types.

However, battery electric vehicles remain the fastest-selling fuel type on dealer forecourts – dealer demand seems less strong than consumer demand, with some steering clear of BEVs due to catching a cold when values dropped and the majority of independents are not stocking BEVs at all.

There is clearly capacity for the used market to cope with plenty more BEVs.

The used car market in March is expected to perform very close to typical seasonal movements, with overall prices expected to remain largely unchanged.

Vehicle condition continues to be key, with parts availability and refurbishment capacity continuing to reduce while costs inevitably increase, and the “cleanest” condition vehicles are generally expected to continue to perform well.

The volume of BEVs will continue to increase in the coming months, but many models already appear very attractively priced following the previous reductions, and the rate of used car price falls is expected to continue to slow.

As we move through 2024, we will start to see the positive impact of reduced used car supply due to around 2.47 million fewer cars registered through the pandemic, particularly from fleets (approximately two thirds of the shortfall).

It should be noted that there are detailed ‘flexibilities’ available to manufacturers to cope with the mandate, and some have already indicated that they are planning to use different options as they already know they will not meet the mandated proportion in 2024.

The used market for BEVs will likely remain highly complex for some time. The high prices, fuelled by robust demand in the middle section of 2022, are a distant memory.

Increased used volumes and a multitude of issues impacting demand combined to bring the ‘perfect storm’, resulting in the eye-watering decreases in used values, which started almost 18 months ago, with several models falling in value by more than 40% and a handful more than 50%.

BEVs are now down 26% year-over-year at 36/60, continuing to improve from the 36% in September and expected to alleviate significantly. It was not a surprise that values came down in 2022/23.

Buyer demand in the used marketplace is back to previous levels. Although a small number of buyers remain selective, demand is considerably higher than it was a few months ago.

It is expected to remain robust, especially for models at the lower end of the price spectrum. 

At 12 months old, BEVs retain an average premium of +6.6% (almost £1,800) over ICE equivalents. This is partly due to newer models only being in the used market in small volumes, but there is also a contribution from new car price discounts.

As the market for BEVs continues to evolve, it’s essential to keep up to date with a real-time view of the market.