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CAP reveals criteria for electric vehicle residual value forecasts

CAP has announced the qualification criteria electric vehicles must meet to enable future residual value forecasts to be set.

The announcement comes as part of a major review of the EV sector launched last month by CAP.

It has been designed to pool all the knowledge necessary to help potential owners and operators make “informed business decisions about their future risk position in this emerging field”.

CAP launched the review when it became clear that without a definitive pool of information it would not be possible to provide reliable residual value forecasts.

CAP says that in order to qualify for the residual value forecast process an electric vehicle must;

  • Have European Type Approval
  • The battery must be owned as part of the car, not leased separately

This follows debate at CAP around the possibility of car and battery being treated as separate entities, such as under dual ownership arrangements with the car owned but the battery leased. In such cases CAP believes it would be impossible to attribute any residual value to a vehicle which could in theory lack the means to operate.

Work is ongoing to identify the full range of criteria which will impact on the residual value forecast itself. These include;

  • Vehicle range
  • Charging method
  • Maximum speed
  • Electrical ampage
  • Warranty arrangements

CAP believes the emerging electrical vehicle sector requires a new way of thinking compared with conventional cars and commercial vehicles.

Mark Norman, of CAP’s EV Review Group said: “It is tempting to assess electric vehicles in the same light as those with conventional engines.

“Many people in our industry are therefore already writing them off as inferior in terms of convenience and everyday usability for the whole range of purposes for which we currently use road vehicles.

“That kind of dinosaur thinking is short-sighted because it fails to recognise the potential for social, political, taxation and business change which may well bring new ways of using road transport.

“Therefore one of the major challenges in this field is that you are not only trying to forecast vehicle residual values but forecast changes in society too.”

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