Used electric cars pose a problem for the motor finance industry, which may not be ready in time for the Government's 2035 ban on the sale of petrol and diesel cars.
Industry-wide discussions on used electric vehicle (EV) finance are needed, according to Startline Motor Finance.
The company’s CEO Paul Burgess said: “It’s fair to say that the used car motor finance sector has been aware of the structural problems around used EV funding for a while but we believed that more time was available to work our way through them. The new announcement moves the point of action much closer.
“Like most other motor finance providers, we have been looking at the challenges around constructing EV funding products. These range from the fact that predicting RVs remains much more difficult than for petrol and diesel cars through to the question of the battery as an asset.
“The current situation, where there are very few companies currently willing to provide finance for used EVs – and that even some of those are having the business underwritten by manufacturers – illustrates the difficulty of solving these problems.”
A properly functioning used car market and accompanying motor finance is “essential” to the success of EVs in the medium and long term, according to Burgess.
“Our view is that no single motor finance company is likely to solve this issue by themselves and there needs to be industrywide discussion and co-operation in order to deliver the required innovations,” he said.
Manufacturers have played a greater part in the funding of used EVs than has been seen in the traditional motor finance market, by underwriting the battery while motor finance companies fund the car. Burgess believes this is one option that could help to create more affordable products.