Navigating the next phase of the EV revolution

At the Asset Finance Connect Autumn Conference, the auto asset management stream workshop delivered a comprehensive exploration of the strategies, challenges and opportunities facing the electric vehicle (EV) market as the industry navigates the next phase of the EV revolution.

Led by a panel of industry experts including Chris Kirby (Tomorrow’s Journey), Conor Horne (Lotus Cars), Mark Thomas (Ridecell), Chris Moysen (Carasti), Ben Young (Motorway) and Henry Pearson (Octopus Electric Vehicles), the session offered diverse perspectives on the evolving EV landscape, residual value (RV) uncertainty, and the path forward for stakeholders.

The EV market

The panel provided an incisive overview of the current state of the EV market, marked by both optimism and persistent challenges.

Growth and adoption: Henry Pearson presented a bullish outlook, citing the UK’s Zero Emission Vehicle (ZEV) mandate as a key driver of EV adoption. However, Conor Horne painted a competitive picture, noting the surge in manufacturers—rising from 42 pre-pandemic to 62—vying for market share in a contracting auto industry. As Horne noted this creates a smaller pie for more players to fight over.

Regional perspectives: The workshop featured a global lens:

• UK: Positive trends driven by salary sacrifice schemes and government mandates, though hindered by unclear guidelines for credit trading under ZEV targets.
• USA: Mark Thomas highlighted that EV growth has plateaued at 9-10% of the market, with adoption focused on fleets like taxis due to cost-efficiency.
• Southeast Asia and UAE: Chris Moysen described infrastructure and awareness as significant hurdles, with Thailand seeing a shift to hybrids over full EVs and the UAE struggling with EV returns due to limited infrastructure.

Challenges in adoption: Common barriers such as range anxiety and charging infrastructure persist globally, though progress has been made. Residual value concerns and negative media coverage also deter consumer confidence, as noted by Conor Horne.

Residual values

RVs were a focal point, reflecting the complex dynamics of EV valuation over time.

Challenges with forecasting: Conor Horne described RVs as an “ever-moving beast,” with factors such as discounting, incentives, and government mandates adding layers of unpredictability. Salary sacrifice schemes were praised for mitigating RV risk while expanding EV adoption.

Second-life leasing: Henry Pearson emphasised the unique potential of EVs for second-life leasing, stemming from their longevity and lower total cost of ownership (TCO). He projected a future where leasing products are reimagined to cater to used EVs, potentially extending salary sacrifice schemes to pre-owned vehicles.

ZEV mandate impacts: The UK’s ZEV mandate, requiring 22% EV sales by the end of 2024, remains a double-edged sword. While driving adoption through incentives, it creates pressure for manufacturers underperforming the target. The panel expressed concerns over the lack of clear government guidance on credit trading and its ripple effects on the used market.

The future of EVs

Looking ahead, the workshop delved into long-term trends and innovative models shaping the EV ecosystem.

Shared mobility: Mark Thomas highlighted the rise of shared mobility solutions in the US, such as Waymo’s driverless ride-sharing services, as a key driver of cost-effective EV adoption. Both Thomas and Pearson agreed this model would reshape urban mobility.

Mass adoption curve: Conor Horne suggested that mass EV adoption would follow the typical technology adoption curve—slow initially, then exponential. While the tipping point remains uncertain, he believes it is approaching rapidly.

Used EV market maturity: Both Henry Pearson and Ben Young predicted that 2025 would mark a pivotal year for the used EV market. Price accessibility and education would be critical to overcoming consumer hesitations.

Conclusion

This workshop effectively unpacked the nuanced challenges of managing EV assets while emphasising opportunities to innovate within this dynamic space. The collaborative insights of the panellists offered a well-rounded view of the current state and future trajectory of EV adoption, residual value management, and market evolution.

Key takeaways include:

1. The importance of government support and clear guidance in accelerating EV adoption.
2. The promise of second-life leasing and salary sacrifice schemes to mitigate RV risks.
3. The need for global infrastructure investment and education to enable equitable EV growth.

As the EV industry navigates uncharted waters, the insights from this session underscore the imperative for bold, collaborative strategies to harness its full potential.