Do government subsidies, popular here in the United States to help lower the upfront costs of buying electric cars, impact used values when one goes to resell it later? That’s the theory from a new study out of Europe suggesting items like that up to $7,500 off a Nissan Leaf via the federal government credit could actually be posing a threat to the viability of the future EV market.
Now I’m going to steer away from politics on this story, as one could easily get into the debate of whether or not government support of private sector matter is a good or bad thing. Instead, here’s what Cap Consulting researchers found against the background of a “cautious market view of EVs” which suggests the cars “already typically depreciate around twice as heavily as a conventional car, such as the Volkswagen Golf or Ford Focus.” In short, they
analysed the used market performance of the Nissan Leaf in the UK, Germany, France and Italy to compare values in countries with and without a purchase incentive subsidy.
They found a direct correlation between stronger used values in Germany and Italy – where there are no plug-in car grants – and weaker values in the UK and France, where new car purchases are subsidised by the government. They also identify that France, as the country with the highest subsidy, also sees the lowest used values for the Leaf.
The report also concludes that the removal of subsidies will widen the gap between new and used values so far as to threaten the economic viability of choosing a new EV in the future.
Government subsidies for new plug-in car purchases therefore merely serve to create cheaper used electric vehicles.
“Our analysis of used market values across markets with and without a subsidy clearly shows that grants are ineffective as a means of reducing ownership costs and, worse still, their inevitable eventual removal will cost new EV owners thousands in additional depreciation,” said report author Mark Norman in a statement.
How then can the government help out in getting people in electric cars? Through so-called “in life benefits.” These alternative incentives would include such things as “green badge” parking schemes, permission to use bus and multi-occupancy lanes and exemption from many city centre driving restrictions.