EV residual prices will be higher than petrol and diesels

Worries about resale prices have dampened electric vehicle sales in recent years, globally and locally.

But Volvo Cars Chief Commercial Officer Erik Severinson thinks the residual values of electric vehicles versus their fossil-fuelled equivalents are set to flip.

He recently told analysts they should be “more nervous” about buying diesel cars.

“It’s a relevant question – also, if you want to do your lease calculations, you have to know what the residual value [will be]. But you should also ask yourself what would the residual value be of a petrol car five years from now? And I think sometimes in these discussions we forget that aspect of it.”

To date, that appears to be the case in the second-hand market, where prices for three-year-old electric vehicles have fallen faster than their petrol and diesel equivalents. Which in turn is putting off some potential buyers.

Severinson thinks it is a short-term issue that will soon reverse.

He pointed to the massive investments in cutting edge technology that carmakers like Volvo have made – a level of investment that is no longer being made in legacy internal combustion engines.

“[Given] the state-of-the-art technology base for an electric car, there's nothing saying in any way that should have a lower residual value than a combustion engine vehicle at that time. I would argue quite the opposite,” said Severinson.

“I would be more nervous buying a diesel three years from now than buying a BEV three years from now – and I think that if you look at the technology and the efficiency of electric vehicles, we can make them last longer,” he added.

“So, I would argue electric vehicles should have a higher residual value … I meet with the residual value setters on an almost weekly basis right now, ahead of the EX60 launch, and they are starting to see this as well. So I am very confident that the value of BEVs will last – and they will last better than the value of combustion engine cars.”

In the meantime, Volvo Car Australia has a solution for any prospective EV buyers concerned about resale values: Volvo Car Future Value^.

A flexible finance solution, it provides a guaranteed future value of the vehicle agreed up front. Then at the end of the term – one to five years – drivers can choose whether to trade in, retain or return their Volvo based on that agreed value.*

Find out more here.

^Volvo Car Future Value has a Guaranteed Future Value (GFV) which is the minimum value of your vehicle at the end of your finance contract as determined by Volvo Car Financial Services (VCFS) ABN 20 097 071 460, Australian Credit Licence 389 344. If you decide to return your vehicle to VCFS at the end of your term, VCFS will pay you the agreed GFV, which will be put against your final payment subject to fair wear and tear conditions and agreed kilometres being met. At the end of your term, you can elect to (1) trade-in; (2) return; or (3) retain the vehicle by paying the GFV owed to VCFS at the end of the loan term after all repayments have been made. You will be liable for any loan contract deficit and additional charges apply if you exceed the nominated kilometre allowance and/or the vehicle is not in an acceptable condition. Available on new, demonstrator or Volvo Selekt pre-owned vehicles for selected Volvo models. Contact your nearest Volvo dealer to check eligible vehicles for this program. To see if this product is right for you, please see our Target Market Determination on our website and/or seek independent advice. *Subject to a credit assessment and VCFS lending criteria. Fleet, government, rental buyers, hire car and chauffeur companies excluded.