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As used EV prices fall, automakers repay leasing firms

Fueled by generous subsidies and tax breaks, corporate cars are especially popular in Europe, with Volkswagen, Stellantis and BMW leading a market with nearly 13 million deliveries last year. Fully electric cars made up nearly 16 percent of sales then.

Carmakers need to comply with tightening fleet emission levels, or pay fines. In the European Union, the permissible level of carbon dioxide emissions will drop next year with Volkswagen still some way off, according to an analysis by market researcher Jato. In the UK, zero-emissions vehicles should make up 22 percent of sales this year, rising to 28 percent the year after.

But without stable pricing in the used-EV market, Europe’s target for phasing out sales of new combustion-engine cars by 2035 looks less likely. To recover the drop in second-hand values, EV leasing rates have started to go up to exceed those for combustion-engine cars, according to a study by the CAR Institute that focused on Germany.

“There will not be an EV transition without structured and liquid markets where EVs hold their second- and third-hand values,” Jefferies analyst Philippe Houchois said in a note. “In the end it is the difference between new and used price that is the real cost of a car.”