One of the strong arguments for choosing leasing on new electric cars has been to avoid the uncertainty of what the car would be worth after a few years.
When interest rates skyrocketed, many customers still got burned when their leasing costs skyrocketed – something for which the bank DNB was recently sued by the Consumer Ombudsman.
However, the calculation has also become strained for those who sold leases of electric cars, after second-hand values have started to fall.
Now mean Niels Jörgen Larsen at Danske Finans that the leasing market for electric cars is a “ticking bomb”.
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Squeezed used prices on electric cars
During and immediately after the pandemic, used prices for electric cars were high, as interest rates were low and supply problems hampered supply. Now, however, the situation is different.
When interest rates soared, Tesla was early on to cut its prices significantly, and after some controversy, other brands have now been forced to do the same.
The supply of electric cars is no longer a problem, as Chinese manufacturers have greatly increased their production capacity while there are large stocks of unsold electric cars.
In addition, a number of new car brands from China have been introduced on the Swedish market, which increases competition.
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Car dealers and leasing companies find themselves in a pinch
All this means that existing owners of electric cars are exposed to a sharper than expected reduction in value, and this means, according to Niels Jörgen Larsen, that leasing companies and car dealers find themselves in a pinch.
This is because the cost of a leasing agreement is based on a predetermined residual value – i.e. what the car is expected to be worth at the end of the leasing period.
When the value of the electric cars now drops, that calculation cracks, and car dealers are left with residual values that do not match reality.
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“A ticking bomb”
According to Niels Jörgen Larsen, this is a ticking time bomb, which can lead to serious problems for car dealers with a large exposure to the leasing market of electric cars.
– It is a ticking time bomb that will probably lead to big losses for the car dealers and the leasing companies that offer operational leasing to companies. Especially car dealers who have a large exposure relative to their equity can have serious problems. The first merchants have already gone bankrupt. I think we will see continued consolidation on the market in Sweden in the coming years, he says.
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