Fitch: Surging BEV share raises residual value risks

The higher share of battery-electric vehicles (BEVs) in European auto lease ABS portfolios is driving up residual value (RV) risk, according to Fitch Ratings, as used BEV prices have underperformed compared to other powertrains.

BEVs represented 11 per cent of Fitch-rated auto ABS pools in the third quarter of 2024, up from 6 per cent in 2023, aligning with their growing share of new car registrations.

Fitch cited factors such as cheaper Chinese-made BEVs, manufacturer price cuts, and concerns over obsolescence as contributors to falling resale prices. Leasing companies are mitigating risks by diversifying fleets, extending lease terms, and adjusting RV forecasts downward.

Fitch’s analysis reflects greater uncertainty around BEV resale values due to limited historical data and lower expected sales proceeds, particularly in portfolios with significant BEV exposure. While BEVs’ share of EU new car registrations declined to 14 per cent in 2024, their medium-term growth is likely to sustain RV risk challenges.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser