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In 2025, the European used-car market is expected to present a complex landscape for battery-electric vehicles (BEVs), with residual values (RVs) under pressure due to various factors.
According to a panel of Autovista Group experts, the ongoing market deterioration and competitive commercial pressure are impacting BEV RVs. Renault Group, for instance, has emphasised the need for a rigorous approach to protect RVs, prioritising value creation over volume amidst retail market decline and tough competition.
Despite these challenges, the industry is responding with aggressive cost management and selective portfolio strategies. Key models are being launched and facelifts are being introduced to stabilise RVs.
Premium BEVs currently dominate the market, but their higher purchase prices compared to internal combustion engine (ICE) vehicles are a barrier to widespread adoption. This directly affects residual values by limiting volume growth in more affordable segments.
To address this issue, European automakers are starting to develop more affordable BEV models to compete with Chinese manufacturers offering high-quality mass-market BEVs near price parity with ICE vehicles. This could help protect or improve RVs in the volume segment as affordability improves.
In the volume segment, which accounts for approximately 36% of 2023 car sales, BEV residual values could improve if more competitively priced models succeed. However, the overall higher price premiums for BEVs in Europe (average 22% above comparable ICE vehicles) continue to challenge RVs, especially for lower-margin segments.
The brand impact varies significantly. Established brands with flexible and agile business models across combustion, hybrid, and electric powertrains, such as Renault Group, are actively trying to protect RVs by balancing launches and channel profitability. Brands focusing only on premium BEVs risk short-term RV pressures due to affordability barriers and market fragmentation.
Beyond BEVs, hybrids and ICE vehicles still play a role in manufacturers’ portfolios, reflecting a flexible approach considering the pace of energy transition and uneven market demand.
Broader industry production challenges, such as the steep vehicle output decline in the UK (down 15% projected for 2025), could also indirectly affect RVs by constraining supply and altering market dynamics.
In summary, while residual values for BEVs in Europe face downward pressure due to competitive pricing, affordability challenges, and a declining retail market in 2025, efforts to launch more affordable BEV models and rigorous commercial strategies by agile manufacturers may partially mitigate these effects, especially for volume segments and resilient brands. Premium segments retain value challenges given the ongoing price premium and slower mass-market adoption.
Meanwhile, the average car age has risen over time due to supply shortage. A webinar titled Transition to EVs - Has Europe already peaked will take place on 12 March 2025 at 9.30am GMT / 10.30am CET. (Advertisement)
It's worth noting that the decline in RVs is expected to ease in 2026, with countries like Sweden, Finland, and the Netherlands forecast to record positive figures next year.
References: 1. Autovista Group 2. Renault Group 3. Chinese Manufacturers 4. Madas 5. Autovista Group Webinar
- European automakers are developing more affordable BEV models to compete with Chinese manufacturers, in an attempt to protect or improve residual values in the volume segment.
- The need for a rigorous approach to protect residual values is emphasized by manufacturers like Renault Group, who are prioritizing value creation over volume in the face of retail market decline and tough competition.
