What is the situation with residual values in Europe?

The BEV / Petrol RV gap is smaller than headline figures suggest. After adjusting for inflation, purchase subsidies and acquisition taxes, the 2025 gap falls from 12.9 pp to 7.7 pp, showing that part of the difference is explained by policy and price effects.

Falling new BEV prices have weighed heavily on used BEV values. When used BEVs are compared with current new vehicle prices, the gap with petrol falls further to 2.6 pp, suggesting buyers value used BEVs much more closely to petrol vehicles than standard RV metrics imply.

The BEV market is not moving as one single block. Spain shows stable BEV RVs, France remains relatively resilient, while Italy has seen sharper declines. Smaller BEVs are also performing better than larger, more expensive models, and European brands tend to retain stronger values.

Signs of market confidence are emerging. BEVs have historically depreciated more with age and mileage, but this gap is narrowing, while recent trends suggest lower volatility and a gradual stabilisation of BEV RVs.

Inflation: The first factor to account for is the Consumer Price Index (CPI), which has risen significantly across all countries studied between 2020-2026. Since nominal RV% does not account for changes in the value of money over time, inflation can distort observed residual values (RV), creating apparent spikes over the vehicle ownership period.

Purchase subsidies and acquisition tax affect the effective purchase price of new vehicles but are not reflected in traditional RV calculations. As BEVs are often subsidised and ICE vehicles taxed, BEV RVs may appear artificially low when calculated against retail prices rather than actual purchase prices paid by the first owner.

Compositional changes in data: The final correction accounts for changes in the dataset over time, such as a growing share of older BEV entries. Since older vehicles generally have lower RVs, this can make average RV% appear to decline. We therefore apply an OLS-based adjustment to control for differences in age, mileage, powertrain, country and segment, producing RV trends that better reflect the underlying evolution.

Improved BEV technology: Newer BEVs typically have longer ranges, and can have better charging capabilities. This would lead buyers to value new BEVs more in comparison, leading to a larger gap between new and used current prices compared to Petrol cars (whose technology improvements are more incremental).

Favourable taxation for BEV company cars: BEV cars often enjoy lower taxation than their Petrol counterparts, reducing the cost of owning a new BEV more than for a comparable Petrol car. This could increase the ability to pay for new company car BEVs, widening the gap between new and used prices.

Higher price sensitivity of used car buyers: Whilst BEVs can provide significant operational cost savings, used car buyers may be put off by higher up-front costs of BEVs. Used BEVs may need to be closer in value or equal to used Petrol cars (whilst new BEVs are still slightly more expensive than new Petrol cars) to encourage used car buyers to purchase a BEV.

Battery State of Health testing: Battery certificates increase buyer confidence by proving the condition of the battery, which is directly linked to range and vehicle value. BCA, Europe’s largest car remarketer, found that certified EVs achieved around 1.4% higher resale value and sold 2.7 days faster on average, while Arval has issued over 30,000 battery health certificates across the UK and EU.

OEM-led approved used schemes: Several OEMs are strengthening used-EV confidence through approved-used programmes, including Stellantis, Kia and Mercedes-Benz. BYD goes further with a dedicated Certified Pre-Owned scheme, including a 179-point inspection, a guaranteed battery health score of 90, a 1-year / 20,000 km vehicle warranty, the remaining 8-year / 200,000 km battery warranty, and 2 years of roadside assistance.

Industry discounts and favourable financing: Discounts and lower financing rates can help sustain new BEV demand and reduce upfront costs for consumers. However, heavy discounting also lowers the benchmark price for used BEVs, putting pressure on residual values. Targeted, predictable support and favourable financing are therefore preferable to broad, repeated price cuts.

Improving second-hand BEV affordability through leasing and finance: Second-hand BEV leasing and tailored finance products can improve access to used EVs while supporting residual values. Leasing can benefit from smoother depreciation after the first lease, enabling lower monthly prices, as shown by Ayvens’ Re-Lease plan. Dedicated finance products can also increase buyers’ ability to pay, supporting RVs by raising affordability rather than reducing the underlying vehicle price.

Lengthening first-hand leases: Longer lease periods could spread BEV depreciation over more years, reducing monthly lease costs and helping absorb residual value risk. However, the leasing industry has offered limited options so far, partly because customers and fleets still prefer shorter replacement cycles and newer technology.

Standardise battery health certification: The EU is already moving in this direction through the battery passport, which will become mandatory from 18 February 2027 and provide QR-code access to battery identification, performance and durability data, as well as through Euro 7 battery durability requirements. The aim should be to build on these steps so they deliver a simple, comparable and consumer-facing battery health standard across OEMs and providers, giving buyers in the second-hand market a clear benchmark they can trust.

Introduce mandatory battery health disclosure: Requiring standardised battery health checks at resale would give buyers clearer information on battery condition and future degradation risk. This is feasible at relatively low cost, but needs a trusted methodology and clear liability rules. The proposed car CO₂ labelling rules, which would require distributors to inform buyers of the vehicle’s state of health for BEVs and PHEVs, based on data already available in the vehicle’s on-board display.

Strengthen battery protection through warranties and refurbishment support: In the EU, BEV battery warranties typically cover around 8 years or 160,000 km. These warranties should be standardised, transferable across owners, and consistently applied across OEMs to improve confidence. From 2027, the EU battery passport can support this by providing standardised battery health data and clearer warranty claims. For older BEVs outside warranty, targeted support for battery refurbishment or certified module replacement could extend vehicle lifetimes and improve resale values.

Taxation as a tool to support used-BEV demand and residual values: VAT or vehicle tax exemptions would improve affordability for buyers (reducing the cost) while allowing resale prices to remain stronger (certain margin to increase resale price). These measures are simple to communicate and administer, but would involve a public revenue trade-off during the transition period until BEV residual values stabilise.

Use public procurement to create demand certainty: Public fleets could help absorb older BEVs after their first life, creating a demand floor and reducing resale risk for leasing companies and fleet operators.

Introduce targeted RV guarantee schemes: Government-backed RV guarantees could reduce lender risk and smooth BEV depreciation during the transition, particularly for fleets and leasing vehicles. These schemes could be time-limited, decline over time, and apply only to vehicles meeting durability and efficiency standards. A relevant precedent is Tesla’s European buyback scheme for early Model S and Model X vehicles, which allowed owners to trade in the vehicle for at least 50% of its base purchase price after 3 years.