25/06/11
Q&A: Used vehicle demand in an electrified world
London, 11 June (Argus) — Widespread electric vehicle (EV) adoption is raising
new questions about battery lifespan, resale value and smart charging habits.
Argus spoke with Peter McDonald, director at UK charging technology firm Ohme,
to discuss how home charging and battery health standards could shape EV demand.
The role of Standardising State of Health (SOH) certification is often discussed
as key to building trust in the used EV market. How will this impact European
OEMs? Battery State of Health helps address information asymmetry in the used EV
market. New BEVs typically come with generous warranties, giving first owners
confidence. However, in mature markets, most vehicles are financed, with future
value influencing lease rates and purchase prices. Since the battery is a major
cost component, confidence in its long-term durability significantly affects a
vehicle's lifecycle value. Buyers increasingly want not only a snapshot of
battery health but also a forecast of its future condition. This is especially
critical in markets like Europe, where consumer finance is tightly linked to
vehicle purchases. As a result, battery durability may impact a vehicle's future
value more than performance specs. OEMs are incentivised to encourage optimal
charging habits to extend battery life. Batteries with high residual or scrap
value may help offset concerns around SOH and depreciation. Ultimately,
transparency in battery health and projected performance is becoming essential
to maintaining confidence and value in the growing used EV market. What does a
shift toward home charging mean for how and when batteries degrade and, by
extension, demand for replacement cells or recycling? Discussions with OEMs
suggest AC (slow) charging is better for battery health than DC (fast) charging.
As a result, OEMs prefer customers to charge at home or work where possible,
preserving battery longevity. Most early EV adopters—and around 16mn future UK
households — can charge regularly at home or work, using DC fast charging
occasionally for longer trips. Homes without off-street parking present
challenges, but as demand grows, more scalable public charging solutions will
emerge. Widespread home and workplace charging supports more consistent battery
health, leading to higher resale values and lower new purchase costs. Improved
durability also extends vehicle life, reduces warranty and maintenance issues,
and delays battery recycling needs. We have seen carmakers are leaning on
subsidised leasing to justify EV production volume. How does this distort demand
and how should that shape investment in materials supply chains? Two key factors
drive this: OEM commercial dynamics and government policy incentives. OEMs make
inflexible production decisions and, to meet environmental regulations and
attract investor confidence, many have committed to EV strategies. When EV
supply exceeds demand, OEMs need demand levers. Lowering new vehicle prices is a
blunt tool — most, except Tesla, avoid it as it directly impacts residual
values. In Europe, government EV incentives have focused on benefit-in-kind tax
reductions, encouraging businesses and drivers to choose EVs over ICE vehicles.
Fleet channels, with less transparent and fluctuating lease rates, now dominate
EV uptake. This has created polarised demand and fuelled the rise of salary
sacrifice schemes, attracting retail-intent buyers into fleet. As a result, OEMs
rely heavily on fleet sales, often via hidden discounts. Leasing companies have
become major asset holders, concentrating EV ownership. Strong EV demand exists
— at the right price. Given lease rates are tied to residual value, buyers act
rationally. This places high importance on battery state of health and
sustaining post-mobility battery value. What is Vehicle-to-Grid charging and how
might that reshape the economics of battery packs, degradation rates, and
materials circularity? There are major financial and carbon-saving opportunities
when consumers charge during low grid demand. Charging overnight, or when supply
exceeds demand, offers the lowest-cost, lowest-carbon charging. Companies like
Ohme, in partnership with energy providers like Octopus, make this smart
charging simple and seamless. Vehicle-to-Grid/House (V2X) technology offers even
greater benefits. It allows customers to power their homes from their cars or
profit from strategic charging and discharging — exporting energy back to the
grid. While high upfront costs have limited adoption, many OEMs are now
committing to vehicles with two-way inverters, making V2X primed for mass
uptake. From a battery perspective, V2X can reduce charging costs, turn the EV
into a grid asset, and enhance residual value — potentially increasing what
consumers are willing to pay. It encourages EV adoption and aligns with
home-based charging habits. At scale, V2X could reduce the need for separate
home batteries and industrial grid storage, lowering overall battery demand
across the supply chain. What challenges do carmakers and energy providers face
in co-ordinating charging strategy and battery health? The worlds are different.
Carmakers face high upfront costs, intense competition and uncertain demand as
they invest heavily in building a global electrified fleet. In contrast, with a
few notable exceptions, energy retailers are typically national heroes, focused
on local, highly regulated markets. Collaboration between the two remains
limited, despite clear mutual benefits: OEMs building great EVs, and energy
providers supplying abundant, affordable power. Ultimately, my view is that OEMs
may have the greater influence in shaping future standards, as they design
vehicles for multiple markets and global requirements, while energy providers
remain more locally constrained. By Chris Welch Send comments and request more
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