The days of the internal combustion engine may not yet be over but most carmakers, both large and small, are declaring that the electric vehicle holds the key to the future for the automotive industry.

Mitsubishi, Peugeot and Citroen are currently starting to launch their respective i-MiEV, i0n and C-ZERO models while Renault is to introduce its four-strong EV range from next year, kicking off with the Kangoo ZE light van. And Volvo’s CEO Stefan Jacoby recently confirmed that the brand’s C30 DRIVe Electric will go into production in 2011, ahead of a plug-in hybrid in 2012. In fact most carmakers that don’t have an EV close to production have said that they will do soon.

Of course there are many issues pertaining to pricing and usability that need to be ironed out before fleet drivers will be able to plug into this market, and governments, manufacturers and technology providers are all looking to work together on these areas.

But there are still big question marks being raised over the desirability of EVs to used buyers and how much demand there will be for such vehicles from second and third buyers, who may not trust the technology. So what actions need to be taken now to help ensure a receptive audience of future EV buyers?

Andrew Jackson, automotive analyst at Datamonitor, says: ‘Demand will only be created for remarketed electric vehicles if consumer fears are allayed through greater transparency by vehicle makers. Generations have grown up with petrol and diesel cars meaning the technology is mature in design and a strong sense of reliability has been embedded in the public psyche.

‘It follows therefore that until motorists can see that electric vehicles are as reliable over a sustained period of time, with repairs as affordable as their conventionally powered counterparts, they will always view remarketed versions with scepticism and demand will suffer. Slow demand for used electric vehicles will impact on resale values, with some reports suggesting that as much as 90% of the vehicle’s value will be lost after five years.’

He adds: ‘Used buyers need transparency and fleet operators and manufacturers should provide as much as possible, by being upfront about the limitations of their technology and debunking myths that affect public support. There have been a number of incidents recently where manufacturers have had to backtrack on statements made about their vehicles. If they cannot effectively communicate the benefits of their electric or hybrid vehicles to the public, then they will never be able to compete with small, fuel-efficient diesel cars.’

BCA agrees that as with all alternatively fuelled cars, work needs to be done with EVs to ensure a willing audience of buyers.

Communications director Tony Gannon says: ‘The key issue for all alternative fuels is acceptability with the general motoring public, because they will drive the demand in the used market. So it is perhaps less a question of residual values, and more about future consumer perceptions.’

However, he notes that used commercial vehicle buyers may be more open to buying EVs. He explains: ‘The commercial vehicle market has had a long exposure to alternative fuels and is probably more comfortable with the concept than the car market. There are also clearly defined business benefits for low- or zero-emission commercial vehicles working in the congestion-charging zone, for example. LPG is the fuel of choice for commercials, of course, rather than electric although the Mega Van has become quite well established for urban work and other small-volume ECVs have been around in one form or another for many years.

‘However, pure electric vehicles remain such an infinitesimally small part of the used vehicle market in terms of volume, it means few benchmarks have been set in terms of desirability and therefore price. Essentially this is a combination of remarketing and missionary work!’

Stephen Dilley, country manager, FleetData UK Limited, says that in terms of remarketing, the jump from conventional internal combustion vehicles to electric is made a little easier through the stepping stone of the hybrid vehicle.

He explains: ‘Many of the specialised remarketing issues pertaining to the electric vehicle will have been encountered through the experience of selling used hybrids.

‘The questions that currently exist for hybrids – drivetrain longevity, battery life, cost of battery replacement etc all apply to the electric vehicle. More importantly, the length of the battery warranty will prove to be the critical factor, unless of course, battery leasing becomes the norm.

‘However, battery leasing is perhaps less attractive to certain parties in the transaction. Is it possible that manufacturers see an opportunity to shorten the lifecycle of the motor car (and thus maintaining production volumes) through the simple arithmetic of the replacement cost of the battery versus the market value of the used vehicle? Let’s not forget the potential cost of adding a used vehicle warranty that covers the battery.’

Earlier this year, Glass’s also warned about the problems involved with EV batteries, saying that ‘if the battery is owned rather than leased, and lacks the appropriate extended warranty, the value of the typical EV will then fall dramatically until the vehicle is five years old, at which point the car will have a trade value little more than 10% of the list price.’ As such the company has recommended that manufacturers take the battery out of the upfront cost and implement leasing agreements instead – these ideally should be applied to the vehicle too, it says.

Range and rechargeability of electric vehicles will also impact the scope of the potential used market, says FleetData’s Stephen Dilley. ‘Whilst there are initiatives in the UK to introduce a network of charging points nationwide, this will take time, and across Europe, one has to be sceptical that, in certain countries, it can be achieved at all, thus creating “electric deserts”. This, in turn, will impact values if the evolution of battery technology results in a growing range increase over time. A little like the decision to buy the fastest computer PC available now, or delay until next year’s even faster model is available, used values for the “older” technology electric vehicles will be damaged by the knowledge that a better version is coming soon.’

BCA’s Tony Gannon agrees that age, along with mileage, could pose issues with remarketing EVs and says that as with remarketing all vehicles, it’s important to consider ownership and in-service use as well as end-of-term condition.

‘Fleet managers operating them should make sure their EVs are serviced at the correct intervals during their working lives by the supplying dealer and provide a complete service history at the time of sale.

‘Consider providing an independent mechanical condition report as well – your remarketing partner should be able to conduct this for you. A comprehensive report will help satisfy buyers as to mechanical and cosmetic condition and it is quite possible that different guidelines will be introduced to account for the specific needs of electric vehicles – battery condition, for example.

‘But by far the most important factors will be valuation and buying power. A database of prices will help remarketers establish sensible benchmark values that the market will bear and specialist buyers for EVs will be needed to support the market in the early days. It will require a variety of remarketing channels to reach those buyers and it is likely that online channels will be a critical part of the mix.’