The Expert Podcast

• Is 2024 a turning point for electric vehicles (EVs)? Many think so. However, some argue EVs are in "total failure mode."
• Discussion inspired by a financial article shedding light on critical EV trends and risks.

• S&P Global Ratings issued a white paper on EV residual value risks.
• Residual value: The predicted resale value of a vehicle after a lease ends.
• Leasing companies must accurately forecast this value to avoid financial losses.

• Example: A $50,000 vehicle leased for 3 years is expected to retain a $30,000 value after lease.
• If resale value drops unexpectedly, leasing companies lose money.
• Finance companies also face risks when repossessing vehicles with lower-than-expected resale values.
• Misjudged residual values impact stock prices, credit ratings, and financial stability.

• EVs depreciate faster than internal combustion engine (ICE) vehicles.
• Higher depreciation could lead to reduced recoveries for asset-backed securities.
• Reminder: Asset-backed securities were a major factor in the 2008 financial crisis.

• Challenges include charging issues and rapid vehicle depreciation.
• Example: A man loses money as he charges his EV in cold weather and faces declining vehicle value.

• Ford halts shipments of its Lightning trucks due to weak sales, despite previous high demand.
• EVs, once highly desirable, are becoming harder to sell even at discounted prices.

• Consider buying a used EV if the price is right and the battery is in good condition.
• The battery accounts for most of an EV’s value, making it a critical factor in purchasing decisions.

• What does the future hold for EVs?
• Will the transition to EVs take more time, or were they oversold?
• Are we witnessing a temporary setback, or is the EV movement at risk of failure?