Barely a month goes by without a structured finance research house putting out a paper showing that used electric vehicle prices have been more volatile than the prices of cars with internal combustion engines.
There are multiple causes. New EV prices are falling as production gets more efficient, while battery technology and range are improving. This progress can make older models less attractive.
But regulation is also a factor. If governments want to encourage a switch to EVs, indecision is intolerable. Uncertainty can put people off buying electric vehicles and makes it harder for manufacturers to plan the huge budgets involved in shifting production from one model to another. Policy vacillation can also make financing EVs more expensive.
If data show that EVs are at risk of deteriorating in price as they age by more than petrol cars, rating agencies must evaluate securitizations in light of that evidence.
That means ABS deals with more EVs could need more credit enhancement and hence be more expensive for the borrower. That could in turn make financing an EV purchase more expensive for the end consumer.
It is not necessarily the job of governments to solve that problem directly. Propping up the market for obsolete cars could slow innovation. But it is surely better not to compound the difficulties of this nascent technology with inconsistent policy making.
That extends from national and international authorities down to city mayors.
In London, for example, an unwelcome Christmas present is in store for EV drivers next year. Their exemption from the congestion charge will come to an end on December 25, 2025 and they will have to pay the full daily fee of £15.
The general direction of policy making has been in favour of EVs, but that won’t necessarily continue.
Across Europe, as far right parties have advanced in elections, there is a risk that legislation to drive the green transition could be unwound, or that new green measures will be harder to pass.
In the European Union, right wingers want to attack the EU's target, legislated in 2022, that from January 1, 2035, no new fossil fuel-powered cars can be sold.
Fifty companies from the car and EV industries, including Volvo, Uber and lessor Ayvens, put out a joint statement on Monday urging the EU to stick to the agreed target, and not change it when progress on EV adoption is reviewed in 2026.
That fact that the companies felt the need to make this call shows they fear the policy is in danger — and that they know changing it would imperil their investments and planning.
With legislation as it is, it should be petrol car prices that collapse eventually.
Indeed, there are ABS investors who expect used petrol car prices to be just as volatile as EV prices in the coming years. They are right to be cautious because volatility is usually the result of a transitional period.
Policymakers should be careful to avoid making the vital transition to clean transport any harder or slower than it is already.