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Shortage of financing options could stall electric vehicle sales, warn legal experts

Figures published by the Society of Motor Manufacturers and Traders (SMMT) in August 2019 showed UK registrations of fully electric vehicles were up by 158% year-on-year.

EV registrations have also proved to be the silver lining in the UK new car market, which is currently at its lowest level since 2013, according to recent figures by the SMMT.

However, a shortage of financing options for consumers and businesses could restrict the market’s growth and negatively impact the UK’s ability to meet carbon emission targets, according to London-based lawyers Shoosmiths.

GlabalData’s motor finance reporter Athena Chrysanthou says: “In a legal briefing, lawyers from the London-based firm said that financing packages on offer from ‘captive’ (or manufacturer-owned) and ‘non-captive’ finance providers have largely “failed to adapt to the distinctive characteristics of EVs.”

“The report, entitled ‘Financing for electric vehicles’, explained that traditionally, finance providers designed and built their IT systems to support straightforward products which have worked for diesel and petrol cars, as they are bought and sold as a single asset.

However, Shoosmiths said: “EVs are not so simple. As well as the vehicle itself, an EV requires a battery, often worth several thousand pounds – and there may also be a need to take account of new charging technology, including its installation, care, maintenance and use limitations.”

Stephen Dawson, sector head of financial services at Shoosmiths, warns that if they fail to tackle these issues many finance providers may “find it increasingly challenging to produce finance documents for their EV loan books that are fully compliant with the law.”

Dawson added: “At a time when major manufacturers are increasingly prioritising the development of EVs, everyone along the supply chain, from manufacturers through to dealerships, needs to work closely with their finance partners to ensure that proposed EV-friendly finance offerings cover all the issues associated with purchasing EVs.

“There are huge problems ahead for both the industry and consumers if the financing for EVs isn’t overhauled to meet the demand of this growing market.”

Next Finance 13 January
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