Update your auto financing models to account for EVs
The growing adoption of electric vehicles (EVs) will change the auto-finance sector. Already, longer battery life, more charging stations, tax breaks for EV manufacturers, new environmental regulations, corporate ESG goals, success with EVs among commercial fleets, and better affordability for consumers are driving higher rates of EV adoption.
The switch to EVs will dramatically change the ownership model and hence the financing. Vehicle buyers will own the chassis, but rent the battery, which accounts for up to 60% of the cost. Separately, many drivers will increasingly opt for subscription-based car usage models – like Netflix, but for cars -- rather than ownership, leading corporations to finance fleets of vehicles. Zipcar started a similar operation over a decade ago, and we expect more to catch on this year and beyond.