KBRA UK (KBRA) releases a report exploring the changing dynamics of the European auto market and the challenges presented by the electric conversion. As petrol and diesel prices continue to soar, greater attention has been placed on the electrification of daily journeys and the conversion of passenger vehicles to greener alternatives. In Europe, sales growth of electric vehicles (EV)—including battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV), and hybrid electric vehicles (HEV)—surged to 44% of new vehicle registrations in Q1 2022. Investors and market participants are eager to see the funding of these sales convert into a green securitisation of EVs. These vehicles are increasingly becoming a part of securitisation pools as EV sales increase.

Key Takeaways

• Europe’s EV sales show ongoing strong growth, from 4.3% of total new passenger vehicle registrations in 2017, to 37.6% in 2021, and 44% in Q1 2022.
• EVs remain a small proportion of the existing fleet at 2.3% of European Union (EU) vehicles as of 2020. At the current rate of sales, we estimate it would require about 19 years to fully replace existing fossil fuel vehicles if only EVs were sold from now on.
• Residual values for EVs have improved, with pricing across both premium and non-premium brands holding value.
• Auto asset-backed security (ABS) securitisations are increasingly including EVs in their pools, with 2022 transactions containing between 2% and 30.7% of BEVs and hybrids.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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