Government Loans Proposed To Speed Up Sales of Alternative Fuel Vehicles.
A loan guarantee scheme has been proposed to the UK Government to help boost the number of electric and hybrid vehicles sold.
The specialist lender Paragon’s The Motor Finance Team feels that an Enterprise Finance Guarantee (EFG) could help the increase the sales of alternative fuel vehicles (AFVs) after its compiled research showing sales of AFV’s are being held up by a limited amount of finance options.
The latest findings from Paragon’s Headlight Survey for Autumn/Winter 2018-19 found that nearly three quarters of brokers expected an increase in both hybrid and electric car sales in the coming six month.
The report also highlighted that a quarter of brokers said they were having difficulty organising finance for electric cars.
What is the issue? And how would an EFG Help?
Electric cars constantly being updated due to the technology involved. This means there is a huge amount of risk in terms of valuation and complaints regarding the iniveitable new technology “teething” issues.
An Enterprise Finance Guarantee by the Government would mean that lenders could take a view on where residual value would be. The would mean the Government would stand the loss beyond that.
Julian Rance, director of motor finance at Paragon, said:
“AFVs are clearly growing in popularity as 72% of brokers said they dealt with electric cars on a quarterly or more frequent basis. This throws open the question on how much quicker electric car sales and development would grow if funders could get more comfortable with this type of vehicle at a time when manufacturers are still improving the technology and battery life.
“What we need is the Government to step up to the plate when it comes to electric cars and the pollution agenda.
“If it is serious about outlawing the sales of new cars or vans powered solely by a petrol or diesel engine from 2040 as part of its Road to Zero strategy, then the Government also needs to help fund AFV vehicles through a scheme like an Enterprise Finance Guarantee.
“Lenders need some form of financial guarantee for these cars and we are happy to take risks, but only to a certain point. This partial guarantee could make a real difference.”
Enterprise Finance Guarantee loans have been used in the past to help small businesses as part of a Government scheme in the UK. Could this be the answer here?
How We Can Help
If you are looking to switch to alternative fuel vehicles for your fleet then we want to hear from you. Feel free to drop us a line on; 07971 865102 , email us for more a callback, or leave your comments below.