By on July 27, 2011

We have no wish to dampen enthusiasm for any new development in the light commercial vehicles sector but at this point the prospects for all-electric vans are fraught with difficulties, despite the clear operating advantages of using one for specific kinds of work

The Commercial Vehicle Monitor editor for the British residual value gurus at CAP, Tim Cattlin, tells Honest John that the new electric Azure Transit Connect has a few issues that fleet managers may want to look at before buying Britain’s first electric van. To wit:

The £39,999 van is expected to have a value of £8,000 after three years and 30,000 miles, with CAP explaining that uncertainty over the unproven technology and expensive batteries are the biggest issues.

That’s a 20% residual value after three years of driving 10,000 miles per year. Yikes! (Incidentally, if you drove the Transit for its entire 80 mile range every day for a year, you’d rack up about 30k miles in that year alone). The Azure Transit Connect is reportedly available in the US for $57,400, although Ford doesn’t list a price on its website and production is said to only be about 600-700 units this year. Meanwhile, Ford had better hope that the residual value issues aren’t linked to Azure’s technology (which uses Johnson Controls batteries), because it’s just announced a plug-in hybrid Super Duty Chassis Cab for 2013… with Azure as a partner and fleet businesses in mind. Better take a look at those projected residuals first, guys…

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19 Comments on “Electric Ford Transit Connect Struck By Killer Depreciation...”


  • avatar
    tiredoldmechanic

    As a fleet manager, I can tell you that residuals after 3 years don’t mean much normally. What does matter is value for money spent over 8-10 years and whether the unit can perform the task it was purchased for. A $57,000.00 micro van with an 80 mile range is definately a niche product even in a city environment regardless of what it’s worth when you dispose of it. My guess is most of these are sold to government entities of one sort or another so residuals are even less important. If Ford ever develops one that can go 3 times as far and costs half as much then the real world might take notice. Right now? Expensive science experiment that few fleet managers (here in North America anyway) would touch.

    • 0 avatar
      sitting@home

      There’s a line omitted that was in the quoted article …

      “despite low running costs and congestion charge exemption.”

      A quick guesstimate of these (the congestion charge is 10 pounds per day, Diesel is 6 pounds a gallon) would put the savings around 4000 pounds a year for a Londoner. Over three years that’s 12000 saved which puts the overall cost nearer to 50% of the initial purchase price … probably comparable to the Diesel equivalent.

      Wouldn’t work for many, but would work for some. And if you’re the only plumber in town who will enter the congestion zone, you can charge whatever you like.

  • avatar
    Steven02

    I am not sure I get this as a product. I would think commercial vans would need more than 80 miles a day range, but I could be wrong about that.

  • avatar
    Ion

    I normally laugh at whenever something is accused of being FUD over at ABG because they do it so often. But 8000 in just 3 years, really? how much does battery depreciation hurt your average hybird.

    If this is really the case then think of how easy it’d be to make your own Focus EV.

  • avatar
    Jimal

    It seems like they’ve made a very conservative estimate (guess) based on a series of unknown variables. I don’t know that it means much of anything until there are some hard facts to go by.

  • avatar
    GoFaster58

    A lot of this new technology is unproven in the real world.

  • avatar
    NulloModo

    When it comes to commercial vehicles the more niche the product is the worse the depreciation.

    A base engine vinyl seat regular cab work truck can easily fill a lot of roles, and holds its value pretty well. A 2wd diesel 3/4 ton truck with a utility body is hit harder because there is a much more limited market, and a Class 6 truck with a dump bed has a residual that sinks like a rock because the market for it is smaller still.

    Given that the market for new electric vans is already small, the market for used ones is probably microscopic.

    Ford isn’t positioning the Transit Connect Electric as mainstream product. I work a very large Ford dealer, and I’ve never even seen one. The Transit Connect Electric is great for publicity, and Ford is probably getting a lot of useful data from those that are deployed that will help in the development of a more mainstream model sometime in the future. For now though, anyone buying one probably isn’t doing it for purely economic reasons, so the residual value isn’t likely to be that big of a consideration.

    • 0 avatar
      Robert.Walter

      Nullo, If a customer walked into your dealership and tried to order one could he? What is the delvery wait time? Is Ford putting any incentives on these, if so, how do they compare to incentives on other Ford model lines?

  • avatar
    KixStart

    I can understand the concern but 30% seems unduly pessimistic.

    The Prius, which has a battery and technology that initially caused a lot of concern, has excellent resale value after 3 years.

    • 0 avatar
      Luke42

      KixStart:
      The Prius has been on the road for a decade, and is now in the “proven technology” category by most standards. The batteries aren’t cheap, but they cost about the same as an automatic transmission for any compact car and last about as long.

      For instance, my wife’s 2004 Prius has about 130k on the odometer, and the original battery is doing great. The conventional wisdom in the Prius community seems to be that the batteries are good for about 225k miles. Also, there are companies that rebuild Prius batteries (by taking two batteries and replacing the dead cells in one of them), and putting it back on the road

      It is a good comparison because it shows the curve of how people perceive new technology, and because they both depend on batteries. But there are a lot of Prii out there, and they’ve racked up a lot of miles over the last decade, so there’s plenty of data on how the hybrid synergy drive lasts in the real world.

  • avatar
    Luke42

    Sweet, when and where can I buy an electric miniature van for £8,000?!? :-)

    Judging by the fact that I personally would pay more than £8,000 (even at a 2-1 exchange rate) for an electric Transit Connect with 30k miles on it in 2014, and I’m pretty moderate as Green Car enthusiasts go, I doubt that this number will hold when these machines actually hit the secondary market.

    About the only way that could change is if something cheap/durable/capable becomes available on the new EV market between now and 2014, and no such vehicle has been announced. The announcements all point to gradually decreasing prices and gradually increasing production numbers. If we’re lucky, that will include gradually increasing range — but, at this point, range will cost you.

    BTW, it’s just fine with me if EVs remain niche vehicles for the next decade or two. They don’t need to be all things to all people.

  • avatar
    eldard

    This would never have happened if it had a Honda badge.

  • avatar
    Luke42

    @eldard: Right, because Honda isn’t selling EVs…

  • avatar
    otter

    Tiredoldmechanic is right as far as private fleets go. I’m an engineer in fleet management for a large US city, and we will soon have a new contract for TCs, gas and electric. We won’t be buying more than a handful – they’re expensive, after all – but residuals after 3 years or, really, at all, are more or less irrelevant to us. The range limitations are not an issue in an environment where they stay within city limits (large as they are) and return home to a garage each day.


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