Financial dynamics of a shift to BEV transport

The German Language podcast Lage der Nation has published an interview with Axel Friedrich on Dieselgate. Axel Friedrich has been a department lead in the German Umweltbundesamt until 2008, now working with BUND and other environmental NGOs in Germany and instrumental in uncovering Dieselgate on the German side.

The interview contains some very interesting remarks on rental car companies and car maker owned car leasing companies, and how the shape the car market. A deprecation of Diesel cars by those leasing companies is instrumental to transforming the car maret and in promoting the shift to BEVs.

Similar, but different concerns from Bloomberg in Europe’s Car-Leasing Boom Sets Off Alarm Bells .

Buyers of notes backed by auto debt are increasingly vulnerable to drops in used-vehicle prices because more and more drivers in Europe are leasing cars and trading them in for new ones.

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“If there’s a steeper decline in car values, then borrowers will be incentivized to return their vehicles and it will be bondholders who bear any losses,” said Aaron Baker, a London-based credit analyst at Banco Bilbao Vizcaya Argentaria SA. “This exposure to used-car prices could be catastrophic.”

Basically, cars are valuable things and are being used to secure loans and bonds, and are also bought on loans and bonds where the intrinsic value of the vehicle is being used to secure the load for buying it. Changes in the price of used cars by shifts in how cars are bought (In the future, less people want to own a car) and which cars have value (In the future, Diesel will be close to worthless and people want to buy BEVs) are threats to credit security and to the financial business around car purchase in itself.

The change to BEVs and to self-driving cars will be much more disruptive than anticipated.