In the EV Market, A Clearer Credit Picture of the EV Buyer Takes Shape
20 November 2023 - 2:00PM
Despite electric vehicle (EV) sales moderating from a torrid pace,
the share of new EV car registrations increased markedly through
the first half of 2023 to 8.3%, up from 5.6% one year earlier. A
new TransUnion (NYSE: TRU) study conducted in collaboration with
S&P Global Mobility found that as the share of new car
registrations for EVs rose, the credit makeup of these buyers
continued to remain strong. The average credit score for mainstream
buyers of EV autos stands at 774 and has not changed significantly
between Q2 2022 and Q2 2023.
The study examined the credit risk profiles of mainstream EV
buyers -- as opposed to those buying vehicles designated as luxury
models -- compared to the risk profiles of buyers of more
traditional mainstream ICE (internal combustion engine) vehicles.
The study found that the risk profiles of mainstream EV buyers were
much more closely aligned with the risk profiles of luxury model
buyers, whether EV or ICE, than buyers of mainstream ICE
vehicles.
The study found that more than 60% of mainstream EV buyers fell
in the super prime credit risk range, which was in relative line
with the percentages of buyers of luxury cars, both ICE and EV. At
the same time, while subprime made up 5% of mainstream ICE car
buyers, only 1% of mainstream EV buyers fell into that range, also
in line with the 1-2% range for both luxury ICE and EV models.
“Consumers in recent years have been moving to EVs for a myriad
of reasons whether related to the environment, or cost, or simply
personal preference,” said Satyan Merchant, senior vice president
and automotive business lead for TransUnion. “Yet despite this
growth in share, the credit profile of the mainstream EV buyer
continues to remain stronger than that of the mainstream ICE buyer,
something for lenders to consider when assessing appropriate
lending options and risk.”
The risk profile of mainstream EV buyers
is more similar to that of luxury buyers
|
Mainstream ICE |
Mainstream EV |
Luxury ICE |
Luxury EV |
Super prime |
39% |
61% |
54% |
64% |
Prime plus |
23% |
20% |
22% |
21% |
Prime |
21% |
13% |
15% |
11% |
Near prime |
12% |
5% |
7% |
4% |
Subprime |
5% |
1% |
2% |
1% |
Source: AutoCreditInsight by S&P Global Mobility and
TransUnion
“EVs tend to be purchased more by lower-risk buyers such as
those who may otherwise be shopping for luxury cars, with their
premium price tag likely a significant factor as to why,” said
Merchant. “Knowing the types of customers who are shopping for EVs
can help lenders better target outreach and marketing and maximize
their return on investment as they attempt to acquire new
customers.”
In addition to the credit risk range, the study found
similarities in the credit profiles of mainstream EV buyers
compared to the profiles of luxury buyers. The study found that in
addition to credit score, average APR and loan-to-value (LTV) among
mainstream EV buyers tended to be more in line with those of luxury
buyers than those of mainstream ICE vehicles. Loan-to-value is a
ratio determined by dividing the amount borrowed (including sales
tax, title and licensing fees) by the total cost of the
vehicle.
In addition to credit score, APR and LTV
of mainstream EV buyers tend to be similar to luxury
cars
|
Mainstream ICE |
Mainstream EV |
Luxury ICE |
Luxury EV |
Average Credit Score |
739 |
774 |
764 |
780 |
Average APR |
6.9 |
6.1 |
6.5 |
5.8 |
Average LTV |
105.0 |
93.0 |
94.0 |
75.0 |
Source: AutoCreditInsight by S&P Global Mobility and
TransUnion
The study also found that at a time when leasing continues to
lag well behind its pre-pandemic popularity, the growth in the EV
sector may ultimately play a key role in helping to reinvigorate
the leasing market. While leasing over the first half of 2023
remained flat in comparison to 2022 figures among mainstream ICE
vehicles, among EVs, in particular non-luxury EVs, leasing has seen
significant gains. In the first half of 2023, a full 22% of
mainstream EVs have been leased, more than double the 9% in
2022.
Merchant concluded, “The leasing market, which has been
depressed in recent years for a number of reasons, may ultimately
be sparked by the EV surge. It’s a trend worth following, in
particular, to see if ICE vehicles eventually come along for the
ride.”
About TransUnion (NYSE:TRU)
TransUnion is a global information and insights company with
over 12,000 associates operating in more than 30 countries. We make
trust possible by ensuring each person is reliably represented in
the marketplace. We do this with a Tru™ picture of each person: an
actionable view of consumers, stewarded with care. Through our
acquisitions and technology investments we have developed
innovative solutions that extend beyond our strong foundation in
core credit into areas such as marketing, fraud, risk and advanced
analytics. As a result, consumers and businesses can transact with
confidence and achieve great things. We call this Information for
Good®—and it leads to economic opportunity, great experiences and
personal empowerment for millions of people around the
world.
http://www.transunion.com/business
Contact |
Dave
Blumberg |
|
TransUnion |
|
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E-mail |
dblumberg@transunion.com |
|
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Telephone |
312-972-6646 |
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