Once hailed as the unstoppable future of mobility, the global EV market is now showing signs of strain, with uneven growth, pricing pressures and infrastructure gaps complicating its path forward. As consumer adoption slows and regional disparities widen, attention is shifting to the financial systems underpinning EV uptake. Financing has emerged as a critical battleground, and lenders, increasingly squeezed by valuation risks and changing buyer preferences, are being forced to rethink their strategies. In this evolving landscape, AI-powered analytics may hold the key to unlocking profitability and resilience in EV lending, according to Earnix.
The US EV sector faced several hurdles in 2024, including high average prices, over $57,000 per vehicle, representing a 19% premium over the industry average, and a sparse charging network.
As of mid-2024, just eight of a planned 500,000 federally funded EV chargers had been deployed. Nevertheless, incentives proved pivotal in sustaining growth. Discounts averaged more than 12% of the transaction price, and leasing loopholes enabled broader access to government subsidies.
Tesla held its leading position with a 6.6% sales increase, thanks in part to the Cybertruck’s launch, which moved 16,000 units. General Motors surged by 60%, overtaking Hyundai with 32,095 sales.
Projections for 2025 are more optimistic, with GlobalData anticipating BEV sales to rise to 13.7m, driven by price cuts, new model releases and fresh incentive packages, especially in China and the UK.
Leasing booms as consumers avoid EV depreciation risk
Leasing is quickly becoming the preferred financing method for EV buyers. Experian data shows that nearly 20% of all new vehicle leases in Q4 2024 were EVs, up significantly from just 2.11% in Q4 2020.
Among new EV purchases, 50.1% were leased and 38.9% were financed via loans. One of the key reasons? Consumers are wary of the uncertain resale value of EVs after 36 or 48 months.
By leasing, they transfer that risk to the leasing company and gain access to newer models without long-term commitments. For lenders, this raises critical questions around risk management and profitability: Should they favour leases or loans? And how can they navigate valuation uncertainties tied to rapid technological advancements?
Financing strategies evolve as EVs go mainstream
EV financing is beginning to diverge from traditional auto lending, with key concerns around battery lifespan, insurance costs and infrastructure availability playing a larger role.
New EV financing grew over 30% YoY in 2024, with leasing now comprising nearly 45% of new EV transactions. Used EV financing is also picking up, particularly among prime and super-prime borrowers.
However, complexities like missing batteries in second-hand vehicles, requiring separate lease arrangements, introduce new risks and considerations. Lenders are increasingly wary of pricing volatility and the fast pace of innovation, which can shorten the lifecycle value of financed vehicles.
AI-based analytics pave the way for smarter EV financing
Financial institutions are now turning to AI and machine learning to better manage the risks and rewards of EV financing.
With dynamic market conditions, pricing analytics platforms offer tools to adjust loan and lease rates in real time, helping lenders stay competitive while safeguarding profitability.
AI-driven solutions such as those from Earnix enable lenders to forecast future value, set optimal loan terms, and respond to consumer trends. This allows lenders to run targeted campaigns, adjust risk models, and deploy strategic promotions more effectively.
Real-world applications of AI in EV finance
Advanced analytics platforms provide critical use cases in EV financing. Firstly, they can help lenders boost EV loan or lease volumes by identifying and targeting the most promising market segments.
Secondly, profitability can be fine-tuned by using AI to guide portfolio composition, ensuring a balance between risk and return.
Lastly, these tools aid in reducing delinquencies by running simulations to test policy changes before implementation. This enables more precise decision-making across KPIs such as profitability, risk and growth—ultimately building a more resilient lending strategy.
Read the full blog from Earnix here.
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