Car makers are putting new faith in an old and often neglected price-control method to clamp down on the rising costs of electric cars: residuals. Residuals is automotive industry jargon for the value of your car when you come to sell and, as you might have noticed recently, that’s a lot more than it has been.
This has created two effects. One: used cars become more expensive. And two: car companies earn a lot of money, particularly on the finance side of their business. VW Financial Services, for example, saw profit more than double to just under €6 billion (£5bn) in a record year, citing higher residuals. Morgan Stanley, a bank, called its performance “EXTRAORDINARY” in an analyst note. (Analysts aren’t known for their prolific use of capital letters.)
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