Residual Value Guarantee (RVG)
Heavy Duty Vehicles (HDVs) represent 25% of European transport emissions, yet only 1% of vehicles.1 To address this, zero emission technology is rapidly improving, with some models already capable of ranges similar to diesel vehicles.
The EU has recognised the importance of transitioning the HDV sector through its HDV Regulations, requiring manufacturers to incrementally reduce overall emissions of HDVs sold from 2025 onwards. Despite progress in a few regions, overall adoption of zero-emission technologies remains low, accounting for less than 4% of truck sales in the EU during first half of 2025.2
In the EU, it is estimated that €783 billion of investment needs to be unlocked by 2040 to decarbonise the sector.3
Finance has a key role to play in helping fleet operators to make the switch, but residual value (RV) risk is making truck financing and leasing less accessible and more expensive than necessary.
An opportunity through guarantee
An opportunity through guarantee
RV guarantees address the risk that a used vehicle will be sold for less than anticipated at the start of a contract (the expected RV). By providing more comfort to finance and leasing companies, they can help to increase the flow of investment and adoption of zero emission HGV by reducing cost of leasing by an average of 12%.4
Residual value guarantee programmes, provided primarily by the public sector, offer a cost-effective way for governments to accelerate adoption of zero emission trucks. RVG programmes do this by guaranteeing a portion of losses, thereby protecting guarantee recipients (lenders and lessors) against residual value (RV) losses when vehicles are sold for less than expected.
Residual Value Guarantee blueprint
In partnership with CALSTART, the Green Finance Institute created the Residual Value Guarantee blueprint: an introductory guide for governments and finance institutions to set up residual value guarantee programmes to support purchasing, financing and leasing of battery electric trucks, which aims to help stakeholders design successful RVG programmes to temporarily stimulate market development.
Depending on the chosen structure, by way of illustration, a £10 million reserve for RVGs could mobilise over £228 million ($306 million) in additional private capital and support the deployment of over 2,188 electric medium-duty trucks, 2.2 times more than using an upfront subsidy. It could also generate £32 million ($43 million) in savings for fleets and £2.2 million ($3.0 million) in savings for guarantee managers if some guarantees go unclaimed.
1. Heavy-duty vehicles – Climate Action – European Commission
2. Decarbonising heavy-duty road transport: State of the enabling conditions – ACEA – European Automobile Manufacturers’ Association
3. 202411_investment_needs_study
4. Modelled by the authors
