Electric Vehicles Are Making Asset-Backed Loan Deals Riskier

Troubles in the electric vehicle industry are spreading into debt markets, where falling values for used cars are causing challenges that could make it harder for customers to get loans.

Analysts are warning that the growing use of EVs as collateral for asset-backed securities (ABS) — a key source of funding for automakers’ financing arms as well as leasing companies — risks driving up the cost of raising debt.

With the industry producing more and more EVs to satisfy UK and European government efforts to phase out sales of new oil-fueled cars, the share of battery-powered vehicles in ...