I’ve been saying that for 30 years since I read “The Millionaire Next Door”. It’s usually better to find someone with a poor grasp of arithmetic to pay the first year or two of depreciation on a new car, and then buy used.
In the late 1990’s and early 2000’s Nissans had the reliability and build quality of Hondas and Toyotas, but for whatever reason, they depreciated like Chryslers. In 2005 I bought a year old V-6 Altima with 13,000 mi on it on e_bay for 30% less than a new one. Still had 23,000 miles on the 3-yr 36,000 mile warranty. It’s nearly 20 years old, with 98,000 miles now, and all I’ve done to it was oil changes, 2 sets of tires, and one set of brake pads.
Of course, Nissans are crap today now that French automaker Renault owns them. The Japanese reliability and build quality is gone.
Of course the price war on new EVs causes the prices of used ones to fall. But recent reports of high insurance cost and high repair cost add to the grief. And now we have reports of poor cold weather performance.
Fortunately lithium prices are falling. That might make for some savings on battery manufacture. And Federal rebates can help.
EVs are certainly not a sure thing. Hybrids seem to be doing better for now.
The problem is that the only way to get the $4k used EV rebate is to buy from a dealer … and that means you have to pay the dealer skim. There is an outfit, I forget the name right now, that facilitates the sale between individuals as a “dealer” so you can get the $4k … for a fee of course.
Yes, it’s KeySavvy. Both buyer and seller pay a $79 fee (though I suppose if you’re the one that wants to use KeySavvy you pay both fees.) You just find the EV you want from an individual seller, and then run the transaction through their storefront.
A good friend of mine sold his small pickup truck for $17k about four years ago to Car Max. Then he bought a cargo van and outfitted it with beds, kitchen and toilet. He has gone to Florida a few times with his wife in it. He is now older and sold his place in Florida. As an engineer he loved remodeling the van. He did the woodwork, electric, plumbing etc…solar panel, ceiling, windows, etc…huge job with storage compartments etc…
As EVs increasingly become computers on wheels, particularly with respect to the pace of improvements, they increasingly take on the economics of computers.
I believe it is commonly considered that computers depreciate about 20-25% every year, losing virtually all their commercial value after 5 years. BEVs are following the same path. This shouldn’t be surprising for any technology where the product keeps getting better and cheaper.
Baloney. After 5 years the car will still be viable as, uh, “a car”. There may be software enhancements to make the new super duper models even better, but so long as it is “a car” it will have some significant terminal value. This is unlike a phone which performs sluggishly, if at all, as carriers eliminate 3G connectivity, or where repair shops can’t do anything about a cracked screen, or whatever.
Yes, EVs have lost significant value, and at least half of that is due to Tesla’s dramatic repricing to clear stacked up inventory. It’s possible that will happen again, but cuts of that size seem unlikely, since the basic and expensive cost components of the car (battery, steel, rubber, software) are decreasing at slower rates and margin compression is achieved at some point.
If there is some tremendous battery breakthrough (for instance Toyota’s prediction of a 900 mile battery) then current EVs will lose value faster, but absent enormous leaps forward such as that, EV depreciation will generally follow the path of ICE: faster for the first few years, slowing asymptotically as time goes by.
Except in this case, they never touch the car, never see the car, never really own the car (except on paper for a few minutes while the transaction takes place), and are not even located in the vicinity of the car. I suppose we could call them a virtual dealer. Oh, and the fee they take for their services is much lower than a traditional dealer takes.
I’ve purchased cars from carmax 3 times and sold cars to them twice. They are pretty good and very easy to deal with (as opposed to most dealers). But they are a used car dealer, not a used car transfer facilitator. Two entirely different things. Of course, if carmax wants to make another $158 by also offering this service, I doubt there is anything stopping them.
EVs are depreciating for the same reason other stuff depreciates:
Lower prices as a niche product is making the transition to being a more commoditized product.
Better technology is easy to understand. It’s why nobody pays the same for a mobile phone from a few years ago as a a mobile phone now. Because they’re better. Lower prices happen as competition heats up and as the production cost goes down (and production cost goes down due to lower component prices and better manufacturing techniques and larger volumes). Availability is similarly obvious, if there are only 2 models available, then all demand has to be satisfied with those two models, and prices will rise. If there are 15 models available, the demand is more spread out so prices drop (“competition”). And higher incentives literally make the price of a new one $X lower in an instant, which makes the value consideration different between new and used, which can only lower the used prices until the value consideration reaches a level at which people are willing to buy/sell.
For decades the computer industry has had this problem and it has never stopped people from buying lots of them. You buy one today rather than wait a year or two because you need the computer today. Same with the car.
If EVs really are “computers on wheels” (hint: they are not), then this sort of depreciation SHOULD BE EXPECTED.
I tend to do the opposite. I bought a late-2012 27" iMac loaded. The computer lasted me 10 years. (unfortunately its replacement is not loaded, but was the best I could find on very short notice when the former computer failed unexpectedly when computer supply was tight).
Buy the best computer today, keep it a long time. I tend to do the same with cars, BTW. Buy new, usually a mid-level trim however. But keep them 8-10 years. I find this better than buying used, since I get the most trouble-free miles during that 8-10 years.
Until now I have pointed out that all these “declining EV demand” stories have mostly been “declining from ultra-optimistic projections” by clueless old line auto execs, salivating at the kind of demand Tesla stoked.
Now come layoffs; going from 2 shifts per day to once for the F-150:
The F-15 Lightning is not the best example in the EV market. A year ago the price of the base model was $60k. The price for the high-end Platinum Extended Range version of the Lightning was 100K, and that’s before tax and license. The adaptor for the Tesla super-charging station (or Tesla charging) was a slow rollout.The Extended Range version of the Lightning range is 300mi, but if you tow a load your down to about 220mi. Even now, Platinum Extended Range version of the Lightning is (was cut to) $91,995. The Rivian R1T featuring Quad-Motor AWD sold for $15k-$20 less than the F-150 extended range last year. The Rivian has better range a carries a bigger payload.
People who require a truck for long distance and heavy loads are probably waiting for an evolution in EV trucks down the line.