Used EV prices drop

News from the UK:

After a couple of years of demand outstripping the supply of electric cars it’s suddenly a buyer’s market. Research by Car Dealer magazine shows that over the past six months, 29 of the 30 biggest depreciating used cars are electric models…

While diesel cars dropped an average of 1.3% and petrol vehicles just 0.5%, electric cars’ auction prices have fallen by a massive 33.6% since December.

DB2

4 Likes

“Why is the second-hand value of electric cars plummeting?”

This is trivially easy to answer. It’s because the price of new EVs are dropping. When I bought my model 3, I could have bought a used one for $2,000-$3,000 less than a new one. But those used ones, and I looked far and wide, were all 2-4 model years older, and all had 17,000 miles or more on them. So, for the first time in decades, I opted to buy new instead of used. Usually I bought used 2-3 years old, to allow the first owner to eat the 30-40% initial depreciation. But for just 2 or 3k? Why bother and why take the risk?

Since then, the price of my car has dropped by about $8,000 AND has a new $7.500 tax credit to boot. That makes the equivalent “new” price about $15,000 lower. That means that all the used cars also have to drop in price, because otherwise it’ll be worth far more to just buy new.

7 Likes

Is that also the case in the UK? At any rate, as more new EVs are bought there are also more used EVs available. Still, a 34% drop in five months is massive.

DB2

2 Likes

Not really. Used car prices climbed dramatically for the past few years due to Covid. No new production available, so prices of used cars went up significantly due to the demand for any vehicle. Federal rebates on new/used EVs bring down the price of those new/used cars. Which means the price of a used car is driven down because the price differential between new and used needs to be high enough to sell the used car–otherwise, it will sit until it is towed to recycling.

3 Likes

While true, that applies to ICE vehicles as well. Their price drop was in the 1% range as opposed to 34%.

Which is not the case in the UK. In fact, they discontinued subsidies for most EVs a year ago.

DB2

1 Like

“Key subsidy scrapped last year, and carmaker says growth in sales has tailed off in Britain”

You just proved my point. The price differential has to be large enough to sell a used car vs a new car. Minimal difference and the used car will almost never be sold.

Help me out here. In the UK the subsidies were removed last year and new EVs became more expensive. How does more expensive new EVs result in a one-third lower price for used EVs?

DB2

Because the existing market for EVs had been saturated, so resale values tanked?

Steve

That could be (while demand for ICE vehicles remained norma)l.

EVs made up some 15% of new car sales in the UK and used EVs about 1% . If that saturates the market then future growth projections may be in trouble.

DB2

Future trends will be interesting to observe. Keep in mind, the AMC Pacer sold very well in it’s first year too.

2 Likes

Three possible reasons:

  1. According to Bloomberg New Energy Finance, as of 2018, “U.S. drivers now lease almost 80 percent of battery electric vehicles and 55 percent of plug-in hybrids” compared to just 30% leased on conventional vehicles. How New EV Leases Affect Used EV Availability | Recurrent

If UK behavior was like that of the US, then there are a lot of EVs entering the used car market as their 3-year leases end.

  1. New data from the U.K. shows that electric vehicle sales reached record highs in March, marking the strongest month for sustainable powertrains in the history of the region. Sales for the month were led by the Tesla Model Y. https://www.teslarati.com/electric-vehicle-sales-u-k-record-highs-march-2023-tesla-model-y/

This all about Tesla. Assume that the first choice of the great majority of prospective BEV buyers is a Tesla. Tesla lowered their prices and reduced wait times making their products more attractive than buying a used electric VW.

  1. I think people are increasingly seeing BEVs as high tech devices, you know, like computers. Is there much of a market for 3 year old computers?

Increased new/used EV supply + increased Tesla affordability + perception of obsolete technology = sharp declined in used EV prices.

I’m a buyer once I can find a used Model Y Performance for $35,000 or so. {LOL}

intercst

1 Like

I’m a buyer once I can find a used Model Y Performance for $35,000 or so. {LOL}

Getting closer. This one is listed for $40K - don’t know if there’s room for negotiation. I don’t think the Model Y performance version will qualify for the $4K used EV credit (you have to be below $25K purchase price).

Probably a few more years before the 2020 MY performance Model Y dips down to $35K.

1 Like

Then it will be close to needing a new battery…

No, it won’t. People don’t get new batteries for Teslas, except in unusual situations where something goes wrong.

-IGU-