Used EVs will have to become much cheaper and more plentiful

Irish car buyers are continuing to face an uphill struggle to actually get hold of a new car. Global supply chains are still stretched thin, and the continuing lack of semiconductor chips in the market is putting a brake on new car production. That goes double for electric cars, which use more chips and are therefore proportionally more affected by the slowdown in supply (although many car makers are holding back production of other, non-electric models to compensate).

That tightness of new car supply is having a massive knock-on effect in the second-hand market, where although values of used cars seem to have topped out (mostly…), there is a similar dearth of stock for sale. In the past, that could be remedied by dealers buying in plentiful used stock from the UK, but not only are British buyers facing the same supply and demand issues, there’s the additional handbrake of Brexit – and consequent VAT and import charges – which has all but closed that route off to Irish buyers.

When it comes to electric cars, the situation is even worse for second-hand buyers. The market for used electric cars essentially doesn’t really exist yet in Ireland. Only two models – the Nissan Leaf and Renault Zoe – have been around for long enough for any decent levels of stock to exist, and buyers are often reluctant to commit to a used EV, citing concerns about battery life and poor range.

Even the business user-chooser market – theoretically a great source of high-quality used cars – has been dragging behind on EVs in recent years. According to one source within the motor industry: “Leasing companies were always nervous about how to value the battery in a used EV, and there were some rumours that the value of the battery was being written down to zero from day one, and anything that was actually achieved above that was considered as profit.”

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Opel Ireland’s James Brooks says: “As far as the second-hand market goes, buyers are looking for anything that they can get right now, just like new car buyers. The thing about it is; how do you put a value on a second-hand electric car when you’re essentially getting €10,000 off the price of a new one?

“The consumers who are going electric are still in the early-adopter category, so they tend to buy new because they have the budget, and they like to get that Government discount. There’s also a sense of being able to show off a little, to say to the neighbours that ‘I bought this new car and got €10,000 off it’ rather than buying a two-year-old car.”

While the Government has indicated that the days of extensive grants and reliefs for buying an electric car are coming to an end, many are saying that it’s still too soon

It doesn’t help that car dealers are currently subject to a rolling three-year VRT relief cap of €200,000 when it comes to selling new EVs. While the Government has indicated that the days of extensive grants and reliefs for buying an electric car are coming to an end, many are saying that it’s still too soon to bring all that to a close. While the prices of new electric cars are expected to roughly equalise with those of petrol and diesel models over the next couple of years, obviating the need for Government grants, for the used market it’s not so clear-cut.

The used car market will be critical for reaching the Government’s stated aim of having one million electric cars on Irish roads by 2030. Quite aside from the obvious need to keep electric cars sold today on the road by then, there should also have been a healthy supply of spare used EVs coming from the UK. Brexit and the supply crisis have scuppered that.

Chip shortages

Conor O’Boyle is the chief operating officer for used-car website Sweep and newly established electric car comparison site Nevo.ie. He told The Irish Times: “In short, there aren’t enough UK EV imports coming in at the minute, which is contributing to the lack of a meaningful used EV market in Ireland at present. That, coupled with the shortage of new cars over the last two years with Covid and the chip shortage means that we won’t see a relatively decent-sized second-hand electric vehicle market here for at least 18 months to two years.

out of 33,809 used cars listed for sale on the site on the day this piece was written, only 791 were classified as electric vehicles

“The Government should bring in significant incentives for used EVs to be imported from the UK. There are over 8,000 used EVs for sale in the UK at present from franchised dealers, with almost 7,000 of these being 2018 or newer, which provides range that most consumers would be comfortable with – more than 200km on a full charge. In comparison, there are fewer than 1,000 EVs for sale from franchised dealers in Ireland at present.”

Indeed, second-hand EVs are distinctly thin on the ground in Ireland right now. According to Carzone.ie, out of 33,809 used cars listed for sale on the site on the day this piece was written, only 791 were classified as electric vehicles. The cheapest of those was a 2013 first-generation Nissan Leaf, advertised by a private seller for €10,900. The seller admits that the car has a useable range of only about 115km on a full charge.

No wonder, then, that second-hand buyers are still avoiding EVs. According to Daljinder Nagra from consumer advocate organisation Which?: “The main issue is that of driving range. In recent years, larger batteries and improved efficiency have seen the latest electric cars manage over 500km between charges. However, many older, used models struggle to manage 300km – some can’t even reach half that figure. Depending on the car you choose, you may find yourself looking for a chargepoint nearly every time you set off.”

Would switching incentives from new electric cars – where they are arguably needed less now – to imported used electric cars, to encourage EV take-up by middle-income families, be of benefit? O’Boyle reckons that it would: “Irish consumers are looking for used EVs, which is apparent from both Nevo.ie, our electric vehicle website, and Sweep.ie, our used car website. The majority of consumers aren’t interested in purchasing a new vehicle due to costs, which we know from a survey we conducted recently. However, with such a small second hand EV market in Ireland, an incentive for used EV imports would be of huge benefit to Irish consumers in making the switch to electric.”

Others are less sure. Brian Cooke is the director general of SIMI, the Society of the Irish Motor Industry, which is the umbrella group that represents Irish dealers as well as manufacturers and importers.

“With the poor levels of new car sales over the last decade, imports did play a role in plugging the used-car shortage in recent years, although it was a double-edged sword as it undermined both Irish used-car values and hindered Ireland’s ability to reduce emissions from the national fleet,” said Cooke.

“This combined shortage of new car sales and used imports has proved a real challenge for Irish retailers in sourcing used car stock over the last two years, and third-party analysis of the used car market indicates that used car values have risen as a result. With Brexit here to stay, the most likely way to see improvement in used-car availability will be via a higher new-car market, which can generate trade-ins, and also a car rental market that sees cars come back into retail over a relatively short timeframe,” Cooke told The Irish Times.

‘Stringent targets’

“With used imports averaging five to six years old, it was always unlikely that there would be any material level of used electric vehicles coming into Ireland in the short-term, with used import EV availability likely only to happen towards the end of the decade. In addition, the UK has also set very stringent electric vehicle targets, and it is likely that they will want to hold on to to their EVs and instead focus on exporting the cars they don’t want.

‘The only cars that [UK dealers are] going to send here are the ones they really, really want to get rid of.’

“In SIMI’s view, this meant that it has always been the case that the Irish new-car market would be the only reliable source for new EVs over the next few years, and reaching targets will overwhelmingly be determined on the success of the new Irish EV market. Used imported EVs already benefit from the lowest VRT rate, and the issue in securing more of them is going to be one of availability rather than any additional incentives.”

Opel’s James Brooks puts it more succinctly: “Why would a UK dealer, who is suffering the same issues with shortness of supply as everyone here, bother trying to sell a used EV in Ireland? They can sell it far more easily at home. The only cars that they’re going to send here are the ones they really, really want to get rid of.”

There’s certainly no incentive of higher prices in the Irish market to tempt UK dealers to send EV stock this way. “Some used electric cars, like the Renault Zoe, are good value right now but others, such as Tesla Model Ys, sell for more used than they can be bought new, if you’re willing to wait for one to arrive,” Ashley Winston, from car-sourcing service Palmdale, said.

Quite simply, the numbers don’t lie. So far this year, 28,316 used cars have been imported into Ireland, the vast majority of those from the UK. Of those, a mere 220 were electric cars – less than one per cent. If we want to build a healthy used market for electric cars in Ireland, we’re just going to have to do it ourselves.