ED from Co Waterford asks: “Why are values in used electric cars falling so rapidly?”
There are a huge number of reasons as to why used EV values have fallen so far and so fast, so let’s try to unpack them.
First off, there’s the simple fact that the person shopping in the used car market is inherently more conservative and careful about its purchases than the person shopping in the new car market. Anyone buying new is getting a new car with a lengthy warranty, and so doesn’t have to concern themselves with worries about unreliability nor mechanical malady because they know they’re covered.
Someone buying second hand doesn’t always have that, and with worries – unjustified in a technical sense, but entirely understandable – about the longevity of batteries and how expensive they may be to repair or replace, used buyers are for the most part steering clear of electric cars.
EV Q&A: Why are values in used electric cars falling so rapidly?
Your EV questions answered: Am I better to drive my 13-year-old diesel until it dies than buy a new EV?
Your EV questions answered: Is it okay to leave an electric car sitting for a while? For how long?
Can I really do a long journey in an electric car?
Indeed, car makers, who continually refuse to talk about battery replacement or repair in anything other than the broadest terms, are leaving an information vacuum into which all kinds of online rubbish can then rush. That in itself is having an effect on second hand values.
Equally, there’s the charging network. According to a survey of Irish attitudes towards electric motoring, carried out by Volkswagen Ireland, 60 per cent of non-EV drivers said that they were worried about running out of charge (a concern shared by 25 per cent of actual electric car drivers) a whopping 53 per cent of EV drivers said that they have ‘struggled with or still have reservations about’ public charging facilities.
That doesn’t paint a pretty picture of our national charging network, and herein lies a significant issue of confidence. While EV experts can bring to the table all the statistics they like about average daily mileage, and the amount of charging that’s done at home rather than at public chargers, the problem with such is that they are statistics, and averages.
Humans are not simple statistics, and no one has an average life, and so it’s entirely understandable if someone feels hesitant about sinking a lot of money – even second hand – into a car that they believe might strand them out on the road with no power at some point, or even simply leave them searching for a charger, or queuing for one, when they’re in a hurry. These may be edge cases to the statisticians, but they’re not to the person experiencing the problem, and so until there’s a visible, reliable, and fit-for-purpose charging network – as opposed to one that meets the average estimated need – then scepticism will continue.
[ Car sales slip in 2024 as EV deals plungeOpens in new window ]
Then there’s the Tesla Effect. Two years ago, in the face of growing competition from Chinese car makers, Tesla began to slash the prices of its new models. Significant cuts were made to the prices of the Model 3 and Model Y, and as Tesla is the market leader when it comes to EVs, in a global sense, so others had to cut their prices too, to remain competitive.
That was good news for new car buyers, but bad news for those who’d already bought electric cars at the earlier, higher prices and were locked into financial agreements on those cars. While the minimum used value of those cars was largely protected by PCP agreements, the ‘equity’ over and above that was not, which torpedoed more than a few people’s hopes of an easy trade-in. Some owners cut their losses, and traded in for a more conventional hybrid, petrol, or diesel car, which put further downward pressure on used EV prices.
Equally, the fact that new electric car prices were being chopped, left, right, and centre, meant that buying a new EV was often better value, overall, than buying a used one.
Then there was the fact that as we came out of the pandemic, there was a sudden and rapid rise in interest in electric cars, a rise that car makers were unprepared for and which pushed up the prices of new and used EVs as shortages of supply took hold, made worse by the sudden collapse in global microchip supply, which curtailed the manufacture of those new EVs.
Which meant that there was something of an artificial bubble in electric cars prices, new and used. Consult your history books on the Dutch Tulip Mania for more on this. What we’re seeing now is partially a correction from that bubble.
However, there are silver linings to all of this. Many industry experts agree that if we’re not at the absolute bottom of used EV values, we soon will be, and this is causing more than a few financial gurus to advise people to buy a second-hand electric car now, before the prices start to go back up. That advice may well have its own effect as it propagates.
So, there are lots of reasons as to why electric car used values are on the floor. But there is a floor and they won’t be this low forever. So buying a used EV now, at a time when everyone else is still resisting them, is actually a brilliant idea.
