Examining the Resale Market for Electric Vehicles
I thought readers might be interested in a conversation I’m having with my colleague Jon Lesage, alt-fuel auto industry guru:
Jon (in his newsletter): Hybrid electric vehicles are doing much better at retaining their market value than are plug-in electric vehicles, according to Kelley Blue Book. Used electric vehicles are retaining nearly 55% of their original MSRP, while hybrids are much higher with retained average value at 74.3%.
Craig: On the resale of the EVs and HEVs, how are you doing this? Are you sure you’re comparing apples to apples? Sounds like a difficult challenge to me.
Jon: Yes, the volume of cars is so small it’s difficult to believe in the usual analysis of data. I’m looking forward to digging into the NADA Used Car Guide report that came out yesterday on plug-in electric vehicles. Should be interesting.
Basically I’m taking information from Kelley Blue Book.
Craig: Well, it’s unclear to me how KBB, or anyone for that matter, can compare a used car market that’s 12 years old with several millions of vehicles in it, to one that’s brand new with a handful of vehicles.
Btw, not that you asked, but I predict that the resale market for battery electric vehicles will be based on an interesting and unique combination of concepts, principally:
• The overall appetite that the world has for electric transportation at that given time. Are people convinced that EVs will continue to grow in importance? As someone once said, they’re not going to want to invest in the automotive equivalent of the BetaMax.
• The trajectory for battery replacement. What real-world experiences with batteries that have been discharged thousands of time will people have had? What deals for replacements will be available?
• The relative improvement in new models over used. A senior exec from BMW I met at the L.A. Auto Show told me that EVs a few years hence are going to be so far superior to what’s being sold now that he’ll have no trouble getting the premium for a new one.
We’ll see…
Craig,
It’s only going to get worse as the market broadens. Right now, there’s a backlog for some models, and you have to WAIT to get new ones… that super-heats the market for used vehicles and tends to exaggerate their value.
For instance, for the first few years the Prius was released in limited volume, and there was a waiting list, it was not uncommon for 3-year-old Prii to sell for 90-100% of their original value. Once the production became sufficient to saturate the market, the value of used Prii dropped to “sane” levels.
If that is an indication, we could easily see used EV’s see a similar drop in value over the next few years.
Personally I doubt that the battery for a typical EV will be much good after ~8-10 years. I wouldn’t want to pay much for an EV with a 4-year-old battery.
I think you’re 100% right here. The real clincher here is battery technology — which, btw, is improving better and faster than almost anyone predicted a few years ago.