New electric cars come with a built-in mystery: Nobody can predict their resale value
The newly-introduced used EV tax credit has car-buyers thinking about used EVs. But that market is complex to understand, experts say.
Nissan
Electric car prices are creeping down, as are the costs of used EVs.
But it’s hard to say exactly how a used EV depreciates without much historical data.
There are many things to consider when evaluating a used EV.
Resale value has long been a major consideration for car buyers, but the shift to electric is challenging the data the industry has on vehicle depreciation. That’s a problem when consumers need assurance that the EV they’re buying is worth the investment — and that they’ll be able to offload it at a good price later down the road.
In the gas-powered car world, that calculus is pretty straightforward.
“We have decades of information that give the buyer of say, a high-end pickup truck, a lot of confidence that he or she can resell that vehicle five years from now for a significant portion of what they originally paid,” Patrick Anderson, founder of Anderson Economic Group, told Insider.
In the electric future, things aren’t so clear. “Nobody knows what that is going to be for a Cybertruck or F-150 Lightning or a Lucid Dream Edition,” Anderson said.
Right now, the data’s just too limited. Most of what we know about used EVs comes from Tesla, and even that is unpredictable. Tesla’s Model 3 only depreciated about 4% after three years, according to iSeeCars.com, but recent discounts have spurred price drops on the second-hand market.
Nobody knows how much a used EV is worth
The way that used luxury and non-luxury gas-powered vehicles depreciate might not necessarily apply to used electric cars because of several caveats, according to Edmunds analysts.
For one, car-buyers aren’t necessarily weighing the same factors between a used gas-powered car and an electric one, said Steve Patton, EY Americas mobility sector leader.
“Mileage became a really important indicator around the value of the vehicle because mileage is really just an indicator of usage of the engine,” Patton said of gas cars. “We know that that’s not necessarily a good indicator for the health of the battery.”
Two, it’s not clear how today’s higher-end product mix (about 77% of EV sales were luxury in Q4, per Anderson), coupled with the introduction of more affordable EVs, will play a role in what the overall used EV market will look like.
What data we do have on used EV sale prices may not apply to the cars coming out now. The Nissan Leaf, for instance, once depreciated 49% after five years, per an estimate from iSeeCars.
But battery tech is expected to continue getting better, even if the improvements don’t make as dramatic of a leap as they did between the first and next generations of EVs.
The question is whether today’s tech will depreciate faster or more slowly than more antiquated tech.
There isn’t much used EV data available to know how an EV might depreciate.
Nissan
What car buyers should keep in mind
New EV buyers should think about the factors a prospective used buyer will be interested in, like whether a battery was used in a cold or warm environment, if it was fast-charged a lot, and more.
“What we need to understand is not just that the battery is holding its charge, but I need to understand the history of that battery, too,” Patton said. “That becomes really important in understanding the residual value of the vehicle.”
To the extent that four-year-old, used Tesla data is historic, it “indicates that there’s considerable depreciation for the electric vehicles and that a buyer of a used electric vehicle has to be very concerned about the battery,” Anderson said.
“It’s going to be different by manufacturer and by type,” Anderson added. “It’s just a big uncertainty for buyers and something that is going to weigh on, especially, mass market buyers, who aren’t going to have the extra disposable income to absorb a $20,000 or $30,000 depreciation hit in just a couple years.”
These things are evolving, and what used EV-buyers are willing to pay will change. A flood of used Model 3s coming onto the market means one’s sale price could be lower than it was last year. Anticipation of new EV tax credits bringing the price of new EVs down trickles down to the used market, too.
Regardless, EV-owners can start tracking their battery through tech like Recurrent’s, in large part to differentiate their EV when the time comes to resell it.
