Why do used electrics drop so quickly in price?
Why do used electrics drop so quickly in price?
It's been years since I've checked the used electric market, but I'm seeing cars like the Hyundai Ionic 6 or Polestar 2 for low 30s, where as they were in the high 40s or mid 50s new a year ago.
My suspicion is that:
- Normal car depreciation when driven off the lot
- General fear of batteries wearing down prematurely, even if the car has ~10k miles
- Any applicable federal rebates or otherwise have already been claimed and can't be claimed on used vehicles(?)
Is there any other reason why these drop so quickly? Would buying one be considered foolish in anyway?
For Polestar 2 and Tesla model 3 specifically, Hertz has dumped a bunch of slightly used ones on the market and so prices are artificially low at the moment. Hertz did this because people were abusing the cars, resulting in premature tire wear and damage to bumpers etc. Basically they're too much fun and morons renting them would bump them into things or shred tires with all the instant torque. I expect prices to go back up once the market stabilizes, in the mean time they are a really good deal.
I was going to ask for sauce, but the first result of DDG was enough proof for me.
If Tesla was just a little bit smarter, they would offer rental companies a software update that would reduce that instant torque just a little bit. It would be trivially easy to do so. Might even improve their somewhat shitty reputation, too.
"If Tesla were just a little bit smarter" load-bearing 'if' haha
I haven’t looked at the used car market in 5 years, I know that it’s gotten more expensive due to the supply chain, but I’ve bought 3 used EVs over the years, all of them have worked fantastically and all of them were between 38k - 55k new, purchased for 15k-22k off lease. People just hear “EVs are expensive” but don’t take the trouble to actually look for themselves.
Used Nissan Leafs used to be like $7k cars. There are a lot of people who could use a nice, reliable $7k car capable of getting around any city for all practical purposes. But since it can’t go on a Great American Road Trip™, it doesn’t get looked at all.
I'd love to hear more about your experience! What 3 EVs did you buy used and which was your favorite?
I’ve bought Volts and an i3. The Volts were I think 12.5k and 12k and the i3 was 22ish. All 3 have been great but the BMW has a lot more compromises as a long distance vehicle. The Volts have been rock solid and super reliable. We only have one left, but it still reads with its normal rated capacity after 10 years.
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You can get much cheaper civics too if your willing to look.
Base models are for cities. For the other half of the US population, 38-55 is normal for a midsized sedan or low for a full size pickup
I think the trouble is that many people that need the reliable 7k car, also need the road trip capabilities because that's their main mode of using their time off, because owning two cars and/or flying are out of the price range for folks that need a 7k car.
Until that's solved by better charge infrastructure or better range (or both) EVs aren't a good candidate for those folks and they're a sizeable part of the market.
Fast moving new technology means a larger gap between the used and new market. Combine this with effects of smaller volumes per model and they start high and fall fast.
It will change, but 'early adopters' are carrying some of the costs of transition - though only realise losses at time of sale (so keeping the vehicle longer will cost you less than frequent refreshes).
Edit: and no, buying one is not foolish. For many consumers, a midrange EV is already a saving over a reasonable lifetime.
It is a new technology which is evolving faster than ice cars do.
As others have said, the tech is evolving rapidly. Batteries are the biggest cost of a new EV and they are getting cheaper and better every year. There's reasonable estimates we'll see EVs with 500mi of range on a charge by 2026 for example.
Another thing that hasn't been mentioned yet was how absolutely bonkers the car market was coming out of the pandemic with the "chip shortage". There were months to years long wait lists for any type of new car, so if you wanted a car immediately it had to be used. Those wait lists are becoming resolved and the market is stabilizing.
When we went to buy our Ioniq 5 about a year ago, the comparable used EVs were scares and $35-40k compared to $45k for a brand new Ioniq. And our rusty 11 year old ICE car traded in for $6k, way more than it was worth.
Because they weren't worth what they cost you in the first place - they're artificially inflated. Like diamonds.
Another point people aren't bringing up is the fear of how soon a battery goes out. There are still a lot of fear mongering articles out there and no one wants to pay 30k for a car if they have to pay another 15k in three years. Until the lifetime of batteries becomes common knowledge people will only look for new EVs where the warranty is just starting for them.
Yeah, I've heard that's a concern. I also heard that there hasn't been enough failures to know when you should expect batteries to fail. I've heard numbers like 300k-500k miles, since the cells inside the batteries are rated for thousands and thousands of cycles. I guess one way to hedge your bets would be to buy one that has modular battery replacements, so you only pay 4k vs 20k
Paid 40k for a used tesla in 2020 with 35k miles. (The EV was purchased new for 60k in 2018) The car is currently at 131k and going strong, dont even think about battery degradation being an issue worth addressing because there are new Chargers popping up all over the place. Plus the fact that EV roadtrips are much quicker and cheaper when you avoid long charges and charge just long enough to make it to the next charger. Love the fact that used EVs are getting so affordable, just wish folks would realize how much more realible an EV is compared to combustible engines. Plan on driving our car into the ground, even if the car only goes 100 miles on a full charge, that would be more than enough imo. So glad folks can get the same product as me for half the price and never visit a gas pump for the rest of their life.
I don't particularly think they are going low. However:
- Tesla has been artificially holding resale prices high for a long time. They could only do this when there was very little competition in the second hand market.
- The initial price for EVe is too high. All the manufacturers are trying to recoup R&D costs on one or two models. The cars aren't worth the initial price and the second hand market corrects for this.
- We've been through a period of scarcity due to the supply chain getting screwed during CoVid, so demand couldn't keep up with supply. Supply is far bigger now. Shortages are largely over and there are far more brands in the market.
What I'm saying is that it isn't the second hand price being low. It's that it used to be high for various reasons and the market is correcting. Cue people getting caught out because they didn't see it coming, and getting vocal about it.
Only one comment barely touched on it, but the price of gas is a huge factor. 2 years ago, gas prices were generally higher and very unstable. This drove the demand for EVs up. Because of supply chain issues, no one could make any cars fast enough. This scarcity combined with the gas prices drive demand while restricting supply.
Come to today and you have the gas prices being stabilized in the US by tapping into the strategic reserve. Once the election cycle is over expect that to stop and gas prices will again rise and become unstable again. EV demand will jump, so we should see the used market adjust accordingly. If you want to go with a used EV in the next couple years, now till November is the time.
Batteries. People already get range anxiety, bad batteries add to it.
Besides the reasons others have commented, for the Polestar in many cases the closest service center is 100+ miles away. I was looking at a used one and got a different EV for that reason.
Great point! I'll have to look into this more. What did you end up getting?
I got a 2023 Chevy Bolt EUV, with 5k miles on it. I know, really a different category than the Polestar, but the only reason I was considering it was because the used ones were pretty affordable. I really like the way the Polestars look.
Nobody really knows how long such a battery holds out. As it is the major cost factor of an EV, people are reluctant to pay high prices.
While we don't know the top end yet, we know the average is at least 100,000 miles or every EV manufacturer wouldn't warranty for that much. And that is just for when the batteries hit 30% degradation, not total failure.
Long term surveys are showing as little as 10% degradation after over 150,000 miles. After over 12 years on the road, less than 5% of old Teslas Model S's have needed battery replacements. The average lifespan of an ICE car is around 12 years, but less than 8% of EVs built in 2011 have needed a battery replacement and less than 4% of EVs built in 2012 have.
Typically they are guaranteed for 100K miles.
I'm in Australia and while they're getting cheaper, used ones aren't dropping that quickly unfortunately. Any with a decent range like a kona are $38k AUD still, minimum.
#3 is def a factor.
Because of the cost to replace the batteries.
I've read that quite a few EVs have batteries where you can swap individual modules, and don't need to replace the entire battery arrangement if something fails. That seems to bring the price down significantly, especially considering you won't be spending money on oil changes, timing belts etc
Supply and demand.
- A couple years ago, teslas, specifically, had the highest resale value of any car …. When there was huge demand and they couldn’t build enough.
- Now Teslas, specifically, have poor resale value ….. now that supply exceeds demand, prices new have been dropping, and Hertz dumped tens of thousands on the used market. Also the rebate means prices of new vehicles compete with more recent used
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Where to start?