Electric cars suffer ‘unsustainable’ depreciation in second hand market
By Paul Homewood
h/t Ian Magness
Electric cars lose as much as half of their value after just three years on the road, new figures show, as the rate of depreciation far outstrips conventional equivalents.
Research from Auto Trader said there were “unsustainable levels of depreciation” in the electric car market, with used prices of battery-powered vehicles dropping by 23pc in the last year alone.
The online vehicle marketplace said a motorist buying a £50,000 electric car could expect to lose £24,000 in value over three years, while a similarly priced petrol car could lose £17,000.
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Auto Trader’s latest report warned that “residual values of electric cars remain unsustainably low”.
It said that the price of used electric cars could come under further pressure this year as thousands of motorists return vehicles acquired on three-year leases and as manufacturers cut the price of new vehicles.
“With over 800,000 new electric cars registered between 2020 and 2023, supply returning to the used car market will only increase in 2024, and if demand does not keep up, electric cars could depreciate even further, undermining both consumer and retailer confidence,” it said.
Manufacturers are now applying record discounts to new electric vehicles in a bid to boost stuttering demand.
Auto Trader said car makers were slashing thousands of pounds off prices, with average discounts of 10.6pc offered in December. This compares to discounts of 4.8pc a year earlier.
It predicted that a wave of Chinese entrants would further push down the cost of electric cars.
Sales of new battery-powered vehicles in Britain rose by 18pc last year but accounted for just 16.5pc of all new cars sold – a slight decline from 2022.
This problem will only get worse, as increasing numbers of second hand EVs hit the market after three-year leases expire. Since 2021 sales of new EVs have risen by about 40%.
Collapsing second hand prices will spell disaster for leasing companies, who have offered low lease contracts and other finance deals on the back of high trade in values.
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NOT A LOT OF PEOPLE KNOW THAT 
Electric Cars?
Teslas left abandoned as extreme cold drains the batteries
Details of the farce here —
https://www.telegraph.co.uk/world-news/2024/01/17/teslas-abandoned-us-drivers-extreme-cold-drains-batteries/?li_source=LI&li_medium=for_you
Like tattoos, the EV is good only ito whom money accrews
I have mentioned before that manufacturers will have problems deciding on sensible PCP charges for EV’s. They obviously want to keep the monthly payments as low as possible but that means having a good grip on true residual values at the typically 3 year point.
Mercedes got themselves into a mess in the early days of PCP when everyone handed the car back after three years and they had fields full of cars that owed them more than they could sell them for.
Its crazy anyway, even if you think CO2 is a problem. We now know, because Volvo and VW have told us, that you will need to drive an EV for 4 years or so before its lifetime CO2 emissions fall to those of a FF vehicle – so get an EV every 3 years and you will never emit less CO2 than if you had driven an ICE car.
Car production became so efficient that Europe had an oversupply so these lease deals were used to shift the stock without seeing that they had made a new car so tempting people chose that over used stock.
Calculations that I have seen (from Volvo) suggest SEVEN years before an ICE has equivalent total manufacture and driving emissions, to a shiny new BEV sat in the showroom. Not many Congolese children involved in the ICE manufacturing process, either.
And there is gambling at Rick’s.
I dispute their numbers. When I did an analysis ~7 years ago, I found that high-end electrics – Tesla – retained their value like any other car. Low-end electrics – Leaf – had CATASTROPHIC depreciation (71% in two years(!).
A couple of years ago, I found Leaf had improved somewhat, but was still 50% in two years.
The Telegraph not knowing about radical depreciation is willful ignorance.
Teslas have been dropping more as Musk cuts the price to shift new cars and compete with the cheaper fossil fuel manufacturer Chinese battery cars.
7 years ago Teslas were a fashion novelty. Now they are run of the mill, the fashionable greenie lib dems have all bought but the intelligent general public are not being suckered in as they see more and more pitfalls being reported.
Furthermore its been done arse about. The Charging and plentiful cheap electricity needed to be supplied before a glut of cars with limited charging.
Since Nutty Zero means ultra-high priced electricity the whole electric car project is doomed – by nutty zero!
Most of those lease purchases would’ve been through business drivers. They’re heavily supported by BiK tax breaks so EV’s or hybrids make financial sense, however government can’t offer those terms indefinitely and certainly can’t extend them into the private sector.
Which private owner is going to buy a used car that’s unreliable and depreciates like a dropped rock, all the while being one bad luck story away from needing a new battery which could cost as much as the car is worth? If they need a new battery their car would have an effective value of £0.
The wider implications for the auto industry (and by extension our economy) barely need explaining.
Meanwhile here’s the latest on Ford and GM.
If you have to pay to dispose of the battery then the value of the car is negative.
Almost to the point:
Yesterday I was told by the man who fitted new tyres for me that there was an incident in Norwich recently when a low slung BMW EV tore open the battery of his car on a ‘sleeping policeman’ on one of the radial routes into the city.. The battery was split and the contamination team from the County Council and Police attended to clear up the mess. No word yet of the fate of the rest of the car and any residual value.
You are buying a battery with a car wrapped around it. Battery care is critical. You have no way of knowing how the previous owner cared for it. I submit there should be NO MARKET for used EVs. I.e., they should be priced as if the battery is bad; you can’t know if it’s not bad.
Some will buy them because they couldn’t afford to show their virtue at full price.
From what I have read on EV forums, there are gizmos which allow the condition of the battery to be checked: capacity; weak cells, etc.. The charging history can also be reviewed to see how the battery has been treated – has it been thrashed by repeated rapid charging, etc.
Apparently some dealers provide this info as part of the cars’ documentation.
So a prospective buyer can learn more about an EV’s history than for the equivalent ICE.
“Apparently some dealers provide this info as part of the cars’ documentation.”
People should trust used car dealers.
Motoring journalist buys a Golf R when it’s his own money:
“For a daily driving experience, the instant torque, the lack of transmission, not having to worry about changing gears, EVs are the best. And that is still true. I still absolutely believe that. However…”
“A battery is almost $20,000 to replace. And it’s warrantied for 100,000 miles or whatever it is, but that number hangs over your head and the head of the next buyer…
Yep. People are beginning to notice.
Not Edmund King of the AA which used to be a drivers club the same as the RAC but are both now just businesses. He was being interviewed on GB News about this and was questioning all the known drawbacks stated by Martin Daubney and came out with the whopper that once people have owned a battery car they will never go back. When it pointed out that normal cars keep their value he replied that he would just keep his battery car longer and drivelled on about it being cheaper to charge on his property than buying fuel. So there we go – an EVangelist as Geoff & The MacMaster call them so no sense expected from him.
Probably a bit too soon here to see them talking about the new German law that allows your power to be reduced when there is not enough energy on the grid. This off course is via your ‘smart’ meter – compulsory from 2028 – and I am being bombarded with calls from Bombay or Calcutta by Shell Energy to have a ‘smart’ meter. Not sure if this is due to Octopus now owning the company. I told him over my dead body would I have one. These callers are about the only ones to identify themselves to my call blocker and trigger the phone ringing.
More from the silly season
Emma Boyd Carpenter tries to get more ,oney for Sadiq Khan to waste.
Wildfires in London?
Was that Warren Zevon?
The sales manager of a well known countrywide car dealer advised my mate (who trades his car in about every 2 to 3 years for a nearly new one (demonstrator or pre registered )) that BEVs have no second hand value.
A bit like old wooden boats (not modern glued strip plank like Spirit) that have essentially negative value (because of ongoing but unpredictable maintenance costs not to mention gribble or even teredo worms as in my case, Sheerness, Chatham and Medway hulks likely to blame) with the purchase price based mainly on compassion for the previous owner.
I thought readers might be interested in this video explainer from a Colorado-based fire department, which details the strategy and resources required to tackle an EV fire in a very informative and unbiased manner:
I would suggest the owners of the vehicle involved are extremely luck people!
” … lose as much as half of their value after just three years on the road, ”
This applied to many petrol cars in the 1990s and 2000s in the UK, particularly Ford and Vauxhall (GM).
My limited understanding of the pricing mechanism for leasing is that the price for leasing a BEV should now increase to broadly match the depreciation.
Absolutely correct. The only problem is the cost of horrific depreciation will substantially increase monthly payments thus removing any economic case for EV’s, at a stroke obliterating the overall appeal of EV’s versus ICE vehicles.
Perhaps it’s not an electric thing . . . maybe all cheapy cars depreciate rapidly.
Like most of these articles the journalist didn’t understand that there are more things going on than just conventional depreciation. The point about lemons and the value of second-hand BEVs is critical – and should be well-known but isn’t!
In effect the value of a second-hand BEV is a function of the battery warranty. Any manufacturer can increase the value of its second-hand BEVs by offering a no questions asked battery warranty that is transferable to any future owner. The depreciation of new cars will then depend on the remaining length of that warranty. The difficulty for vehicle manufacturers is the potential liabilities created by offering long battery warranties, especially if they do not control the manufacture of the batteries. Sane battery manufacturers will limit their liability – and many of them would simply go out of business if lifespans prove to be shorter than expected.
All in all the manufacture and sale of BEVs is simply an insurance disaster in waiting. By the same token, the high depreciation of BEVs will push up the value of second-hand hybrids or ICE vehicles and extend their expected life. Eventually we will finish like Cuba and many developing countries where old (non-BEV) vehicles are kept on the road almost indefinitely.
The fear must be that Davos-controlled Fascist Elite will be told to introduce laws to ban old vehicles, especially if they can’t be tracked and controlled. I see Jeremy kHunt is there receiving his instructions, probably not to cut taxes.
Can anyone identify this car please ?
https://www.bristolpost.co.uk/news/bristol-news/gallery/smoke-pours-sky-after-car-9042238
BMW X1?
https://www.autotrader.co.uk/car-details/202309302517514?sort=price-asc&advertising-location=at_cars&body-type=SUV&fuel-type=Petrol%20Hybrid&fuel-type=Petrol%20Plug-in%20Hybrid&fuel-type=Diesel%20Hybrid&make=BMW&model=X1&postcode=CW12%201SB&year-to=2024&fromsra
Certainly looks like it. A lot of white smoke – does that indicate the battery?
Black smoke – running rich; white smoke – burning oil.
Burning oil . . . wait . . . never mind.
Puppies escape from house fire started by e-scooter
The blaze, which was caused by an e-scooter’s lithium-ion battery igniting, caused a large scorch mark in the property
https://www.bristolpost.co.uk/news/bristol-news/puppies-escape-house-fire-started-9048897
By Shannon Brown Reporter
21:52, 21 JAN 2024UPDATED21:53, 21 JAN 2024
The belief that there is a market for BEVs, other than a novelty one now saturated, that can by be grown by diktat or lower prices persists.
The market for BEVs, or lack thereof, was tested over a hundred years ago together with ICE, and steam (paraffin fuelled). ICE won.
At the time, availability of petroleum spirit was not widespread, often available nearby only in chemist shops, there was no dedicated network for dispensing motor fuels.
In that respect, availability of fuel and thus distance able to be travelled, was no better, probably worse than for battery chargers now, so cannot account for preference for ICE – and all motor vehicles were similarly expensive.
Yet ICE won – why? Probably because batteries were big, dead weight, and could be problematic. Plus ça change.
Going back to BEVs is as dumb as going back to wooden sailing ships – although the Climatrons are suggesting that too.
To be fair, the main reason used EVs have lost so much resale value lately is the price cuts on new EVs.
https://www.cnbc.com/2023/10/06/tesla-cuts-model-3-model-y-prices-in-the-us-after-deliveries-fall.html
You wont find anybody in the russia, asia, south america, or africa countries debating or even discussing EVs, or net-zero, its just not on their horizon ….its a western disease
Another problem is that the first party to own these will have used rapid chargers as they are the rich who don’t care about anything but virtue signal. So the new owner maybe only months away from battery replacement. Another thing today on van isle the snow is10” deep so a car that is never suppose to have its belly scratched does what
…and at 70,000 no value at all as the cost of replcing the batteries will be more than the car’s worth
This doesn’t help the s/h price…
https://www.reuters.com/business/autos-transportation/hertz-sell-about-20000-evs-us-fleet-2024-01-11/
“gezza
January 18, 2024 2:10 pm
The fear must be that Davos-controlled Fascist Elite will be told to introduce laws to ban old vehicles, especially if they can’t be tracked and controlled. I see Jeremy kHunt is there receiving his instructions, probably not to cut taxes.”
The problem is people, most appear to have zero critical thinking they’ve just got to learn to say NO !
‘Safe & effective’ was a perfect example.
Very true. ‘Died suddenly’ can’t penetrate their thick skulls as the latest to drop dead is the Mail’s tennis reporter as the Australian Open.
O/T Interesting article in the Business section of the DT about smart meters and the company supplying them, SMS who are subject to a takeover bid. I didn’t realise the company fits the meter then charges yearly rent to the electricity supplier, about £45 according to the DT. Which obviously is passed on to the customer in their bills! So much for smart meters saving you money!
“For their owners, smart meters offer a steady stream of cash.
Providers like SMS earn annual rental fees from energy companies like British Gas for each smart meter installed. Customers ultimately pay this fee as part of their utility bill.
Initially, SMS must spend money to install smart meters, forking out around £420 to acquire a smart meter from a manufacturer – such as Elster and Landis+Gyr – and install it on the wall at home.
But once the box is fixed, the smart meter acts like a cash machine for the owner.
Energy companies pay around £45 per year to rent the box from smart meter providers, according to analyst estimates, and this fee is index-linked to inflation.
With contracts running for between 15 and 20 years, it offers a near bulletproof income stream.”
https://www.telegraph.co.uk/business/2024/01/18/wall-street-raiders-battling-control-smart-meters/
It’s not really that big of a profit. Sending out the electrician to install the meter and take away and dispose of the old one probably adds at least £250 to the meter cost. Then there is the cost of smart communication on the 2G network which adds a good chunk to the bill. All these costs have to be financed until the income pays them off. Who takes the write-downs when the meters are no longer up to the task and have to be replaced is another business risk. Think of the original smart meters that stopped working when a customer changed supplier – or the future need for meters that will control your smart appliances, again causing early replacement.
All that can really be said is that smart meters have so far proved to be very expensive, with costs for consumers now likely to be over £25bn.
Electric vehicles manufacturers should be forced, buy, consumer protection laws to give battery life and replacement cost figures. Having to replace the battery of an EV is a huge unknown cost for potential buyers, especially those of used cars. This aspect of EV ownership is never mentioned.
O/T but relevant to Farmer Sooticle (above) : Not just ‘smart meters’. A meter installer/remover employed by a national elec supplier told me that ALL meters, whether smart or conventional, were long ago sold off to investment companies who then leased them back to the power supply co’s. and then charged out to the consumer via the ‘standing charge’.