How a crashing second-hand market slammed the brakes on EVs
By Paul Homewood
h/t Ian Magness
“The moment for electric cars is now,” proclaimed the website of rental start-up Onto.
“Once you get behind the steering wheel and feel what they’re capable of, we know there’s no going back.”
The Warwick-based company matched words with actions, amassing one of Britain’s biggest EV-only fleets with 7,000 cars overall.
Instead of leasing or selling the vehicles, customers were offered “hassle-free subscriptions” that included a car, insurance, maintenance and even charging from £359 a month.
Yet today customers are greeted with another message, explaining that Onto Holdings Limited was placed into administration in September.
According to accounts for the first seven months of 2023, Onto was forced to write down the value of its EV fleet by £21m – more than its total revenues for the same period.
Administrators for Onto blamed the company’s collapse on a “steep fall” in the value of electric cars, rising interest rates and the impact of the cost-of-living crisis on drivers’ disposable income. It was unable to secure additional funding from its shareholders as a result, administrators Teneo added.
Onto is far from alone in having suffered these challenges.
Second-hand EV prices plunged across the board last year, as manufacturers including Tesla slashed prices and a wave of ex-lease and rental vehicles flooded the market.
As experts have pointed out, this has long been predicted and it is generally good for consumers, the vast majority of whom only buy used cars.
But the trend has also dealt a blow to others – namely, companies and early adopters who paid higher prices and will now recoup less of their investment.
For the moment, used EV prices are stabilising again as the bargains available stoke strong demand, says Marc Palmer, head of insights at Auto Trader.
But with competition in the new car market intensifying, there are fears Chinese brands will seek to undercut their European rivals by slashing prices further – causing further ructions for second-hand sellers.
“That is the big question – ‘will the Chinese come in more cheaply?’”, says Palmer.
“We think they could, because they sell their cars more cheaply in China than they do in Europe. So they’ve got the ability to start more aggressive pricing.
“And if new cars become more affordable, then prices of used cars will probably need to come down a bit to make sure they still provide value for consumers.”
That could make more grim reading for existing EV owners, who have already been clobbered in the past year.
Based on figures for December, Auto Trader found that an EV costing £50,000 is currently expected to lose about £24,000 of its value after just three years on the road, significantly more than the typical £17,000 reduction seen with petrol cars.
Some of the worst-hit cars include the Renault ZOE, which has shed 56pc of its value on average and now sells for £7,700, according to separate data from Motorway.co.uk. Meanwhile, the Volkswagen ID3 fell by 41pc and the Nissan Leaf lost 40pc.
Much of the turmoil last year was a result of large numbers of cars being offloaded at the same time by fleet owners such car rental firms and leasing companies. These businesses often bulk-buy vehicles at a discount, hold them for up to two years and then make a profit by selling them on.
Previously supply chain problems had kept the EV market relatively tight, helping to keep prices high. But last year the influx of supply from fleet sellers was not matched by demand, sending prices plummeting at “unsustainable” levels, Auto Trader found.
This is what fatally wounded Onto, which blamed its massive impairment on “the market downturn in the residual value of EVs”.
Eventually, lower prices triggered record demand for used EVs as drivers scrambled to snap up huge bargains. For the full year, used EV car sales rocketed 91pc higher to 118,973, according to the Society of Motor Manufacturers and Traders (SMMT).
However, with more than 800,000 EVs registered between 2020 and 2023, Auto Trader has warned that the rollercoaster for prices may not yet be over.
Some of this volatility is also down to other factors as well, such as the small (but growing) size of the used EV market. According to the SMMT, EV sales only represent 1.6pc of the used car total.
But Alex Buttle, co-founder of Motorway, says second-hand values are being dented by adjacent issues as well, such as sky-high insurance premiums and the Government’s decision to delay a ban on the sale of new petrol cars from 2030 to 2035.
“If the demand isn’t there, prices naturally come down,” he adds.
Richard Peberdy, UK head of automotive at KPMG, says the resulting hit to prices has presented upsides for consumers but is harder to swallow for manufacturers and dealers. He adds this presents “a significant challenge when it comes to reassuring consumers about the onward value of new EVs”.
This seems to be another desperate attempt by the motoring press to puff up the EV industry, while glossing over the problems.
Mr Peberdy does not appear to understand the laws of supply and demand! “Presents upsides”? The reason why second hand prices are so low is that there is very little demand for them. So why is this an upside for a buyer for whom an EV offers so little value?
And the market is going to get worse, much worse. Note these statements in the article:
- used EV car sales rocketed 91pc higher to 118,973
- more than 800,000 EVs registered between 2020 and 2023
- EV sales only represent 1.6pc of the used car total.
Then add in the fact that EV registrations totalled 267,000 in 2022 and 314,000 last year. So this year we may well see more than 200,000 coming on to the second hand market, and more still next year.
There is no reason why demand for second hand EVs will increase from last year’s level, and if it does not prices really will collapse.
While this may benefit buyers, it will be absolutely disastrous for those who have bought new, not to mention fleet and leasing companies. As the article suggests, many may be forced to keep their EVs much longer than they had planned, as they simply won’t be able to afford to buy new again.
There is one further thought. Second hand buyers tend to be less well off; as such they often won’t have off street parking. So what use is an EV to them, however low the price?
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
I wonder how many people are thinking “I told you so“?
Me and you and Paul for a start Phillip!
Trust the professionals — the journalist in this case — to devalue the meaning of words. Since when were most modern cars an investment? They offers no monetary yield. The capital required to purchase or the ‘rent’ to lease is merely degraded.
Reminds me of the use of ‘compensation’ when referring to salary, pay, emoluments etc . Compensation for what, the loss of free time?
Euphemisms and acronyms are just another barrier to understanding.
While I am at it why are bonuses paid regardless of performance particularly in the public sector?
I choked on this, too:
But the trend has also dealt a blow to others – namely, companies and early adopters who paid higher prices and will now recoup less of their investment.
Buying an EV is like lending money to your brother. You really don’t expect to get your money back.
For children you know it’s a gift
Virtually no new cars are an investment - they all become worth less the moment you drive them away. It is spending, pure and simple. An investment produces a return over and above the amount invested.
I was told 30% driving off the forecourt.
When I was young and sillier bought a Volvo for £30k new.
3 years in it was written off by insurers and we got £1800.
Then bought an LPG in 2003 to replace for £500, which was a lot.
Still on the road at 130k. Have to say LPG in UK is rare. Don’t know about continent now.
Will never buy a new car and trying keep those we have going until we have to renew our paper licenses at least.
The BBC oscillating between Brexit and ‘green’ and ‘the car industry in the UK’ for political reasons showed how partisan they were and are.
Still got mates suckered into eco-diesels thanks to the gummint PR system fooling some of the people.
Same editorial numpties trying to spin no one more voting for the next clowns in waiting than last time as something awesome and historic to see bottles of bubbly rolling down the corridors of W1A.
The public have given up on the whole sorry, inept lot.
Like drinking beer is investing in a brewery.
Not necessarily so Phoenix 44 above. An investment in Tui in 2014 would have cost £33 per share according to last Wednesday’s The Times. Three days ago those shares closed at £5.785 pence.
tomcart, if you make a loss, it’s not an investment! You thought it was, but it wasn’t.
Most cars are “durable consumer goods.” Few are investments, which are “durable capital goods.” What they have in common is that their use is in the future.
To make the distinction clear: the same car would be a durable good in the hands of a family and an investment in the hands of a taxi-driver. The value in use accrues to the family in the one case and to the customers in the second.
There is an old joke that an investment is a failed speculation. That seems to be similar to what a public “investment” is: money down the drain.
My late father drummed depreciation of cars into us. I drove my 1966 Mustang 5 years, my 1978 Mustang 16 years, Ford Taurus 13 years, Ford Freestar 15 years and my current Chrysler Pacifica is a 2019 model.
Compensation as salary or wages goes back to at least the 18th century!
Quite! There is no profit in owning any car (some classics excepted), just cost and depreciation. They are not investments, just money drains.
The factor I had the greatest reservation over was the depreciation of BEVs. A considerable cost of ownership of a new vehicle and a great unknown.
Unless buyers specifically want an EV, EVs were always going to depreciate more than ICE cars. There was zero chance of the extra cost of a new EV being replicated in the second-hand market as the extra cost is just cost. And most buyers perceive EVs as worse than their ICE equivalents, so were always going to attract a discount. If a new EV is £10,000 more than its equivalent ICE version then second-hand its going to be £2-5,000 cheaper. So a buyer without subsidy will be out perhaps £15,000 compared with buying the ICE equivalent new.
A couple of years ago the advocates for EVs were promising me lower depreciation because demand would be much higher than for used ICE vehicles. Couldn’t see it myself.
I think most sensible people have seen this coming right from the start .
Very high prices , not very good for a lot of driving ,[ except just to the shops ] and the difficulty of charging them up .
The grid could not cope with something like 4 or 5 percent of vehicles being EVs trying to charge at the same time . [ Although a lot of the charging stations are powered by diesel generators ].https://www.telegraph.co.uk/business/2023/09/09/electric-cars-generators-national-grid-ev-charging/
So perhaps a few more people might now start to see through the whole Net Zero insanity .
“…except just to the shops.”
Forget that. Covid-19 was really a jolt to one’s habits. How easy it is to AVOID going to the shops! Chaps on bicycles are the “new” thing. I think they were called delivery boys when I was young.
Depends on where you live, dave. Outside of large towns and cities a lot of these delivery services don’t exist other than from the big supermarkets. The Co-op don’t deliver in my area.
I was already buying a lot of things on the internet pre-Covid for convenience and range of goods available but still prefer to visit the shops for food.
I think the “except just to the shops” referred to “popping to the local shops” as a habit. For older people this is a social thing. For younger people just a chore.
Tulip mania eventually ended.
But nobody will accidentally eat an EV.
This isn’t going to help
Price of public EV charging soars as filling up petrol cars becomes cheaper
Motorists who only charge at public stations are now paying 18p a mile or £1,810 a year
Daily Telegraph
It’s not just the cost but the time it takes to recharge the battery, time that is most likely to be completely wasted. And fast charging will ruin the battery even quicker.
It’s not a surprise that the communist fifth column in the MOD want all our mlitary equipment to be electrified and running on batteries.
My council has just brought EV patrol cars and motorcycles, they had to purchase twice as many as half would be on charge and at three times the cost ….council tax going up again
The root cause of all this is direct attempts to rig the market. You cannot expect to ignore simple supply and demand rules and expect a good outcome. Net Zero obsession costs money, and consumers don’t like it.
“You can’t buck the market”. When did we last have a PM who believed that?
And yet in Sushi and kHunt we have a PM and Chancellor who are both multimillionaires and so presumably understand something about markets. Am I the only one left wondering how they made their money given their incompetence in office?
Ho, ho, bl***y ho!
Who’d a thunk it……
As that YouTube man says ‘Future, my arse!’
The simple, economic fact is, things that are worse should be priced lower than things that are better. Yes, some people are both willing and able to price in “saving the planet” in their purchases but most are not or cannot. Far too many people have simply either ignored this basic fact or pretended that EVs are somehow better than existing cars. But reality is reality, however much people claim it isn’t.
Well the gullible early adopters are putting a brave face on their losses. It was so obvious that the concept of charging at home, with 5% VAT electricity was not possible unless you had a drive/garage (although it is now recommended to charge a BEV at least 15 Metres away from buildings, due to fire risk), as only about 35% of homes have off road parking. So in a high rise, streets of terraced houses, miners cottages (loads her in the North East) you have to use a public charger, now more expensive than petrol. It is just not going to be affordable to run a BEV even if they give them away!
Forcing mass take up of a new unproven technology, by banning the existing reliable solution gets ahead of the development curve and problems that show up involve a much greater number of occurrences. (BEV and Bus battery fires, poor extreme cold performance, not enough affordable high speed chargers)
The sooner a U-turn is made, on all of the Net Zero plans, then the country will start to prosper again, but I cannot see it happening soon, too many crooks in power and a great defeat for the eco loons. However as it is the DESNZ that controls all this, Ms Coutinho, lets emphasise the Energy Security part of the name, and start preparing for the Russia/Iran/North Korea Axis the first thing to go will be the gas and electricity connections to the continent and then the Offshore wind farms.
When I went to the DESNZ site to check who was in charge, this was the headline.
UK first major economy to halve emissions
6 February 2024 — Press release
New official statistics confirm UK has cut emissions by 50% between 1990 and 2022.
Take a look at the amount of money they are throwing at mad projects.
https://www.gov.uk/government/organisations/department-for-energy-security-and-net-zero
It would also be useful to look at a graph of UK manufacturing from 1990 to 2022 which I think most of us would expect to be heading steadily downwards as electricity costs have risen. This would show where the emissions reduction has been ‘achieved’. It would also show why Port Talbot will never reopen once closed. But with most of industry gone it doesn’t leave much else to be reduced so any future reductions will be small.
gezza1298, the whole Net Zero insanity has destroyed the Steel industry .https://www.telegraph.co.uk/business/2022/02/26/britains-steel-industry-hammered-climate-change-taxes/
And lots of other businesses have closed down due to increased costs of energy , possibly a 3 times increase due to carbon taxes etc .
The whole thing is due to lies and a political agenda to destroy Western economies .https://www.forbes.com/sites/larrybell/2013/01/22/the-u-n-s-global-warming-war-on-capitalism-an-important-history-lesson-2/
Given EVs’ alleged propensity for spontaneous combustion I wonder if talking about “flooding” the market is really appropriate.
Just an idle thought ….
In Devon in July 2023 an e-car and e-bike company consisting of Co car, Co Bikes and Co Delivery went bust leaving 400 shareholders and creditors facing losses of £1.3m despite having received hundreds of thousands of pounds in subsidies from local authorities.
It was only ever profitable for a brief period despite the fact that the green blob, who seem to have infiltrated every level of our local councils and Exeter University, have given the business unprecedented support ever since the business was formed. Unfortunately none of them had sufficient commercial nous to realise that this business was a dead duck right from the outset.
and the Nissan Leaf lost 40pc
A considerable upgrade. They used to lose 71pc in two years.
Gamecock considers the Leaf to be useless. What would a used one then be?
“Once you get behind the steering wheel and feel what they’re capable of, we know there’s no going back.”
It’s a juggernaut, I tell ya!
Cranked up the GT350R in golf club parking lot yesterday. As I was pulling out, others were staring. I blipped the throttle – big roar – and said, “You can’t get that from a Tesla.”
The reckoning I want to see is with the enthusiast press. Magazines and TV are giddy with the newest and bestest EVs. 80% of the people don’t care. As I watch, I’m thinking, “When are you going to get to the real cars?”
The press put Ford up to making an electric F-150. It’s not working out. Yeah, it’s Ford’s fault, but it would have been impossible for Ford not to be moved by all the government and media pressure.
…”we know there’s no going back.”
Er, does that mean they have no reverse gearing?
They have reverse. But it takes a couple of minutes to figure out how to find it.
If manufacturers in Europe choose to buy greenwash certificates from Chinese manufacturers rather than paying the non EV levy they will enable them to slash EV prices by up to £15,000. Most won’t make enough EV sales to compete. Tesla will also benefit. The best bet is not to buy greenwash certificates that fund EV only manufacturer discounts..
Are modern day businesses so entwined with Governments, protectionist regulations, subsidies and Govt market intervention, that managers no longer understand free market capitalism and don’t know how to run a business anymore?
And there seems to be total ignorance of the product they are buying or its limitations of use.
Thank the Harrison Act and Prohibition laws and conventions as much as the Acts of Navigation.
At least with Prohibition they had the decency to get a constitutional amendment to get authority to regulate alcohol. With drugs, they have unconstitutionally seized the power.
Corporations realize the futility of resisting fascist government. So they cooperate with them, in hopes of gaining advantage over their competitors. Fascists are going to regulate, so help them in write the regs to your benefit.
The core problem is government power. Limit government power, and the lobbyists disappear.
Incumbents like nothing better than that, as Adam Smith pointed out some 200 years ago or more. But as he also pointed out, it is competition that keeps businesses honest, not governments. And we have very few ways of keeping governments honest.
but, but, but – according to Forbes, it’s some sort of right-wing conspiracy to kill the EV market!
https://www.forbes.com/sites/jamesmorris/2024/02/10/they-are-trying-to-kill-the-electric-car-again/
‘In 2020,’ says Mr Morris, ‘I was expecting EVs to approach parity with ICE this year, but that was before the effects of Covid, the war in Ukraine, the cost of energy crisis, and supply chain issues caused by the Houthi blockade of Red Sea container ship routes…’
The copium is strong with this one…
CK
EVs are decadent. Events impacting prosperity reduce decadence.
I suspect “the effects of Covid, the war in Ukraine, the cost of energy crisis, and supply chain issues caused by the Houthi blockade of Red Sea container ship routes” has nothing to do with he demise of EVs, but simply people waking up to the BS they’ve been fed, and saying “no thanks”.
I love the bizarre way existing greedy capitalists are evil right-wingers but those hoping to replace them are virtuous, lovely investors for ghe good of the planet. The Left is now just unhinged, inchoate conspiracy theories.
Oh no, no, no.
https://x.com/colinwalker79/status/1758446991322026056?s=61
This headline in the
@Telegraph is remarkable because: a) the actual data shows that the 2nd hand EV market is doing the opposite of crashing and b) the article refers to that actual data! A short thread.
ps: the thread is not short.
The ECIU are expert PR tricksters
#1 They flail their arms & so loud outrage
#2 Pick one facet instead of the whole argument
and say that one facet debunks the whole thing
#3 Use word games
So here that is “crashing secondhand market”
and ECIU twist that
to say it means low SALES volumes ,
whereas the article uses the term to refer to LOW PRICES
Second-hand EV *prices* plunged across the board last year, as manufacturers including Tesla slashed prices and a wave of ex-lease and rental vehicles flooded the market.
It even says this has increased sales “the bargains available stoke strong demand”
ie VOLUME increased cos people are dumping their EVs and selling them for a LOW price
It looks like Mr Morris is an idiot if he thought battery car sales would match normal cars in just 4 years. The volume of sales has always been small hence they always talked of percentages to hide it.
After introducing this – –
” customers were offered “hassle-free subscriptions” that included a car, insurance, maintenance and even charging from £359 a month. “
– – nothing more is said about it. How did that work out? It seems a rental car company ought to be making money renting cars – not selling used ones.
Color me confused!
No, the business model for rental companies was always based on driving down fleet purchases and selling into ghe second-hand market at a profit..
Looks like it was the asset markdown that killed them as it would have made it impossible to carry on getting funding if you don’t have the assets to back it up.
Most of the pain is falling on the leasing companies and the manufacturers’ finance arms. Aiui, the great majority of EV “sales” are as company cars and, of the small proportion which are sold to private buyers, most are on PCP or lease, etc.. It seems they may have been caught out by the bubble in used prices a couple of years ago, driven by a shortage of new vehicles due to covid, Ukraine, etc..
So there are now some extraordinary bargains to be had in the used EV market and that seems likely to continue as new models arrive, existing ones are facelifted and increasing numbers of ex-lease cars hit the market.
The unintended consequences of attempts to “fight” climate change keep coming.
John Bowman permalink
February 16, 2024 3:14 pm
Like drinking beer is investing in a brewery.
I think of drinking Beer as an investment in contentment. 🙂
Reading about the plummeting prices of used EVs made me think about how cheap they would have to be for me to buy one. Thinking about it, I don’t think that I would want one even if they were free.
Chemo flaming batteries, Tonto!
Never discussed
2. Can they be recycled when the vehicle goes to the breakers yard and if so, what will be the cost and energy required to do so ?
3. Or will they just be dumped ?
I can’t help wondering what’s going to happen to all these EV’s when they are 6+ years old. Are parts going to be readily available, given the relatively small production runs and will anyone be stocking the battery for your model in 10 years time (assuming the original lasts past next week of course)?
My current car is over 8 years old and parts are easy to get and we have a trusted garage that’s done all our servicing for years. They won’t have anything to do with EV’s at the moment.
Where are all these unwanted EVs parked?
The reports I read claim the batteries degrade
by about 10% in six months. Although there is this study:
https://electrek.co/2024/02/13/lithium-metal-ev-battery-life-stanford-study/
Back to the question: What does a dealership or a car-loan
company with lots of EVs do with them? In addition to all
the other costs, each will have repeated charging cost
that a real car would not have.
No wonder new car dealers are not happy taking delivery
of factory-fresh ones. And what of the factories with hundreds sitting in a state of un-wanted?
[Unrelated: Why am I forced into the spacing like this when others seem to get regular single spacing? I’m using Libre Writer and doing a copy & paste.]
A surprising study. Stanford was also where Professor Paul Ehrlich of many catastrophic predictions worked.
P.S. John, it is probably your computer’s problem.
More Chinese EVs on their way.
BYD And Chinese EV Win In Europe Might Be Delayed (forbes.com)
Labour now say they will bring back the new ICE ban to 2030 if they win the GE – what absolute incompetence – they’ll reap all the civil unrest they will sow
The shifting of the ICE ban to 2035 by Sunak was all smoke and mirrors anyway. He still went ahead with approving the requirements for the percentage sales of vehicles that have to be EVs, starting this year. There’ won’t be civil unrest over this, what there will be (intentionally in my view) is a slow destruction of the automotive industry. People will gradually find that the freedoms and opportunities that car ownership enabled in previous decades and for earlier generations disappear. And it will be too late to do anything about it.
Down amongst the Leaf mould of Nissans ten years old and under 10K we will see cars worth zero with the battery replacement cost
Charge for battery disposal could make it less than zero.
The farce continues…
Car charger withdrawn over fears hackers could use it to attack National Grid
Wallbox has sold close to 40,000 electric car chargers in Britain, although it is not known how many of these are of the affected model. Copper SB chargers already installed in homes are not being recalled.
https://www.telegraph.co.uk/news/2024/02/21/car-charger-withdrawn-hackers-could-attack-national-grid/