Do electric vehicles (EVs) hold their value?
This, at the moment, is a torrid subject for electric vehicles. While any new car buyer is well and truly used to the concept of depreciation, electric cars are currently suffering a double-whammy of sharp depreciation, in part triggered by tumbling prices for new models, and an apathetic used car market in which the vast majority of buyers simply don’t want to buy the current crop of used EVs.
This is causing something of a crisis in the used car market for electric cars, and it’s pushing some EV owners – their fingers well and truly burned by falling second-hand values – to actually ditch electric motoring altogether, take the financial hit and go back to a more familiar petrol, diesel, or hybrid car. They are also becoming staunch critics of the transition to EVs.
Are used EVs going unsold?
There are definitely electric cars sticking so firmly to some second-hand forecourts that they’re all but unsellable. Recently, The Irish Times spoke to Merlin O’Reilly from used car auctioneers Merlin Motor Auctions. “As an example, we had a 222-registration Volkswagen ID.4 in here, which brand new would cost you around €41,000,″ said O’Reilly. “It looks brand new, and we put it up at auction with an initial bid of €20,000. And we got nothing. Not a single bidder. Two years and half price? It just doesn’t make sense. It would make someone an absolutely lovely car, at a terrific price.”
That particular ID. 4 was being disposed of by a finance provider, which means that a previous owner had either handed it back to clear a car finance debt, or it had been repossessed for delinquent repayments.
[ Car auctions are full of used EV bargains – but should you take the plunge?Opens in new window ]
So there are bargains to be had?
The current situation does mean that such vehicles can make almost ridiculous bargains for those prepared to shop for them. According to O’Reilly, finance providers trying to move cars on will generally set a reserve price, but they can often be flexible as to whether a car will be let go for less. That said, a bank or finance house can’t be seen to undersell their cars either, as such a move would wreck the confidence on which such finance is provided. Still, there is certainly wiggle room for a canny buyer here.
“Looking specifically at that ID. 4, I’d say if someone who was keen on it had been here last week, at €22,000 they would own that car today,” says O’Reilly. “And next week that could be €18,000. Ultimately, we didn’t have a live bidder, but the banks are aware of all this and that’s why there’s caution around electric cars. For example, they underwrote loads of Teslas, only for €10,000 to be knocked off the new price, and that hit all the finance companies with electric cars on their books. Once one price goes backwards, they all start to fall back.”
So, does that mean that EVs are just bad news when it comes to resale values?
At the moment, yes, but like all swords this is a double-edged thing. So, if you own an EV and its value has fallen, then the upside of that is that the new EV for which you might trade it in has also become cheaper, so your cost-to-change remains about the same, or has possibly become even slightly less expensive. Of course, for used-car buyers who are prepared to make the leap to electric, the huge upside is that there are some genuinely terrific electric cars out there right now – that ID. 4 at Merlin auctions for instance – which can be snapped up for half-nothing.
Is this going to be a feature of EV prices or just a short-term blip?
EV used values have fallen so sharply recently because there has been a dramatic “correction”, clawing back the huge overvaluation of EVs that occurred in the period immediately following the Covid-19 lockdowns and the global shortage of computer chips.
As the supply of new electric cars recovered, so it was inevitable that those used prices were going to fall considerably. They’ve probably over-corrected by now, and should begin to recover in the next year or two, especially if – as has been suggested – the Government introduces a used EV buyers incentive subsidy in the next budget.
The other point to make is that as the charging network improves, as EVs become more common on our roads, and as more and more people become used to the whys and wherefores of electric motoring, so more and more used buyers will make the leap, and values will begin to stabilise. Right now, though? Yeah, it’s a rough ride.
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