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2020-2022 increased availability of longer-range BEVs for sale, and impact on used vehicle market

2K views 15 replies 8 participants last post by  jlsoaz 
#1 · (Edited)
Setting Tesla discussion aside for a paragraph or two, it looks like some of the established automakers will finally be making good BEVs for sale throughout the US approximately in 2020-2021. (I can't speak to other countries and regions as well, but perhaps there is at least some similarity.) Chevy sort of started doing so around 2017 (though they need to take next steps), Nissan, Jaguar and Audi seem to have started doing so around 2019, Porsche and Polestar/Volvo are on the verge, and maybe around 2020 Hyundai and Kia will actually make the better vehicles more widely available (they definitely are not widely available at present in the US). I'm thinking there are a number of other automakers for which those years will finally mark the very beginning of offering "the good stuff" widely and readily for sale. In the US, all of this takes place against a backdrop of continued relatively low gasoline prices, and so that would seem to present a headwind to near-term long-range BEV sales.

I think there are a variety of points that can be made in discussion about the upcoming transition. Usually general industry discussion interests me more than personal vehicle buying discussion, but there is one point I want to make here that spans both angles:

What happens to the used vehicle market once the new long-range BEV market is finally somewhat more competitive? Will used Model S's that previously sold at ~$30-$45k finally move down to the $15k-$30k levels that are occupied by some of their exec-sedan siblings? Will used Model 3s in good condition inch down into the $20k-$30k region, finally reflecting some depreciation and allowing for increased competitiveness as against buying a new BEV from Nissan, Hyundai or others? Or, will the Teslas unfortunately (for used car buyers) maintain their values more than comparable gasoline vehicles might have done, and make it difficult for used vehicle buyers waiting for them to come down in price?

The fever seems to have broken already in 2019 on used Bolt pricing, and it is now in that $17k-$25k region.

All of these are points to consider not only for those of us who are trying hard to avoid paying the depreciation on new long-range BEVS, but I think as well for general industry discussion, as 2020 shapes up to be the start of a next chapter of increased competition.
 
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#2 ·
Used prices will always have a dependence on popularity/desirability and availability. Obviously as EVs become more readily available and the numbers available in the used market increase then prices will fall.

That said, although new EVs should become more available over the next few years it will be another couple of years before those increases start to appear as second hand availability, so it may be 5 years before those lower prices become visible.
And of course demand may rise. If your (US) political landscape changes to a less pro-fossil fuel and pollution one again that could push demand for old and new EVs up quite a bit.
 
#3 ·
[...]And of course demand may rise. If your (US) political landscape changes to a less pro-fossil fuel and pollution one again that could push demand for old and new EVs up quite a bit.
Yes, thank you. Is there a danger that the prices on on good decent-condition long-range used BEVS will not actually go down but hold steady or go up? This may sound absurd, but the entire global shift to long-lasting BEV is one that does not exactly happen every day, so to my mind I have to be open to the possibility.

With that being said, when I ask myself "Could I save $5k-$20k by waiting for another year or two and diving in at a much lower price for a 30k-60k mile vehicle?" then the answer I give myself is "probably, unless something really wild happens". If used price fever does not go down in that time, I suppose I could try to take out a loan I can't afford to buy a low-end Model 3 new, or hope for the best on my Volt still working well after another 12k-24k miles, or I don't know what.

Speaking of the long-lasting aspect of BEVs, this has me thinking not only about changing residual value curves, but the question of whether this (alongside the other usual-suspect reasons) has been a leading reason for automaker resistance to transition to BEV.
 
#5 ·
Not sure what the US market is like but if it anything like the U.K. what really matters is the cost to change your car. Assuming in the next five years more manufacturers are able to produce EVs with decent ranges, then prices of new ones will start to fall. However, it is also likely that the value of your trade in ICE will also fall.
A lot of cars are bought on finance and they will enter the second hand market in the next three years. However, compared with ICE sales, EVs still make up a relatively small share of the market. Therefore if Governments regulate in favour of EVs and against ICE ones then demand will grow and second hand prices of EVs will stay high (and ICE ones drop).
My approach is to treat my EV like any previous car and to expect it to depreciate like an ICE. That way I hope not to be too disappointed as crystal ball gazing about prices is not something many of us are good at!
 
#6 ·
[....] However, it is also likely that the value of your trade in ICE will also fall. [...]
Yes, good point. This recent article (from an unusual bias, but still a good article I thought) examined that side of things a bit.

The Tesla Effect: How Tesla Is Changing the Used Car Game
Tesla’s sales successes are wreaking havoc on the pre-owned luxury car market
By Capital One
Sep 20, 2019

"....The Tesla Model 3’s combination of semi-autonomous (self-driving) technology, quicker acceleration than a BMW 3-series, and energy efficiency that blows away a Toyota Prius, has quickly created a seismic change in today’s luxury car market. As a result, if you’re planning to buy a late-model (non-Tesla) luxury car in the near future, you’re letting someone else take a brutal hit in depreciation and getting a great car for relatively little money—much less than if you bought new, anyway. It can be a vicious cycle, but it can also mean a great deal for you. ..."
 
#7 ·
Used EV and EREV prices in the Uk in 2014-16 were dire due to Unknown’s of EV, little advantage due regulations. Fuel cost savings account as the main benefit. There were also very good new deals on lower range 1st:2nd gen EV’s in 2016 and 17. But the demand, landscape and regulations are changing and used EV prices have risen a lot since 2017. For example we bought low miles (14k) 2012 Chevy Volt in 2014 for £17k, pretty much 1/2 price. Now with 93k miles it’s still worth way over £6k and we have less than 1 year and £3k until the £16k loan we took on to buy it is cleared.

I have never in my life had a car loan where 5 years and 80k in the car was still worth over twice the outstanding finance.
 
#8 ·
Used EV and EREV prices in the Uk in 2014-16 were dire due to Unknown’s of EV, little advantage due regulations. Fuel cost savings account as the main benefit. There were also very good new deals on lower range 1st:2nd gen EV’s in 2016 and 17. But the demand, landscape and regulations are changing and used EV prices have risen a lot since 2017. For example we bought low miles (14k) 2012 Chevy Volt in 2014 for £17k, pretty much 1/2 price. Now with 93k miles it’s still worth way over £6k and we have less than 1 year and £3k until the £16k loan we took on to buy it is cleared.

I have never in my life had a car loan where 5 years and 80k in the car was still worth over twice the outstanding finance.
I've had a somewhat similar experience with my 2013 Volt holding its value seemingly comparatively well, so far (though let's not go overboard, ... in my view it's all relative... and the depreciation in general on cars is not something that I like to pay or that I think is somehow "ok"). I bought it in Q4 2017 with about 38k miles for about USD $16k out the door, (which was I guess about GBP 12k), plus there was I think interest on the loan. This was by far the most I had ever paid on a car, as I try to avoid paying for depreciation.

With respect to the ups and downs of other vehicles, I separate roughly into what I think of as good EVS and I-wouldn't-buy-a-used-one unless I had a teenager and wanted to provide an incentive to them drive a reliable vehicle very short distances at moderate and legal speeds.

good:
As far as I can tell, and using Cargurus to do some primitive research on US prices:
the Tesla Model S's have consistently held their value equal to or better than their gasoline exec-sedan cousins (BMW 7-series, Lexus LS 4xx, Mercedes S-Class, etc.).

I haven't really done the same research on the Volt, but both you and I can testify just anecdotally that it seems to be holding up. Both the Teslas and the Volts seem to have been manufactured with at least some extra effort and expense to protect the batteries and perhaps in the long run this is proving out in their used valuations. It's hard to say for certain.

personally would not go there:
early versions of the Nissan Leaf, Mitsubishi i-MiEV, Soul EV, etc. I think these had short ranges for US driving (over-generalizing across drivers and cars and places) and I"m not surprised their values didn't seem to hold up that well over time (though I haven't really researched this properly to see the exact comparison numbers to comparable gasoline vehicles). I leased a 2012 Leaf for 3 years and the battery degraded (this is a hot area) and it will make me reluctant to consider a used Leaf e+ four or five years after they've been in the market, unless I see clear evidence the real-world ranges held up ok in this climate.
 
#11 ·
I suspect the "value" of a used BEV will be very different between UK and USA due to huge difference in cost of fuel, particularly in some states.

In UK, people who did (say) 60 mile commute could (a few years ago) buy a cheap, used Leaf 24kW and in less than 2 years got their money back just through fuel savings. Once people twigged, prices started to rise. Now, with more workplace charging and longer range used EVs, people with even longer commutes are buying an electric.

From 2020 we will see a lot of company car drivers choosing an electric Tesla, Jag, Audi, Porsche, VW, etc. Most will have a 2nd ICE in the family, that will soon be seen to be what it really is! As such, many will look to replace with a (probably used) BEV. IMO demand is only going one way.
 
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#13 ·
Newer EVs are so expensive (I guess because bigger batteries - those don't come cheap)

When I upgrade from the Zoe1 it'd probably be for a battery owned EV (Zoe ZE50?) once they're circa £7k in the used market but based on how even battery lease ZE40s are holding their value and the rising interest in EVs, I can't imagine a 150 mile battery owned EV hitting the used market at that price for a good 10 years yet. I'd love to upgrade sometime, but think more likely this Zoe will be run until it dies and then not sure... possibly finally make the switch to cycling.
 
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#16 ·
I like being able to compare notes overseas. Back around 2012 I thought maybe battery leasing might offer some slight protection against some of the first-adopter issues, but here in the US battery leasing didn't take hold at that time. Still, it's at least interesting to see how it factors in for others.
 
#14 ·
I keep hoping that in 3 years time there will be many ex EV company cars on the 2nd hand macket. Prices of new EV should also be reducing by then. At some point the tax for company car drivers in EVs will have to increase, that should release more into the used macket.
 
#15 ·
I keep telling myself if I can just hold out until Q1 2019 or so, here in the US it seems possible there will be some re-assuring signs of a break in the fever of prices, but in the meantime, it's hard to hold out. If anything used Model S prices have gone up the last 3 months (and maybe the last 6 months) and used model 3s in good condition seems to be not a mature market yet.

 
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