With new electric vehicle prices hitting more than $30,000 for cars such as the Chevrolet Bolt, Nissan Leaf and Hyundai Ioniq, some buyers are turning to the used channel to find a gas-free car at a more affordable price.
There, they often find they can save significant dollars because the residual values of electric vehicles traditionally decrease more than the average internal combustion engine-powered vehicle. The vehicles typically have older technology and don’t benefit from a federal subsidy offered to new buyers.
EVs also require less maintenance like no oil changes, and they have fewer parts, so care by prior owners may be less of an issue—though battery longevity is an additional consideration. Of course, that’s if buyers are able to find a used EV of interest in a fleet that for now remains comparatively limited.
“From my experience, the secondhand market for them is very small,” said Patrick Synor, a 35-year-old technology professional in Oxford, Michigan, who purchased a 2019 Tesla Model 3 EV last month to replace a Jeep Patriot SUV. “If you’re seriously looking to make that switch, you have to do it quickly. See what’s out there on Facebook, Craigslist, Autotrader and other sites. If you find something, jump on it.”
Inspired by gas-cost savings, zero-emission driving and Tesla Inc.’s self-driving Autopilot features, Synor took the plunge on a Model 3 after about two serious weeks of looking. He originally had considered a Model X SUV but found the vehicles twice the price and few were available in-state to test-drive.
He found his Model 3 at Joe Ricci Automotive in Madison Heights, Michigan, listed at $42,500. He negotiated it down to $39,800, about a 16% savings from a new Tesla he had contemplated.
“I have nothing but positive things to say,” Synor said. “If you’ve been thinking about it, but aren’t quite ready, I’d recommend you don’t take it for a test-drive because I guarantee you will fall in love.”
Joe Ricci has seen increasing interest in electric vehicles on the lot, though they typically do sit there for a few weeks before selling, store manager Joe Quinn said. A 2019 Tesla Model 3 on the lot currently has a couple of inquiries, and he’s sold three or four Tesla and Nissan Leaf EVs in the past 60 days.
“Moving forward, we’ll try to get a few more, absolutely,” Quinn said. “If we can go to auctions and get lower-mileage cars, we’re not afraid of it. It’s a different buyer, they are just more concerned with gas mileage, a little more concerned with air pollution, and cost of gas is one of the big motivating factors. But we’re not afraid to sell them.”
Other dealers like Matthew Hargreaves Chevrolet in Royal Oak, Mich., do not see used EVs often and sell maybe one a year, general manager Walt Tutak said. Some buyers may go to online used-car retailers such as Carvana Co. and Vroom Inc. that can pull from inventories across the country and provide a “seven-day test drive.”
Today’s EV buyers still are in the quasi-new adopter phase, said Ivan Drury, senior manager of insights for auto information website Edmunds.com Inc. The limit for many shoppers has been the range of vehicles, and that’s even more evident in the used market.
“What is available in the mass market in the last few years has been kind of supplemental,” Drury said. “These are compliance cars because you have to have an EV for the (high-occupancy vehicle) lane, so you go with a Fiat 500e with 80 miles of range. It’s one of those commuter cars.”
The rise in sales of used, subcompact electric vehicles has been significant over the last two years, growing to nearly double the sales of mid-size EVs, Vroom CEO Paul Hennessy said in a statement to The Detroit News.
Because their everyday and weekend use is limited, such EVs often do not hold their value since they are unable to compete with their used counterparts. Range on electric vehicles has improved over the years, but based on data since October, a 2019 model year on average still loses 27% of its value, a 6 percentage point difference from the average internal combustion engine vehicle, according to Edmunds. An average 2017 model year has lost 57% of its value, 23 percentage points less than the average ICE.
Market-leader Tesla’s vehicles fare better than others, Drury said. And part of the decreases can be attributed to the limited $7,500 federal tax credit available to new car buyers, though Tesla and General Motors Co. vehicles no longer qualify. The rebate is not available to used EV buyers at all.
“With incentives and leases, there’s a lot to be manipulated in the price of new cars,” Drury said. “In the used market, we see their true value. We see what people are willing to pay, and it’s nothing compared to ICE equivalents.”
EV usability, however, is improving. Trade-ins for EVs accounted for almost 30% of purchases in 2020 as buyers now are able to replace the functionality of their ICE vehicles. With 200-, 300- and even 400-mile ranges, used EV value retention is likely to improve in the coming years, Drury predicted. Though if more states follow California’s lead in banning the sale of new gas- and diesel-powered vehicles by 2035, prices of used ICE vehicles could increase, too.
Like batteries in cellphones and other electronics, EV batteries do degrade. Still, that represents less maintenance than ICE vehicles, and as a result, transferable warranties for EVs are often longer and for more miles than traditional automobiles, said Joe DiMaggio, director of customer experience at Current Automotive, a used EV dealership in Naperville, Ill., founded by former Tesla employees three years ago.
The business delivers EVs across the country and even ships internationally, selling on average about 30 vehicles a month: “Every time we grow our inventory, our sales volume increases, and we haven’t hit the limit yet,” co-founder Trip Jacobs said.
One of the fastest ways to kill an EV battery is allowing it to charge fully or letting it drain to zero, DiMaggio said. Most EVs, however, come with software that ensures the vehicle avoids hitting either extreme without sacrificing range.
“There’s not a lot that you can do to hurt or damage it as long as you are using it as intended,” DiMaggio said. “The reality is the battery is going to last for a long time.”
Heat especially wears down lithium-ion batteries, said Nick Di Camillo, a sales representative at JN Auto, an EV dealership in Cleveland, Quebec. Demand for sudden bursts of power needed to accelerate a vehicle from 0 to 60 mph in seconds can deteriorate battery health, too.
“After that,” Di Camillo said, “there’s about 100 million reasons scientific-wise and chemistry-wise that can not be explained why one degrades worse than another.”
JN Auto has upgraded batteries for customers like on first-generation Nissan Leafs after about five to six years, Di Camillo said. That’s improving: “If a Chevrolet Bolt has 240 miles per charge, generally speaking, with the needs they have, it’s probably eight to 10 years minimum before you have to change the battery.”
The dealership uses an on-board diagnostics adapter to evaluate the health of EV batteries. Using the in-vehicle diagnostic system, the device can show how many kilowatts of energy are available.
The dealership reuses batteries for vehicles when possible or finds a new use. With equipment from a Nissan Leaf, it turned a 1950s tractor electric, changed out a lead-acid battery on an electric side-by-side and installed a battery pack to charge a small house in the woods.
“No waste,” he said. “There can’t be waste with electric, or it’s going against the whole idea of electric.”
JN Auto converted to selling all EVs about seven years ago after its owner found his family was spending $9,500 per year on gas. To encourage adoption, it has offered customers the opportunity to rent an EV for up to two weeks, and the conversions are high, Di Camillo said, though he was unable to provide an exact percentage. Rentals are less common now that EV range has improved.
“The No. 1 message I try to get across is: Know what your needed range is,” Di Camillo said. “That will help to determine which model you need at the cheapest possible price for your needs to be met. If you’re a guy who needs an F-150 and goes out and buys a 350, it makes no sense. Evaluate your needs before going electric.”