Used EV prices bottom out as bargains tempt buyers

Used electric vehicle prices bottomed out in September and October and even outperformed those for petrol and diesel models, new data shows. Budget models such as the Renault Zoe and Nissan Leaf actually rose in value during the past two months, according to figures from used market analyst CAP HPI. The figures give car manufacturers cause for optimism after used EV values fell a cumulative 44% in the 12 months to the end of August as used buyers baulked at the high costs. The whole industry has been watching nervously for indications of health in the used EV market, with many worried that the legislative push and company car incentives weren’t being matched by consumer pull. Finally, after a grim year, a more rosy picture is emerging, albeit with caveats. “We’ve seen some stabilisation,” Derren Martin, director of valuations at CAP, told Autocar. CAP monitors used dealer prices and, based on evidence from the market, affixes a value on individual models across a range of age and usage milestones. Using the industry standard of three years and 60,000 miles, CAP calculated that electric car values fell by just 1% in both September and October, the smallest fall in 12 months and better than the 1.9% drop for petrol and diesel models. “Used EV pricing appears to have bottomed out,” Robert Forrester, CEO of dealer group Vertu Motors, wrote in his company’s six-month financial report, published in early October. “A new, more affordable base price has been established and therefore demand and supply are much more aligned.” However, the overall figure hides some wildly different price fluctuations. “That 1% average doesn’t paint anywhere near the picture,” Martin said. The Seat Mii was the biggest climber in October, with values up 3%, while the Nissan Leaf, Renault Zoe and BMW i3 all rose 2%. The MG 5 was the winner in September, up 3%, closely followed by the now discontinued Hyundai Ioniq EV. All are cheaper models. “They look good value,” said Martin. “The cars dealers are keen to take models that are three years old and priced around £10,000 because they know that people want them and they can make a profit.” These cars are experiencing what Martin calls the hockey stick effect – prices fell to a level buyers are happy with and are now climbing again. More expensive models are still suffering as buyers baulk at higher used prices, which dealers are then forced to reduce to generate interest. “Cars that haven’t had large drops previously because there wasn’t much supply in the market are now coming down by a large amount,” Martin said. He cited the Audi E-tron GT and the BMW iX1, down 3.5% and 3.6% respectively in September. There were also big falls in October for the Mercedes EQC (down 5.9%), the Kia EV6 (down 5.1%) and the Lexus UX (down 5%). The Tesla effect is hurting more premium cars, according to Martin. Tesla’s price cuts and the wide availability of used Model 3s mean that a good stock of used cars is available between £20,000 and £30,000, setting a benchmark for the market. The fact that new electric cars are now getting cheaper is also hurting used prices. For example, Mercedes is offering a £8600 discount on the EQC while Ford has cut the price of the Mach-E by £7000 across the board, matching the Tesla Model Y. With car makers trying to gee up sluggish sales with low-interest finance and discounts, the monthly payments on new EVs can be similar to the repayments on used cars, hurting values. However, the lower values are tempting in deep-pocketed dealers such as Vertu, who is betting that their low prices represent good value. “The group continues to buy used electric vehicles since they represent a market opportunity at lower prices,” Forrester said. Two opposing forces are working on electric car values further into the future. One is the ZEV mandate, which will force car makers to push EV sales to 22% of their total next year. That will put more electric vehicles into a marketplace that hasn’t shown it's ready to soak up the supply, especially among private buyers (which used buyers almost always are). The other is the shortage of used cars as a result of Covid and subsequent chip shortage. Martin estimates that 2.5 million cars weren’t sold that otherwise would now be pouring into the used market, helping to bolster values in a tricky period when supply is outrunning demand. However, with electricity prices high, continuing concerns about the charging network and an undercurrent of negativity about EVs in general in the right-leaning press, some government encouragement might be needed to juice the used EV market in the short term.