Those looking to re-sell their EV could be getting less than they expect with the current trend. (Source: Getty/TikTok/Paul Maric)
Electric vehicle (EV) buyers are being warned of the tens of thousands of dollars that will likely be wiped off the value of their cars when they’re put back on the market. Resale value is one of the biggest issues plaguing the industry as rapidly evolving EV technology quickly makes older models less appealing.
Cox Automotive found EVs only hold 55 to 60 per cent of their value after three to four years. That’s fairly dire compared to internal combustion engines (ICE) that use petrol or diesel, which typically hold a resale value of 75 to 80 per cent.
CarExpert.com.au founder Paul Maric told Yahoo Finance EV owners should upgrade their car every two years to ensure they don’t lose too much value on their investment.
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“Once you get to the point of three or four years old, you’re getting to the end of the new car warranty and you’re halfway through the battery warranty.
“No one really knows what’s going to happen in 10 years after an EV is produced. You don’t know the cost of having to replace a battery.”
He pointed to the Nissan LEAF, the world’s first mass market electric and zero-emission vehicle.
While some of the earlier generations of the vehicle were able to go up to 200 kilometres on a single charge, he cautioned that an older version might have a significantly shorter range before it needed to be recharged because of how the batteries degrade over time.
“Two years is that sweet spot and means that you can manage your depreciation effectively. If you are holding on to it longer, you just need to be prepared for a lot of volatility, a lot of volatility in that market,” Maric said.
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Tesla has slashed the price tag on its Model Y by $16,000 over the last few years, with the Rear-Wheel Drive version now costing just $58,900.
It was the most purchased EV in Australia for the first half of this year and one of the most popular year-on-year. But if that car wound up on the second-hand market by the end of the decade, it might only be able to fetch around $32,395, according to the lower end of Cox’s analysis. That equates to a $26,505 drop in value.
Tesla has taken a hit to sales this year but still dominates the EV market. (Source: Reuters) · REUTERS / Reuters
It would be even more brutal for those who bought before the car manufacturer started slashing its prices in late 2022.
“If you were someone like me who took out a novated lease on a Model Y at $70,000,” Maric told Yahoo Finance. “That three or four-year lease is about to come up to its expiry, and I now have to pay a balloon payment on that car, which is the residual payout amount for the car.
“We’re at the point now where the balloon that I’m paying is more than what the car is worth on the second-hand market. So now it’s basically a fire sale.”
The huge plummet in resale value is largely down to how fast EVs have been able to outdo their predecessors in the defining component of the car: the battery.
It seems like every year, manufacturers reveal they have discovered a new technique that allows their vehicles to go further on a single charge, which aims to reduce range anxiety that concerns many owners and potential buyers.
ICE cars, by comparison, have very little change in their petrol or diesel range, and the main updates year-to-year is how the vehicle looks and drives.
If an EV in Australia can go an extra 100 kilometres compared to one from two years ago, that latter one might not be as popular amongst second-hand buyers who want the best bang for their buck.
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