Except For Tesla, Used EV Prices Are Scary Low

 

Wondering about buying an EV? Maybe you want to do your part to save the planet. Or maybe you are just tired of paying for gasoline. You could be attracted by the instant torque and quiet ride. But how much will an electric car actually cost you?

the price of a used EV continues to fall





Smart shoppers know the true cost of an automobile includes lots of factors. Purchase price is just one of them. They include fuel, interest, insurance, taxes, maintenance, and repairs. Then there is the big one — resale value. Until you know what your car will be worth when you sell it or trade it in, you really have no idea how much it will cost you to own.

Sadly, if we are talking about an EV, the answer is likely to be bad news. According to Anil Goyal, senior vice president of operations for used car pricing service Black Book, a three-year-old, off-lease Nissan LEAF wholesales for between $6,000 and $7,000. That’s less than 20% of its original sticker price. A similar car with a gasoline engine usually sells for around 50% of its MSRP. A five-year-old LEAF is worth a dismal 11% of sticker price.

Okay. You’re right. The calculations are skewed because they don’t take into account the federal tax credit available for electric cars ($7,500). Please don’t shoot the messenger. But there is no denying that low resale values mean the business case for buying a new EV is harder to make.

The only bright spot in the EV picture for new-car buyers is the Tesla Model S (there are precious few used Model X cars for sale, so we can’t comment on that yet). Black Book says a 3-year-old Model S is worth 62% of MSRP. Why the difference? “To be under 20 percent [for a 3 year old LEAF] is fairly telling,” says Goyal. “A lot of it has to do with demand.” Lots of people want a used Tesla. Not so many want a used LEAF.

There are several reasons for the difference. First, the pace of development for electric cars, especially in battery capacity, is quite rapid. Many people remember when personal computers first became popular. The technology was improving so quickly that the machine you bought in the morning was obsolete by the time you got it home and set up. Only Tesla has over-the-air wireless updates that keep all its cars as technically up to date as possible.

Second, range is a factor. That used LEAF may only be able to drive about 60 miles before the driver feels the urge to recharge it. Any car that won’t go at least 100 miles on a full battery has limited appeal to used car shoppers, Goyal says. That eliminates the original LEAF and the original BMW i3, as well as all the fully electric compliance cars like the Volkswagen e-Golf, Fiat 500e, and Mitsubishi i-MiEV. Every Tesla ever made can go far more than 100 miles on a single charge.

Third is styling. Toyota started it by making the Prius look different from other cars on the road. The idea was to make it stand out from “ordinary” cars. It worked well for Toyota (after many years), so Nissan did something similar with the LEAF. People who own a LEAF are generally happy with their cars, but few would call it beautiful.

Not so with Tesla. Elon Musk has learned well from Apple. Everything he touches has to be appealing to the eye, even if it is a home battery storage system that sits in the basement. The Model S is an attractive car. It still looks good today, nearly 5 years after it first went on sale. The LEAF just looks dated alongside contemporary cars.

Fourth is the proprietary network of Supercharger super-fast charging stations that a Tesla owner can access when away from home. Buyers of other used electric cars are left to fend for themselves as they try to navigate through a complex maze of charging options. In the final analysis, Tesla’s decision to build its own charging network maybe the most brilliant business decision of the 21st century.

Will used EV prices ever rebound? There are a lot of new models coming to market soon. And of course the supply of used Teslas won’t stay low forever. The bottom line is that people are not going to plump down their hard-earned money on a car with awful resale value just to save a few bucks at the pump. Even the most dedicated treehugger doesn’t want to be stuck with a car nobody wants once the honeymoon is over.

Tesla is eating everybody else’s lunch. The others have to figure out how to make cars that people want to own even after the “new” wears off. A big part of that would be a commitment to building a charging infrastructure that is simple to use with enough chargers for everyone. Instead, they are sitting around with their hands in their pockets waiting for the taxpayers to shoulder the burden.

It’s a matter of attitude. The conventional auto companies still see electric cars as a necessary evil, a fad that will pass eventually. They will build enough of them to satisfy regulators, but their hearts are still married to the golden era of the automobile when cheap gasoline for internal combustion engines was the order of the day. By the time they awaken from their long nap, Tesla may be the dominant force in the industry, if it isn’t already.

Source: Car and Driver






About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.
  • HG Wells

    If you have reserved a model three (I was there at 430 in the morning) there is nothing better than a used leaf to tide you over. At these prices it’s almost disposable. Driving electric is addictive.

    • Steve Hanley

      I am impressed by the number of LEAF owners who really like their cars. if it fits your lifestyle, it’s a pretty good car for the money, apparently.

    • Joseph Brown

      I have considered a used Leaf to use until my M3 is ready… but only a very small portion of my days involve driving less than 60 miles. I either drive more than that, or just don’t leave the house.

      The point about the price being in the right neighborhood for a disposable two-year car is well made, though.

  • Rick

    shoot the messenger? You’re one of the very few that deserves praise.

    • Steve Hanley

      Stop it! My wife says I am too egotistical as it is.

  • James

    Consider that the more people that buy a cheap used leaf (like Me) are also doing our part and (if they are like me) are getting hooked and will then buy a new 200 miler ev in the future.

    • Steve Hanley

      That’s an excellent point!

      • t_

        Yeah, low prices help build up demand. I would not buy a new Leaf only to be able to use it for half of my rides. But for a bargain price, I’ll skip the used Mercedes(That I want only for myself and to be able to fix something all of the time) and get a Leaf. An used Leaf capable of 60 miles is way better than a Chinese half car.(That’s what electric you could buy for 7K) Bad news for someone is good news for someone else:-)

  • Chris Overholt

    I’ve been eyeing used Leafs for the past year or so and have noticed the stready drop in prices. I figure when the Bolt comes out prices will take another drop as more people unload their Leafs and buy the Bolt. And another (huge) plunge when the 3 comes out. I am just biding my time driving my 91 Accord Wagon with @ 270k miles. I think Nissan would be wise to buy back the used Leafs and put a 100 mile plus battery pack in them if not more than that.

    Btw, I personally find the leaf’s styling attractive.

    I think the article is right on. Telsa realized that to build the car you have to build the infrastructure, you have to make something sexy, fun and new and up the safety a notch or three. Basically, they had to hit a home run to win. The other companies are just content with hitting singles.

  • Tesla stands out in the used car market for the reasons you state.

    The LEAF is the worst of all EV’s in terms of resale value. The reason is clear, battery fade, companies that don’t stand by their Gen 1 product will find resale values plummet and new car sales soften.

  • Robert Pitts

    Tesla powerwall is a cool project but i am likely to wait for Neutrino Inc home battery and other analogs and then choose one.

  • Robert Pitts

    Well, most of EVs are weak nowadays. Tesla is strong but their price is keeping right rate even if we talk about used cars. All other EVs are pitiable but when you’ll see evs from Mercedes or Neutrino GmbH then even used evs of these manufacturers will be at a right rate, not like now.

  • GregS

    The Leaf already has a crappy range, by the time it’s used even fewer people will want a car whose range has declined significantly. Maybe the next Lead will address this shortcoming

  • Limelight Electric Limo

    You neglect to mention the BMW i8, which seems to also have excellent resale value. Hard pressed to find a used one for less thank $100K. The reason is that most people do not want a car that looks like a BMW i3 or leaf. I think i am one of the few people i know who cars more for function than form. My wife and son would not be seen dead in a leaf while i appreciate the electric drivetrain at a low price. The i8 looks very cool and virtually everyone loves the styling. Plus it’s relatively fast and handles well (i hear). Not sure why car companies seem to ignore styling of electric cars. They do so at their own peril.

    • Steve Hanley

      The i8 is a fabulous car and I would love to own one. But I do not include it in this conversation because there are so few of them on the road.

  • fixerdave

    Well, last year I paid $400 for my wife’s ’95 Neon, and another $200 for tires. A few minor back yard repairs and it’s been fine. Nice car actually. A year and half ago, I paid $985 for a ’97 Chrysler minivan, and another $200 or so in home repairs since. Let me know when the Leaf gets down to that level.

    Oh wait, it won’t, ever, because the battery pack will wear out and will always cost more. That’s the fundamental problem… electric vehicles don’t age well. I can’t rebuild a battery like I can an engine. Eventually, there will be replacement packs for popular vehicles, for a few grand, but they will never have an end-of-life cheap like gasoline engines. I could literally keep that ’95 Neon on the road for the next decade (I have a spare engine/tranny for it already), and pay for all it’s fuel, for what I could buy an old Leaf… and a battery pack to make it actually drive anywhere, probably need 2 packs over 10 years.

    Once the body gets to the point where an EV is not worth a replacement battery pack, and that’s not particularly old, then the whole car is landfill, useless garbage. Environmentally, that’s pretty sad. There’s no long tail to ride for backyard mechanics like me. I will probably never own an EV. Not unless I can mail-order replacement battery packs for $500. Even then… the EV would have to be in pretty good shape to justify it.

    Probably, in 10 years or so, I’ll dump all my vehicles and just take self-driving EV taxis like everyone else. EVs will never be cost effective to own for anyone with a set of wrenches and the skills to use them. That’s actually a lot of people… I’m not that weird.

    • Steve Hanley

      Not weird at all, Dave. I myself have done considerable wrenching on beaters myself, mostly MG’s. But you are definitely not mainstream. I still change my own oil, but I don’t know anyone else who does.

      I prefer to think of people like you and me as “atypical.” ; – )

    • t_

      Most of that is true. Batteries make the car useless in no more than 7 – 8 years. But with more electric cars sold, there should be batteries for sale. And with the batteries at lest for now is the case – pay more at the start and less at the end. Gasoline is going to cost more. May be not today, but…
      I used to use an old Citroen. Nice car, convenient, but with many repairs it gets too unreliable. Used it till its 17th year and sold it for scrap.

      • Steve Hanley

        I drove a Citroen during a rally at the Lane Motor Museum in Nashville several years ago. Nice car, until it stopped working 20 miles away from the museum!

        • t_

          Haha, so you know very well what I mean. Actually I did not have a single problem with the engine. Almost everything else I changed – suspension, clutch, brakes, even the key mechanism. It began to cost as much as a new car.

  • Kenny Heggem

    I like the imiev. Off lease they are like 5 grand with less than 30k miles, 2012 models. I would assume a battery would be like 2 grand to replace in around 10 years? Off here? I would gladly pay that for all the attributes. No gas for all those miles. No oil changes. No tune ups, rare brakes. I am also kinda atypical.. Last car I had was an 87 Chevy Sprint Turbo that I sold in 2010, owner since 1993. I still own my 92 VW GTI 16v, bought 13 years ago.