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?
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