Despite electric cars being seen as the future trend by the industry, consumers still have reservations when it comes to purchasing them. According to the latest report from the authoritative U.S. automotive trading website Edmunds, electric cars have higher depreciation rates, with the value of second-hand electric cars in the second quarter of this year plummeting significantly compared to last year. However, one advantage of second-hand electric cars is that they generally have a newer age.
Over the past year, the value of second-hand electric cars has dropped by one-fifth. Edmunds data shows that the average transaction price of second-hand electric cars in the second quarter of 2023 was $42,482, which has decreased to $33,787 for the same period this year, a sharp drop of 20.5%. In comparison, the price drops for hybrid cars and traditional fuel cars were more conservative at 5.1% and 6.8%, respectively.
Jeremy, a manager at a used car dealership in Southern California, told reporters, “I have found that when people choose a used car, they still prefer traditional fuel cars. Price is an issue; second-hand electric cars are usually more expensive than other types of used cars. Another problem is that the cost of maintenance is too high. Of course, some people want to experience driving an electric car and if they find a reasonably priced newer electric car, they will buy it.”
“Moreover, electric cars depreciate significantly as soon as they hit the road, and when entering the second-hand market, many are nearly halved in value.” He mentioned that a friend of his spent about $60,000 on an electric car, but when he wanted to sell it a year later due to personal reasons, the price dropped by 45%. “The resale value of electric cars is poor, at least that’s the current market situation.”
Ivan Drury, Director of Market Insights at Edmunds, analyzed that previously, due to the continuous introduction of competitive models, the prices of second-hand electric cars skyrocketed, but the sudden drop this time indicates a sudden shift in the trajectory of the second-hand electric car market; the introduction of brand new, more affordable electric car models will continue to drive down the prices of second-hand electric cars.
Experts believe that the volatility of the entire second-hand electric car market remains significant; what is particularly concerning is that an increasing number of car manufacturers are finding it challenging to sell new electric cars without offering substantial discounts.
During the pandemic, tight inventory of used cars and expanding market demand pushed up the prices of used cars in the U.S. to record highs. However, based on Edmunds’ report for the second quarter of this year, the market is cooling off, with overall used car prices down 6.8% compared to the same period last year, with an average price of $27,472.
Industry insiders attribute the cooling trend in the used car market to changes in the new car market: the average amount of discounts on new cars in the second quarter of 2024 rose to $1,687, compared to $611 for the same period in 2023. As inventory normalizes and new car prices drop, prices of relatively newer used cars are also declining.
Research shows that electric cars entering the second-hand market are relatively newer, which is a significant advantage. The average age of traditional used cars is 4.5 years, with an average mileage of 52,478 miles, while the average age of second-hand electric cars is only 2.7 years, with an average mileage of 29,430 miles. For consumers considering purchasing a used car, these lightly driven electric cars have a certain appeal.
Although electric cars are capturing a share of the automotive market, a survey shows that people still have concerns such as “not enough charging stations available, fears of running out of battery while driving, and high costs of battery maintenance or replacement.”
Jeremy also touched on people’s concerns about maintenance costs for second-hand electric cars: “After all, many consumers buy used cars because they don’t have enough money to afford a new car at the moment.” He mentioned that many have also heard about the exorbitant costs of replacing an electric car battery.
Edmunds experts believe that with the significant price drops in the second-hand electric car market, many consumers may be asking themselves: Is now a good time to buy a used electric car? The answer to this question truly depends on the individual. And for consumers financing the purchase of a new electric car, the biggest gamble may be: “How much will the electric car be worth when the loan is paid off?” ◇