The Collapsing Market for Used EVs

Buck Throckmorton17 Feb, 2024 4 Min Read
Plenty of parking.

Buying a new electric vehicle is like buying a wedding ring. It’s expensive upfront, but not worth much when the relationship ends. That is suddenly becoming a huge problem for E.V. manufacturers, because without a secondary market for E.V.s, the cost of ownership is much higher, providing yet another reason for the car-buying public to reject “the electric vehicle transition.”

The market for used E.V.s is crashing as consumers have quickly come to realize that electric vehicles have a short lifespan compared to internal combustion engine (ICE) vehicles and hybrids. The lithium-ion batteries in E.V.s have a useful life of about 10 years, and with the cost of a replacement battery likely to be in the five-figures, battery-replacement-time for an E.V. pretty much means that it’s time for the car to be scrapped. E.V. manufacturers generally provide an 8-year battery warranty, but beyond that, battery failure effectively means the vehicle is a total loss, albeit one without insurance to cover the loss. Therefore, owning an E.V. pushing its 10th birthday means you own a car that could suddenly become worthless.

Such a deal.

With E.V.s rapidly depreciating to a value of $0 as their batteries age, consumers naturally don’t want to find themselves in the position of trying to sell a 6 or 7-year old E.V. that has little value due to its useful life being almost over. This, of course, compels them not to want to purchase a 3 or 4-year old E.V., which in turn makes it difficult for the original owner to sell his E.V. Ultimately, this depresses the entire market for new E.V.s since there isn’t a solid secondary market. Beyond the imminent battery death, there is also battery degradation, which makes the already limited range of an E.V. even more limited after a few years, which also repels potential buyers. Degradation is so bad that Tesla only warranties 70 percent charge capacity on its 8-year battery warranty.

By contrast, the typical ICE vehicle has not even reached middle age when the typical E.V. is taking its last charge. According to a 2023 article in Road & Track magazine, a study of 283 million vehicles on U.S. roadways found that the average passenger vehicle is 12.5 years old. This would indicate that there are about 140 million vehicles on the road that are older than 12.5 years. Reliable old “beaters” that can inexpensively be kept running are a critical component of the automotive market, one which E.V.s are incapable of replacing, or even participating.

How bad is the collapse of used E.V. prices? From late 2022 to late 2023, the average price of a used E.V. declined by 33 percent. Overall used car prices fell by 5.1 percent over the same period, a number that would have been smaller had it not included used E.V.s along with ICE vehicles. From a recent article in The Autopian: Black Book predicts the average 3-year-old vehicle in October 2023 held 66 percent of its original value…” By contrast, “The average 3-year-old EV, however, only held 49 percent of its original value in October 2023.”

What about even older used cars? By digging into Kelley Blue Book I found out just how poorly an E.V. holds its value as it ages. These two passenger cars, both 4-door Japanese makes, now have similar value. Let’s compare:

  1. A 15-year old gas-powered 2009 Honda Accord LX 4-door with an original suggested retail price of $22,415 sells on average for $6,964, which is 31 percent of its original MSRP.
  2. A 7-year old 2017 Nissan Leaf E.V. 4-door with an original MSRP of $35,085 sells on average for $7,778, which is just 22 percent of its original MSRP.

The 15-year old ICE car has depreciated by only $15,000 while the 7-year old E.V. has depreciated by $27,000.

Leasing is a way to avoid the risk of having to unload a new E.V. in a couple of years, but with used E.V. prices plummeting and auto lessors taking a financial beating at lease-end, residual values on new E.V.s will have to adjust downward, driving up the price of new lease payments:

“When a car loses 1 percent of its worth, I make 1 percent less profit,” said Christian Dahlheim, who heads VW’s financial services arm. The issues with secondhand EVs, he said, have the potential to destroy billions of euros in earnings for the broader industry.

Hertz’s disastrous embrace of “the electric vehicle transition” and its subsequent decision to unload 20,000 E.V.s resulted in a $245 million unplanned depreciation expense due to the collapse in the marketplace for used E.V.s. Rental cars are normally depreciated during their time in service such that the rental car companies don’t take a loss against their book value when cars are sold. But Hertz’s staggering loss amounts to an additional $12,500 loss per unit from selling its electric albatrosses.

An albatross by any other name...

And finally, one real world story from an individual who made the regrettable choice to buy a new Chevrolet Bolt in 2021, only to learn a few years later that used E.V.s have little value or interest among auto dealers. In this Forbes piece titled “Hard Lesson As Used Electric Vehicle Prices Crash” the unfortunate Bolt owner, who paid $32,000 for his E.V. in 2021, learns that it is only worth $14,000 now at a CarMax in E.V.-friendly Los Angeles.

Mind you, my Bolt has been garaged with not even a scratch (that I can see) and with about 20K miles on the odometer. It has, to boot, a new battery that General Motors installed because of the battery recall. Unfortunately, none of that matters much to a used car dealer.

This Bolt owner’s immaculate, low-mileage car that is less than 3-years old has depreciated by 56 percent because the driving public has made the very rational decision to avoid purchasing used E.V.s. With a collapsing secondary market for electric vehicles, the market for new E.V.s will see increasing customer resistance.

Buck Throckmorton is a writer ("co-blogger") at the Ace of Spades HQ blog. His career includes many years in banking and commercial lending, as well as a stint with an American auto manufacturer. Buck's writing often takes a critical look at electric vehicles, "green" energy, and woke capital. Twitter: @BuckThrockmort; email:


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4 comments on “The Collapsing Market for Used EVs”

  1. The EV car makers need to redesign the batteries so that they (1) reliably last for 40 years, and (2) cannot catch fire or explode. Thanks to all EV buyers who took part in the beta test. Sorry for your loss.

  2. Wait, I saw a review of the documentary "Who Killed the Electric Car?" and it said that first of all, consumers are just to stupid to understand the benefits of electric cars, second, the oil companies are evil and sabotaging sales, and that even the automakers such as GM aren't devoting enough resources into EV development because they just want to sell giant Hummers with huge profits. It also said that if US consumers weren't so EV-dumb and everyone bought them, "economies of scale" would mean automakers would be able to invest more and the EVs would be better today.
    Gosh, I'm just no sure who or what to believe. (sarcasm/off)

  3. The problem is our government and other governments are so fully corrupt from the Leftist takeover, there are no real scientists left that are honest. The people running our country are so intent and entrenched in the CO2 lie, that they will NEVER speak against it for fear of retribution. We really do need a massive draining of the swamp, but it needs to be done quickly enough to capture all of their incriminating emails and corruption. The FBI is rotten, as is the DOJ, so it would be really hard to return to normal, small govt.

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