Cheap Gas Is Driving Down Electric Car Residual Values
Not so good news is coming from analysts dealing with residual values of cars.
According to an Automotive News article, residual values of hybrid and electric cars will decrease even further.
“Kelley Blue Book projects the collective residual value of 2016 hybrid and electric vehicles sold in January and February to be 29.5 percent after 36 months. That is 4.1 percentage points lower than the 36-month residual projection it set for similar vehicles sold a year earlier.”
Well, we think EVs are even more affected by the value drop than ICE because the market is in the early stages, and new models are significantly better than previous ones – cutting the legs out of older models…such as the next generation of Chevy Volt and upgraded Nissan LEAF. These kinds of step-changes just don’t apply in the mature ICE market.
Of course, there could be other reasons like battery capacity drop, promotion of free fast charging for new cars over used. Most of the articles don’t include federal tax credits, which we know affects the residual value tremendously.
Anyways, lower gas prices makes people less interested in new or used fuel-efficient models – small cars, hybrids and electric. That concerns both, new and used ones.
“Low gasoline prices played a big role in trimming those values, said Eric Ibara, director of residual values at Kelley Blue Book. In 2012 — when the average price of gasoline nationwide was $3.60 a gallon, according to AAA’s website — KBB projected that gasoline prices five years out would be in the range of $3.50-$4 a gallon, Ibara said.
KBB’s current prediction puts gasoline in the $2-$3 a gallon range in five years, he added.”
And the effect of lower gas prices has a dual nature, because there are a growing number of off-lease compact cars, bought when prices of gas were high. The more used fuel-efficient models on the market, the lower their price will be. Sounds like a great buying opportunity then. Although we do have to note that the last 3 months of sales for plug-ins in the United States have each set new all-time records.
NADA forecasts about 521,000 off-lease compact cars in 2016, up from some 380,000 in 2015.
Nissan LEAF doesn’t shine with residual value:
“The NADA guide data show that in the fourth quarter of 2015, a 2012 Nissan Leaf retained just 16.7 percent of its “typically equipped” sticker price; a 2013 Leaf retained 25.1 percent, and a 2015 retained 29.8 percent.”
Chevrolet Volt residual value is falling, but the new 2016/17 version is expected to hold value better:
“Kelley predicts the 36-month residual value for 2016 Chevrolet Volts sold in January and February at 29.5 percent, down from 32.0 percent predicted for the 2015 Volt in the same period last year. But after tracking the actual transaction prices of the 2015 Volt, Ibara said, Kelley now forecasts that vehicle’s residual value at “under 30″ percent 24 months from now.”
“The 2016 Volt is redesigned and has a longer range so “we think the 2016 Volt will hold its value better than the 2015,” Ibara said. “Our forecast was too high last year.”
Source: Automotive News