Resale Values For Electric Cars Continue To Drop – Not For Teslas Though

AUG 26 2016 BY MARK KANE 39

Tesla Model S
2016 Nissan LEAF

2016 Nissan LEAF

Most of today’s plug-in electric cars are still struggling with low residual values.

Car And Driver notes that a five year old EV is damn cheap, despite low mileages and and cars that are working just fine.

The reason according to C&D is the cellphone-like market.  Every year we see cheaper pricing, for better products – in the case of EVs, lessening MSRPs with greater ranges (recently examples of which being the BMW i3, Nissan LEAF, Ford Focus EV).

Another reason given is persistently low fuel prices…but we don’t subscribe to that notion at all, given the rising sales trends in the US against a backdrop of lower gas pricing at the pumps.  That was a talking point in the US from 2015, that has been well-debunked in 2016.

Lower residual values have hit the most popular all-electric model hard – Nissan LEAF, which according to the Black Book, retains just 18% of MSRP after three years and 11% after five years.

“A three-year-old Leaf—a $30,000 to $40,000 car new—returned from lease gets sold at wholesale auction at $6000 to $7000 or, on average, just 18 percent of its original price. For gasoline vehicles, a three-year residual is typically in the 45- to 65-percent range. “To be under 20 percent is fairly telling,” said Anil Goyal, Black Book’s senior vice-president of operations. “A lot of it has to do with demand.””

Because quick value drop, three years old Nissan LEAF SV is sold for the same price as Nissan Versa SV (initially $16,500 cheaper).

Thankfully, Car & Driver is one of the first to also acknowledge the impact of incentives on residuals, and adds some context behind the numbers.

“In all fairness, the original buyers didn’t lose quite that much money. They likely received a $7500 federal tax credit, along with a range of other possible state or local rebates, credits, or incentives; but even factoring those in, owners of a three-year-old Leaf won’t recover much more than 30 percent of their original net cost.”

The Ford Focus Electric is especially hit hard as well, because after just three years is selling $1,400 below the conventional version, despite a starting MSRP $20,000 higher (2x).

The problem extends also to plug-in hybrids. The Chevrolet Volt was for example started out $16,500 more expensive than Malibu LT, but after three years the difference is just $1,700.

It’s not just pure-electric cars that are running low on resale juice—it’s anything with a plug. The Chevrolet Volt plug-in hybrid has underperformed on the used-car lot, too. It stands at just 31 percent of original value after three years (versus the 47 percent norm for compacts).

The only plug-in that stands out on the list is the Tesla Model S, which retains 62% after three years! Growing Superchargers network, over-the-air updates, and strong demand keeps the older Model S prices high.  Also the fact that the $7,500 federal credit, on average, only accounts for about 8% of the total purchase price doesn’t hurt.

Tesla themselves has even resigned from itsGuaranteed Resale Value program for new cars, as the company believes the support is not necessary any more after establishing the brand.

source: Car And Driver blog

Categories: General

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39 Comments on "Resale Values For Electric Cars Continue To Drop – Not For Teslas Though"

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While Leaf, etc. are highlighted, I have to wonder how other EV are doing. Based on some recent forum posts and autotrader listings, used SparkEV are running about $11K (43K miles), which is almost the same as new SparkEV sale pricing post subsidy (about $13K). I don’t know if this will continue or apply to other EV such as Fiat 500e.

11K/13K = 84%. Even used vs non-sale pricing of 18K is 61%, which rivals Tesla.

Some Sparks and 500e have made their way to Phoenix and I see them reguarly on Auto Trader…
They seem to be priced higher than the Leafs here but that could just be a case of limited local availability…
Leafs could be a very good deal depending on your needs and where you are as a used on in AZ just doesnt sound as good as a used on in WA…

Used 2012 Tesla Model S
$47,500 39,294 mi.

Used 2013 Tesla Model S Performance
$47,980 46,412 mi.

There seems to be depreciation here.

Yes, for several reasons, and I’ll give you a few of them:

1) no dual-motor
2) no autopilot hardware (no auto braking, lane warnings, adaptive cruise control, etc.)
3) higher pack capacities available.

And, there could be others based on the specific vehicles for sale, and their location. If they are in an area that isn’t well-served by superchargers yet, then that could be an issue. If there are minor problems with them, then that could be an issue. Any dents or scratches would bring the price down, as well. There are all sorts of reasons for those lower prices, particularly since you’re talking about old models.

I would not be a bit surprised if the 2012 and 2013 60s and 85s have dropped more than the typical Model S trend due to an obsolescence that is not upgradeable, specifically no dual motor and no autopilot hardware.

The good news is that anyone can afford an EV or PHEV today.

That is good news!

Thanks David, for reminding us of the big picture.

GSP

Exactly. State and Federal incentives being passed through to the second owner is indeed a very good thing. When all the crazies claim that EV subsidies go to rich people, this proves them wrong. The people buying a brand new Leaf are not keeping those tax incentives, they are passing those saving they got from the Gov’t off to the next owner.

The first buyer wins because it is money they don’t have to pay.

The second buyers wins even bigger. Because if they keep the car for a number of years, they will end up capturing all of those savings as the Federal Tax incentive sunsets, and used Leaf prices firm up.

(Reprinted From GM-Volt.com) Thomas J. Thias 08.19.2016 Insane M.S.R.P. Reductions-New Chevy Volt Extended Range EV’s Over 7 Model Year Run Insane Base M.S.R.P. Reductions Of New Chevy Volt Extended Range Electric Vehicle’s, Gen 1 Through Gen 2 Over 7 Year Model Run = Now Stunningly Inexpensive Used/Second Hand Chevy Volt EREV’s! MY2011 Chevy Volt EREV MSRP $41,130.00 MY2014 Chevy Volt EREV MSRP $34,900.00 MY2017 Chevy Volt EREV MSRP $34,095.00 The cost, MSRP, of the MY2017 Chevy Volt Extended Range Electric Vehicle has dropped over $7,000.00 since MY2011 was released in late December, 2010. Never, in the history of the North American Automotive Industry has a new car price reduction spread over 7 model year occurred to such magnitude if ever, at all! Former N. American GM President Mark Reuss published this Tweet, dated August 6th, 2013. “mruss @GMdudeinNa @MBurden_dn @GM When we cut cost out of our Volt through engineering and development, we will pass it on to our customers.” Extraordinary MSRP Pricing Reductions over less then 6 calendar years. Unheard of in over 100 years of automotive sticker shocking in the USA. The Fed $7,500 Tax Credit Signed into law under President Bush, The Energy Independence and Security Act… Read more »

Thanks for compiling that. Excited about The Bolt?

EDIT/
US News Best Upscale Midsized Used Cars Under $20,000 Link Fix

“View the best used upscale midsize cars priced under $20,000. Then read our used car reviews, compare specs and features~”

Link Goes To US News, “Best Used Upscale Midsize Cars under $20K” (Hint, Chevy Volt Extended Range Electric Vehicle #1 Of 62!)-

http://usnews.rankingsandreviews.com/cars-trucks/rankings/used/upscale-midsize-cars-1/

Best-

TJT

Anyone is a bit of a stretch, but yes many people can afford them if there’s an EV in their budget and needs class.

*As long as that person has a place to charge the EV.

Here in Finland even the used Leafs are stupid expensive, like 30 000€ or more. It’s no wonder nobody buys them. 6000-7000€ would be a steal.

Regarding the Leaf what do you expect when your original 80 mile car is only a 50-60 mile car and realistically you’re only supposed to use 60% (keep it between 20% and 80%)of that!

Nissan really screwed up with no thermal management which resulted in probably the worst battery degradation out there today. #1 reason I didn’t get one.

That plus it’s really not very desirable nor practical car in my view. I would not take one for free, unless I had to due to financial reasons.

Right. You think they would have gotten a clue after the early initial reports from hot climates like Arizona, demonstrated the inadequacy of the pack design.

No wonder if you can get a NEW Leaf for 11,600 – 20,000 $ in US. Federal tax credit and city incentives combined with dealer cash, too much! Here brand new Leaf for 10,623:
http://insideevs.com/2015-nissan-leaf-for-10623-special-black-friday-deal/
US market is over subsidized.

I got my Ford Focus for $9500. It was on the lot for two years

2014 in 2016 brand new 9500

With the Bolt around the corner, that Ford is barely even worth that IMHO.

This sounds like meaningless noise from people who don’t understand what the numbers mean. These cars most often are not sold at MSRP from the beginning, so how can you calculate depreciation from MSRP? Tesla is exception, but even in case of Tesla effective cost to buyer is some $7500 or $8500 below MSRP.

zzzzzzzzzz asked:

“…how can you calculate depreciation from MSRP?”

Isn’t that the standard way it’s done?

I see your point, but for comparison purposes, if everyone calculates it that way, then it’s the proper way to do a comparison.

The real question is what the price of the Leafs will look like in 2 years when most of their current owners are driving models 3s…
Hopefuly for them their refreshed Leaf will have thermal battery management enough range and a good enogh price to keep some of their customers…

Did anybody pay full retail for the Leaf when they first came out?

The way Nissan structured their wait list, Nissan forced their dealerships to compete for customers on the wait list, with many dealerships offering thousands off of MSRP purchase price.

And calculating Retail MSRP for the initial price vs. Wholesale auction value for the end price (even lower than “trade-in” value) isn’t how these numbers are normally calculated.

Yes, prices of EV’s have come down (both new and used). Especially for 1st gen EV’s. But these numbers are close to meaningless.

If you buy any 2nd gen EV any time soon, these numbers simply won’t predict your resale value in a number of years as the tax incentives start to phase out.

Once the tax incentives phase out, nearly all used electric vehicles will creep up in value, or at least plateau in price and stop depreciating for a number of years.

Nix said:

“…calculating Retail MSRP for the initial price vs. Wholesale auction value for the end price (even lower than “trade-in” value) isn’t how these numbers are normally calculated.”

Okay, so how is it usually done, and how would figuring it the normal way affect the numbers in this article? Is this article using unreasonably low resale figures to paint a false picture of how much value is lost between retail and resale?

I have a Leaf with a least that expires in December. The July offer was for $10.7k to buy it (it is a SV so it was not a base model. I called them and said it needs to be $9k or less. Have not heard back from them yet. My guess is in October they will give me an offer I can’t refuse….

e extend your lease past the date the Bolt and other 200 mole EV and they will have to pay you to keep it!

Nissan dealership doesn’t care what you do at end of lease, if you don’t buy it will go to auction, not there problem, the dealership only wants you to buy or lease a new vehicle.

Let them take it back and buy it at auction yourself – you know how good it is, you can offer more than other people. You’ll probably get it for $7500-$8000

The BMW i3’s seem to be holding up OK — I see them on Carmax for $28K for a 2014

The next time we see a comment on InsideEVs from someone claiming that a large battery pack won’t benefit them, we should just link to this article.

You can’t compare Tesla with non when, up until recently, Tesla had a guaranteed resale value program, where the company would step in to set a floor on the market price. This is similar to how some countries stabilize their currencies.

agree

While I see your point on a theoretical level, the RVG is not the reason Tesla’s resale value is so good.

I have a 2015 and I really want my wife to drive one. But a second new one is not in the financial cards right now.

So I keep looking for a stripper 2013/14 S60, but they are hard to find at what I think is a fair price. I’d love to find a 2013 for 60% of retail after subsidy but it isn’t happening.

We have a 3.5 year old Leaf also but it was never meant for my wife to drive. While she does ok – it isn’t fair for her to have range anxiety (not part of the wedding vows and all).

We paid $24k after TC. I’d imagine $10k would be the best a private sale could give. I suspect I’ll find out soon enough.

Only one way to save this from happening: swappable, upgradable packs and electronics, maybe even body panels. Also, the Leaf STILL needs liquid cooling. They bought back my Gen 1 car, and I won’t get another one until they liquid cool.

Here in the Pacific Northwest the air cooled/heated Kia Soul EV seems to be doing quite well. The only time I have noticed an issue was near the end of the third quick charge after climbing to the top of Snoqualmie pass (I-90) heading east on a warm day. I noticed that it was taking an exceptionally long time going from 81% to 82% SOC. I checked and the cooling fan was running full blast. The car slowed the charge rate down to maintain the battery temperature.

Yes going into the future as global temperatures continue to climb, liquid cooling will become necessary for all BEVs.

I only spent 47% of MSRP on my 2015 LEAF after incentives and rebates.
But still I’m sure it will depreciate quickly.

That is the problem with those calculations.

Tesla are sold at “MSRP” so its residual values are high in terms of %.

No other EVs are sold at MSRP, they are often discounted to 1/3 off the MSRP. So, their residual naturally look worse.