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After one year, the trade-in value of many used electrified vehicles is comparable to the mainstream used car market, according to a new report by the National Automobile Dealers Association (NADA).
Within three years, says NADA, some models can slip to as low 20 percent of their original purchase price.
In its first ever Electric Vehicle Retention Report Card, NADA listed the retention values for almost 20 vehicles built in the last three years. Despite the misleading name, the report includes both battery electric and plug-in hybrid vehicles in its electrified vehicle (EV) category.
To calculate the values, NADA divided the average trade-in value of the vehicle (using data sampled between March and May 2015) with the vehicle’s typically equipped Manufacturer Suggested Retail Price (TE MSRP).
“For the most part, used EV prices continue to be very soft, which really isn’t much of a departure from how prices have tracked over the past couple of years,” NADA said of the used EV market overall. “Used EV demand continues to be hampered by range and technology concerns, as well as by stiff competition from highly efficient – and more affordable – gasoline-powered cars.”
The NADA’s report spanned models built from 2012 to 2014, breaking down the values based on one-year, two-year and three-year values. NADA said it plans to release an annual update of this information.
At the top of all three lists is the Tesla Model S, with retention values as high as 83.1 percent. To help maintain higher used car values, Tesla guarantees that all Model S sedans will be worth at least 50 percent of its base price after three years (the company includes an additional 43 percent for the original price of any upgrades).
“Tesla and Porsche’s relative strength can likely be traced back to their luxury status,” said NADA of the two brands ranking at the top of the one-year retention list.
“For example, the Model S and Panamera S-E are expensive vehicles purchased by affluent consumers. Demand for the two has been predicated on owning a vehicle with cachet and exclusivity. These luxury vehicles are status symbols and often do not compete with the large pool of mainstream, gasoline-powered substitutes, but rather a rarer group of more technologically advanced performance models.”
Concerns over aging batteries (which are expensive to replace) and less-than-new technology can lessen the appeal of EV models that compete with conventional midrange sedans, such as the Chevrolet Volt.
The Nissan Leaf especially struggles with its used car values, falling towards the bottom of all three charts.
For 2013 EV models, NADA reported that the Toyota RAV4 EV and Prius Plug In ranked just below the Model S, with retention rates of 55.8 percent and 53.6 percent (respectively). These values are not far from the gas-powered Toyota Corolla (with 56.8 percent retention for 2009 to 2013 model years) or the Honda Civic (calculated at 54.3 percent retention for 2006 to 2011 model years).
Just under the Toyotas are two Ford plug-in hybrids, the Fusion Energi (at 46 percent) and C-Max Energi (at 42.2 percent).
Only a handful of vehicles appear on NADA’s list for the 2012 model year. At three years old, trade-in values dropped sharply for cars listed below the category leaders, Tesla Model S and Toyota RAV4 EV. At the bottom is the 2012 Mitsubishi i-MiEV – its current $6,166 trade-in value is significantly less than its original typically-equipped MSRP of $29,975.
“Moving forward, many three-year-old EVs are now nearing or already to the point where they are no longer covered by their respective manufacturer’s basic warranty due to age or mileage accrual. This is a potential concern since an extra layer of risk is being added into the mix when used EV buyers are shopping for vehicles,” said NADA.
“As mentioned previously, technology concerns are one of the biggest drawbacks for prospective EV buyers, and the lack of warranty coverage will undoubtedly increase this hindrance further and erode prices on out-of-warranty vehicles accordingly.”