Electric-vehicle residual values continue to fall, with the exception being the Tesla Model S.
Black Book, a car-pricing guide firm, is showing that prices for the 2013 Nissan Leaf are averaging 22 percent of the original sticker price, putting them at around $8,000 to $8,500, while five-year-old Leafs are selling at 11 percent. This, it’s being suggested, could be due to consumers being unwilling to live with differences in ownership experience that occur with an EV – mainly short range and long charge times.
Black Book says that three-year-old Leafs are fetching about 18 percent of value at auction, while the average for an internal-combustion engine vehicle would be from 45 to 65 percent.
“To be under 20 percent is fairly telling,” Anil Goyal, Black Book’s senior vice-president of operations, told Car and Driver. “A lot of it has to do with demand.”
Thanks to tax credits, the resale value hit won’t hurt the original buyer as much as it could, but even when federal and local tax credits and other incentives are factored in, buyers are still fortunate to recoup 30 percent.
It’s not just the potential downsides of EV life – such as diminishing range or the cost to replace batteries – that’s causing the drop in resale value. The sticker prices of new EVs are steadily dropping while new, updated and upgraded models are hitting the market, thus causing some EV intenders to play the waiting game before buying. Furthermore, the lower cost of newer and better EVs means that buyers can snag the most up-to-date model at a good price, thus driving the price of used vehicles down.
“The auto industry hasn’t really seen something like this in a while; it kind of mirrors the electronics industry,” Goyal said.
Styling is also an issue, according to Goyal, as the unusual looks of some of these vehicles drives would-be buyers away.
Increasing range for upcoming models is also driving the trend. Many consumers find 100-mile ranges to be too limiting, and with a slew of upcoming models (the Chevrolet Bolt, Tesla Model 3, and perhaps the next-gen Leaf) offering ranges of over 200 miles, some consumers are simply on hold.
Plug-in hybrids have struggled with resale value, too, with the Chevrolet Volt holding at 31 percent instead of the more-typical 47 percent for compacts, as just one example. One analyst said that consumers may not fully understand how plug-in hybrids work or that they don’t need to be plugged in after use every time. Lower fuel prices may also mean consumers aren’t seeing significant fuel savings by going hybrid, and overall, the compact segment, which many hybrids belong to, has taken a resale-value hit as consumer tastes shift back to SUVs and crossovers in light of the lower fuel prices.
Tesla an Exception
Tesla has bucked the trend by cultivating an image that appeals to consumers, as well as offering over-the-air software updates and a range of over 200 miles in the Model S. The Tesla Supercharger network also helps, as it gives Tesla buyers access to quick-charging infrastructure.
The Model S has a resale value of 62 percent after three years, despite some concerns about build quality that have plagued the small automaker.
The setup of the initial EV leases plays, a part, too – automakers sometimes took cash hits on them in order to move the vehicles off the lot, usually in an effort to meet government mandates for zero-emission vehicles. Automakers were trying to drum up sales, regardless of how strong consumer demand actually was.