Over the last few years, electric vehicles (EVs) have become something everyone is more aware of, and there are plenty of reasons why someone might choose to buy one over and above a traditional petrol or diesel vehicle. For one thing, they promise reduced emissions, they have lower operating costs, and they’re a good way to become more sustainable, which is great for the environment.
However, although all that is true, and although EVs are gaining in popularity, there’s another noticeable trend; the big depreciation of second-hand electric cars. This phenomenon has left many potential buyers scratching their heads in confusion, wondering exactly what’s driving this reduction in value, so with that in mind, let’s take a look at some of the contributing factors.
One of the biggest reasons why there’s a big depreciation in the value of second-hand electric cars is quite simply the fact that technology is moving on quickly, and what was once a state-of-the-art electric vehicle is actually not all that great by the time the owner comes to sell it on. Newer models often come with enhanced battery technology, longer ranges, and generally improved performance compared to older EVs, and as a result, those older cars can quickly become outdated in terms of technology, making them much less desirable in the eyes of potential buyers.
On top of that, advancements in the way cars can be charged and software updates can also help explain the depreciation of older electric cars. Buyers are often willing to pay a premium for the latest features and conveniences, and that leaves older models at a big disadvantage when it comes to resale.
When you think about it, the battery is one of the most important parts of an electric car, and how it works (and how well it works) will directly impact the vehicle’s performance and range. As time goes on, lithium-ion batteries degrade, and that means reduced capacity and range – it’s called battery degradation, and you might have noticed it happening on your smartphone, for example. However, while you can easily upgrade your phone, upgrading a car is more expensive and time-consuming, and you’ll want to make good choices – that’s why second hand EVs are less desirable (why would someone who’s battery is degrading opt to be a car with an older battery?).
In other words, buyers might not want to buy a car if they’ve got concerns about how much life the battery has left or how well it will perform for them – the perceived risks mean that second-hand EVs drastically lose value, with many people opting for newer versions so they can be sure of the battery life.
Unlike traditional vehicles, the resale market for used electric vehicles compared to their gasoline-powered counterparts is much smaller, and as a result, there’s limited demand for second-hand electric vehicles. It’s clear that if there’s no demand, the price is going to tumble, and that’s precisely what’s happening.
There are plenty of factors that go into why people might not be convinced by electric vehicles just yet, despite the positives that come with them. For one thing, the battery and range issue is always going to be a question mark – where is the car going to be charged? How much will it cost? Plus, since standard cars are a lot less expensive and easy to buy, many people choose to save their money and, after a free car reg check to make sure all is in order, they’ll stick to what they’re used to and what they understand – yes, it might be worse for the planet, but if it’s better for the wallet and for peace of mind, that’s often going to win out.
Government initiatives and incentives are fantastic when it comes to EVs – they give people plenty of information, and they offer price reductions to ensure those who are on the fence make a decision in favour of the electric car.
That all sounds wonderful, but these schemes have their downsides too. Because they’re targeted towards new vehicles, it means that older second-hand electric cars won’t even be considered. After all, if the government is offering you money off a brand-new EV, why would you choose a second-hand one? Since there’s no government support for second-hand electric cars, it’s obvious that their value is going to seriously depreciate.
Perception and awareness also play a crucial role in the depreciation of second-hand electric cars. Although there are environmental benefits and plenty of cost savings associated with EVs, some people might still have reservations about buying one. It could be about using the new technology, where the charging stations are, how safe electric vehicles are, and so on. They’d rather wait until they become more mainstream and the waters have been thoroughly tested.
