It’s only a decent time to be in the market for a used car, as prices have continued to come down off of their record highs, but it’s a great time to be buying a used electric car, as prices are dropping rapidly according to a new report. There are lots of reasons that used electric cars are worth less, proportionally, than their gas counterparts and I’ll detail them below. There’s also one big reason why used EV values are likely to only get worse.
Welcome to another week of The Morning Dump, this time with 100% more Serbian car news! We’ll be talking about Serbia this morning because I’m always amused by how tall Serbia’s President is and it dovetails nicely with news of GM’s latest contract to provide vehicles for the U.S. State Department.
And, finally, this global Dump takes us to China, where Toyota continues to face weak sales and Tesla continues to lose ground to BYD.
The Used EV Bloodbath
As you’re probably aware, the used car market has been super weird for the last few years. In 2019, used vehicles still followed a pretty predictable depreciation curve and there were enough off-lease vehicles and post-rental fleet cars to keep values relatively in check.
Then the pandemic happened, roughly concurrent with a few natural disasters, as well as government stimuli, and we entered what I like to think of as the “Carvana times” when a general lack of supply caused used car values to get super whacky. This was the era of people getting offered more for their used cars than what they paid for them.
ADVERTISEMENT
This was not sustainable, obviously, and the slow return of regular new car inventory and higher interest rates has put downward pressure on prices. You can see the above chart, from Manheim/Cox Automotive, which shows prices quickly declining, though still at levels well above historical norms.
I’m a little jealous because Automotive News got to go to the annual Auto Finance Summit in Las Vegas on Halloween (best party in town!) and has some great insights to share, though I’m not sure why it took so long to file the story. I guess what happens at the Auto Finance Summit stays in… et cetera et cetera.
Here’s the overall look at the market:
Black Book predicts the average 3-year-old vehicle in October 2023 held 66 percent of its original value, down from 73 percent last year but up from 51 percent in October 2019. The company predicts this stat will decline to 56 percent by October 2026.
This means that by October 2026 we’ll be back to almost normal for the used car market as a whole. What about the electric vehicle market?
The average 3-year-old EV, however, only held 49 percent of its original value in October 2023, down from 70 percent last year but up from 33 percent in October 2019. Black Book expected EVs of that age would keep 45 percent of value in October 2026. It also said comparing the future EV market to previous years was difficult “and probably useless” because of the more diverse mix of EV body types in the pipeline.
As Ed Ruscha said: OOF.
ADVERTISEMENT
A 2020 MY electric car, on average, is worth less than half of what it was sold for three years earlier. That number is going to drop to an even lower number in a few years though, uh, who knows, because in 2020 there were still some Leafs and some Model S/3s and now we’ve got Polestars and Vin-Fasts and all sorts of new stuff.
So why are EVs faring worse than their gas-powered counterparts? Here’s a good list of reasons:
- Well-maintained, a gas-powered vehicle maintains most of its same capability over its lifespan whereas the batteries in electric cars, currently, offer less value over time. [Ed Note: This was definitely the case with early lithium ion-powered EVs like Nissan Leafs and BMW i3s, but newer EVs aren’t expected to see nearly as much battery degradation over their lifespans. -DT].
- Many electric cars are luxury cars, which already face higher depreciation.
- Whispers: Infrastructure
- David Tracy.
- The best-selling EVs over the last few years have been Teslas.
- Tesla has continually and consistently lowered prices, causing the value of used Teslas to drop in turn.
- David Tracy.
- Tesla’s price drops have created a price war that’s caused other automakers to lower their prices.
- EV sales are rising and, eventually, most of those vehicles will become used cars.
Those are all logical reasons why electric car prices have gone down. But why might they go down even more than currently predicted? Again, from Automotive News:
LOL. So companies like Polestar and Hyundai can’t get any tax credit if they sell the car, but those companies can get a partial credit for any leases, which is why so many companies are offering great lease deals on electric vehicles.
That’s all well and good, for now, but in three years there’s going to be a large number of off-lease vehicles suddenly flooding the market, which should only put more downward pressure on used EVs.
ADVERTISEMENT
So, yeah, if you wanted a Tesla maybe wait a bit and grab a used one?
Serbia To Build EV Fiat Panda
What percentage of this post is me wanting show this picture of Italian PM Giorgia Meloni and Serbian President Aleksandar Vucic? Non-zero, that’s for sure. At 6′ 6″ Vucic is one of the tallest world leaders and, at maybe 5′ 1″, Meloni is one of the shortest.
Serbia and Italy have a long and complicated history, though they’ve generally been allied with one another and are both led by generally conservative executives with equally complicated histories. That’s not worth exploring now, because it sounds like Sebria will be making the new EV Fiat Panda, according to Reuters:
Vucic who spoke after meeting Italian Prime Minister Giorgia Meloni did not give any specific date for the production launch.
Vucic said that the production of electric Panda would boost trade between Italy and Serbia above the current 4.6 billion euros a year.
Serbia has a long automotive history (Viva Zastava!) and currently serves as an important supplier for much of Europe’s car industry. Also, the new Fiat Panda EV is probably gonna rule.
ADVERTISEMENT
GM Lands 10-Year VIP Protection Gig With Diplomatic Security Service
I helped run the Distinguished Speakers Committee at the University of Texas, which meant sometimes interacting with various law enforcement agencies when high-profile guests came.
One of the higher-profile guests we had was former Israeli PM Ehud Barak. Politics aside, he was a great speaker and very generous with his time. The visit was a headache, though, because we had to deal with Secret Service (Former First Lady Ladybird Johnson graced us with her presence), Mossad agents (two extremely serious young men and one extremely funny slightly older guy), local police, state troopers, and campus police.
The absolute coolest, chillest, calmest and most in control person who showed up was a guy from an agency I’d never even heard of: the Diplomatic Security Service, or DSS. I like to think he was the basis for The Rock’s character DSS agent Luke Hobbs in the Fast and Furious movies.
Even if he wasn’t, I learned a little about the DSS and understand that they’re deployed around the world to keep our country’s many State Department employees safe, as well as support VIPs. They need a tough ride and it looks like GM Defense will be the source of those tough rides for the foreseeable future. From the GM Defense press release:
ADVERTISEMENT
GM Defense will deliver Original Equipment Manufacturer integrated HD SUVs under the contract with a ceiling value of $300 million. GM Defense was awarded an initial task order through the IDIQ contract for vehicles, training and engineering services valued at approximately $25 million. This contract follows the development and validation contract awarded in 2021 that delivered prototype vehicles for comprehensive testing and evaluation.
The newly designed GM Defense HD SUV incorporates protective armor into the original design and manufacturing process, diverging from current after-market, tear-down and rebuild practices. The new approach provides superior vehicle performance while improving efficiencies in build and lead-time, resulting in faster vehicle delivery to the end user. GM Defense also provides additional benefits through a robust manufacturer’s warranty and extended vehicle lifespan that delivers value as compared to the current multi-stage aftermarket armoring process.
These things look absolutely killer, I gotta admit, and the ground-up construction of these would make me feel better if I was rolling around Karachi or wherever and had a target on my back.
China Is Becoming Tough On Imports
I’m sure Rolls-Royce and Porsche will be fine in China for the foreseeable future, but it ain’t great for the not-super-exclusive luxury/sport set in the country right now as consumers are embracing domestic brands.
First, via Reuters, is news that Toyota is halting some operations in its FAW/Tianjin venture:
“The reason for stopping the production line was to optimize the production system in consideration of aging and changes in the composition of vehicle models such as body types.”
Japan’s Jiji news service said on Friday the world’s largest automaker by sales was suspending some production as part of a major production adjustment in response to weak sales of gasoline-engine cars.
Chinese consumers are embracing EVs. Cool, that explains Toyota. So how is Tesla doing? Also via Reuters:
ADVERTISEMENT
Sales of U.S. automaker Tesla’s (TSLA.O) China-made electric vehicles (EVs) skidded 17.8% in November from the same month a year earlier, to 82,432 cars, China Passenger Car Association (CPCA) data showed on Monday.
That marked the biggest fall since December 2022 when Tesla’s sales of China-made EVs fell 21% on the year as the U.S. automaker reduced output and cut prices to deal with rising inventories and weakening demand.
By comparison, BYD saw its sales grow 31% year-over-year.
The Big Question?
Would you buy a used EV? Are there any you’re interested in? If you’re David, would you buy a third used EV?
"used" - Google News
December 04, 2023 at 11:02PM
https://ift.tt/J9ndsKZ
Why Used Electric Vehicle Prices Are Plummeting And Why Used EVs Will Probably Get Even Cheaper - The Autopian
"used" - Google News
https://ift.tt/m6T0Ykv
https://ift.tt/F4qLMn3
Bagikan Berita Ini
0 Response to "Why Used Electric Vehicle Prices Are Plummeting And Why Used EVs Will Probably Get Even Cheaper - The Autopian"
Post a Comment