Used electric cars have lost so much value in a year that they are now worth the same as comparable internal combustion cars, owners lost up to 560,000
today | Peter Miller
And yet they are still difficult to sell, because their final value is practically zero and they reach it much earlier compared to other concepts. As a result, the worst thing for the boom in electric cars is that this factor drives them away from a single large group of buyers.
We’ve mentioned this on our site more than once, but since repetition is the mother of wisdom, we’ll say it again. When it comes to the cost of owning a car, for the vast majority of cars, it doesn’t matter how much the car costs to purchase, how much fuel it drives, how much it uses on brakes or tires, or whether it is serviced every 10 or 30,000 km. All these factors have their value and of course contribute to the overall cost, but they usually play the x-fiddle next to the loss of value.
Even if you buy a relatively ordinary car for 700,000 crowns and it loses tens of percent of its value in the first few years, what is comparable? Well, usually nothing. I am shooting from the side that it will be about 30 percent in 2 years (which will be quite a realistic estimate for many cars), so we have a load of 210 thousand crowns. Even if you drove 30,000 km per year with a consumption of 7 liters of gasoline per 100 km, the fuel will “only” cost you around 165,000 CZK. But most people will drive around 10,000 km a year for 5 liters per hundred, and suddenly we are not even at 40,000 crowns, even if the drop in value will be only marginally lower despite the different mileage.
That’s just the way it is, that’s why it’s important to pay attention to this aspect when buying a car. It will certainly be sad for ordinary people, but buying such a well-equipped VW Passat can easily be more expensive than buying a coveted Porsche. Because even if you can pay 4 million for an exceptional 911, you can easily sell the car for 3.6 million CZK in a few years. Try selling a Passat with a purchase price of 1.6 “mega” for only 400,000 cheaper after a few years. It won’t work, you can sell it for 1.2 million maybe a few weeks after the acquisition…
Facts relatively overlooked for years are now coming to the fore thanks to electric cars. It really changes the rules of the game – while internal combustion cars can serve for decades without major investments and cost almost nothing with a lucky hand (who bought a BMW M3 E46 in 2003 and didn’t drive it much, he lost almost nothing and has a car in his hands with a long perspective of continued existence, which will probably only increase in price), the value of older electric cars is determined by their continued development from very low standards and the price of replacement batteries with a limited lifespan. Long story short – they can easily be practically worthless after 8 to 10 years if you’ve got a car this old that requires a multi-hundred thousand investment in a new battery to keep it running.
However, the effect of this different value development curve manifests itself much earlier. Not immediately, the development will not be linear, a two-year-old electric car with a warranty can appear as a fresh car unencumbered by the big risk of further investments. Soon, however, “everything collapses, things take a rapid turn and then one feels that one is just catching waterfalls”, as the “classic” would say.
A study by AutoTrader, one of the world’s leading operators of online car marketplaces, reminds us that this is so. It operates in many places, including in Great Britain, which is relatively close to us, where the prices of electric cars began to fall so “rapidly” that the company had to issue a press release about it. The development, especially in recent times, has been drastic for electric cars – drastically negative.
The situation has even gone so far that used electric cars today often cost the same as equivalent internal combustion cars, even if they cost tens of percent more when new or less used. AutoTrader says that differences of up to 20,000 pounds (approx. 563,000 CZK) often turned into nothing or even a price lower than combustion equivalents within a single year. In the 12 months between September last year and this year, the nominal prices of used electric cars (so we’re talking about the shift from used to used, not new car to used, it wouldn’t be surprising there) fell by a massive 22 percent. This is a complete anomaly in a state of persistently high inflation.
There are more factors – the expansion of knowledge about the aforementioned, higher than expected costs of insurance or tires, rising electricity prices and also one very important factor, overlooked by politicians and car companies. The problem with electric cars also lies in the fact that the interest in them among private buyers is negligible (even in Great Britain, as we discussed recently), an unusual part of sales is made up of deliveries to companies. They behave either irrationally (they buy electric cars because it’s trendy, they have to do so with regard to internal rules, goals in terms of reducing CO2 emissions, as part of “green” marketing, etc.) or opportunistically (they use tax benefits, subsidies, etc.) , which seems to make sense, but then there is no one to sell these cars in bazaars. And through the loss of value it comes back to them like a boomerang.
AutoTrader states that, for example, the relatively cheap electric Renault Zoe cost £7,000 (CZK 197,000) more than the comparable Clio in September 2022, but the price of both reached the same level by September 2023. The three-year-old electric Jaguar I-Pace cost £13,000 (CZK 366,000) more than a comparable F-Pace in September 2022, but 12 months later the battery-powered model was £4,000 (CZK 113,000) cheaper (the card reversed) than the gasoline equivalent. One of the biggest differences was then seen when comparing the prices of the three-year-old Tesla Model 3 with the BMW 3 Series in comparable specifications. A used Tesla cost £20,000 (CZK 563,000) more than a BMW a year ago, but now the gap has narrowed to just £1,000. And it could go on like this for a long time, the losses of electric car owners are enormous, usually hundreds of thousands in a single year.
And these are no anomalies, Auto Trader states that the drop in prices of used electric cars has occurred across the board. Nathan Coe, the company’s executive director, adds that the market is only behaving rationally, as the demand for used electric cars at higher prices simply does not exist. He identifies the above as a key aspect – i.e. the fact that sales of new electric cars are mainly handled by company purchases, but this does not apply in bazaars, no large company feeds its fleets with bazaar acquisitions. In the end, companies have to come to terms with the fact that in bazaars they will be faced with rationally thinking buyers who have absolutely no reason to buy, for example, an I-Pace more expensive than an F-Pace and, on the contrary, offer less. And this is where the gap between the prices of new and used electric cars comes from.
This may ultimately be the aspect that deprives electric cars of their last big buyers. If companies buy them dogmatically, then of course nothing will stop them except their own economic problems. However, if they do so opportunistically, i.e. with the view of obtaining artificial financial advantages given by tax schemes or subsidies, they may reconsider under the weight of the fact that even these advantages are far from compensating for the losses caused by massive drops in the value of such cars. Nobody and nowhere will give you a subsidy or tax benefit covering the drop in the value of the car by 560,000.
It remains only to recall the traditional: In a sufficiently long period, economic rationality always wins, always. And the purchase of an electric car has nothing to do with it. Whether you try to get around it at one stage or another with subsidies or other forms of redistribution, it will always catch up with you at some point, this is what happens in the used car market. And even if you start subsidizing there, it will happen elsewhere. You simply can’t run away from economic reality, at most you can run away from it expensively for a while. Therefore, as long as electric cars represent such a far less efficient solution – and are nevertheless imposed on customers – we will be confronted with similar impacts again and again. How about handing the reins back to science and technology? Ideologically motivated imposition of electric cars on everyone is obscurantism, obscurantism, even though it tries to appear exactly the opposite.
Such a Renault Zoe cost almost 200,000 CZK more than a comparable Clio as a used car a year ago, today the prices have equaled. So buying an electric Zoe was a huge waste. And from the perspective of AutoTrader statistics, it was still one of the smaller ones. Photo: Renault
Sources: AutoTrader UK, The Telegraph
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