There’s more good news on the electric vehicle front. As sales of new EVs continue to climb, more consumers are also snapping up used EVs at a quick pace. In a recent analysis by iSeeCars, EV models make up a majority of the fastest selling used cars.
EV models make up a majority of the fastest selling used cars.
The average used car remains on the lot for over a month, but a handful of used EVs are finding new owners in just 22.2 to 26.1 days, according to the analysis. Three fully electric vehicles and three plug-in hybrids made the top 10, with the FIAT 500e rolling off lots the fastest (see table below from iSeeCars).
It appears that buyers are enticed by the relatively low prices for the used EVs. Although EVs remain more expensive than conventional vehicles at the dealership, even with the federal government tax rebate of $7,500 and other incentives, consumers are able to find good deals on used car lots as the value of an EV depreciates sharply in one to three years. Depreciation of EVs is distorted by the existing subsidies for new vehicles, making it seem at first glance as though prices are dropping faster than they actually are.
The average price for a used FIAT 500e is around $9,000, down 40 percent from last year. By contrast, the price for a new Fiat 500e starts at $33,000. A used BMW i3 has had an average price of $23,600 in 2017, compared to over $38,000 last year, helping boost sales for the luxury model. The used value is significantly lower than the $42,000 paid for new cars at the dealership. The Nissan Leaf has sold for an average of $11,000, while the Ford Fusion has dropped below $19,000. Both of those models are selling below the average price of $21,000 for all cars that are one to three years old. Tesla’s Model S was in the top 10 even though the price increased in the past year. The higher price is likely due to Tesla discontinuing its lowest-priced Model S and the limited supply on used lots.
The lower sticker price for used EVs has motivated buyers to move quickly, even if some may have apprehension about moving away from vehicles with internal combustion engines. “Worries about alternative-fuel vehicles’ range, battery life, safety, and performance seem to be balanced by falling prices, leading to quick sales of these cars,” wrote Thomas Lee of iSeeCars.
“One of the best buys out there is a low-mileage electric vehicle” Greg Brannon, the director of automotive engineering for AAA, told The Fuse. “As more used EVs become available and the price points are enticing, consumers will continue to show interest.”
Demand for used EVs could also be high as a result of consumers looking for a second car for short trips. It makes economic sense to purchase a used EV as a second vehicle, even if they have a lower range than the newest models. For short trips, range is not a factor.
Vehicles remain on used car lots for an average of 33.4 days. The more expensive SUVs and trucks take longer than average to sell, reinforcing the view that price may be the biggest factor for buyers of used cars. In its analysis, iSeeCars looked at data from the sales of 2.1 million one- to three-year old cars sold between January and August of 2017.
The lower price of a used EV is in addition EV drivers saving on monthly costs from less maintenance and not having to fill up at the pump. AAA estimates EVs have lower maintenance and repair costs than conventional vehicles at below $1,000 annually. Fuel costs are lower than average at less than four cents per mile, even with gasoline prices remaining relatively weak. On the flip side, EVs depreciate in value at a faster rate of close to $6,000 every year—but the high rate of depreciation makes them more enticing in the used car market.
As AAA’s Brannon points out, depreciation is a major expense with all vehicles, but it is sharper with EVs because of uncertainty consumers have about the technology and higher-mileage EVs, along with the cost of battery replacements.
Concerns about EVs will likely be allayed over time as consumers become more familiar with electrification and charging logistics. At the same time, owners will better understand warranties on batteries and enjoy saving money on fuel and maintenance costs.
But these concerns will likely be allayed over time as consumers become more familiar with electrification and charging logistics. At the same time, owners will better understand warranties on batteries and enjoy saving money on fuel and maintenance costs. Furthermore, as noted earlier, the rate of depreciation is misleading due to subsidies for new EVs.
“There aren’t many drawbacks to purchasing a used EV,” Brannon said, noting that AAA has seen consumer interest in EVs remain steady over the past five years even with the sharp drop in gasoline prices.
As more new models are available at dealerships, consumers will increasingly see more deals for used EVs in the coming years. There are now 34 electric models in the U.S. market, including 21 plug-in electric hybrids and 13 battery electric vehicles. That figure is more than double levels seen in 2013.