Electric cars have an economic problem. They cost more to buy than conventional cars and they lose their value faster than conventional cars. Come trade-in time, that fancy new EV is like an albatross around the neck of the owner. [Note: none of this applies to Teslas, which are in a different universe from all other electric cars.]
People who bought early examples of the Mitsubishi i-MiEV, Fiat 500e, Chevy Spark EV, or Nissan LEAF had trouble disposing of them when it was time to dispose of them. Dealers were offering pennies on the dollar, auction prices were abysmal, and the number of private buyers willing to take a chance on “one of them newfangled eelectiks” was embarrassingly small.
True, electric cars saved their owners money on fuel and repairs but the gap between their cost new and their value as used cars was shocking. They were treated as oddities, things that normal people wanted nothing to do with. Fear of the unknown is strong in human beings. It takes people a long time to warm up to new ideas — like television, computers, and flying.
But finally there is some good news from J.D. Power and Associates. Larry Dixon, its head of valuation services, tells Automotive News the wholesale price for a 2015 Nissan LEAF is 1% higher now than it was 12 months ago. “Now we have prices up for the first time ever. So from a consumer standpoint, that means they have an appreciating asset,” he says. “That’s quite extraordinary.”
Last year, a 3-year old LEAF was worth 23% of its original sticker price. This year, it is worth 30% of sticker. Bear in mind that the used car market immediately discounts sticker price by $7,500, the amount of the federal EV credit every electric car is presumed to get.
The good news pertains to other used EVs as well, Dixon says. The Fiat 500e retains 21% of its original value right now. That’s awful, but better than the 18% from a year ago. A three year old Chevrolet Spark EV has a wholesale value of 25% versus 21% last year. The Spark EV’s wholesale prices are also up 10% year over year. Dixon says volumes on the Ford Focus EV were too low to cite, but the trend is up for those cars as well.
Other market sources confirm what Dixon is finding. According to Black Book, the retention value of used EVs this year is about 38% vs. 21% a year ago. “I think some of it is the prices go down so much and you get a bounce off of those,” said Anil Goyal, executive vice president of operations at Black Book. “We saw that in compact cars in general as well as EVs.”
Two factors seem to be at work here. One is the rising prices of all new and used vehicles. The other is that EV prices — especially those of the Nissan LEAF — seem to have hit rock bottom. Dixon also says many EVs are now coming off lease and make excellent candidates for dealer certified used car programs.
Should you run out and buy a truck load of used EVs? Maybe not just yet. As Americans go crazy for trucks and SUVs, sedans of any type are out of favor. For the moment, all the (non-Tesla) used EVs on the market are sedans/hatchbacks.
But the news may be a sign that attitudes about electric cars are shifting. They are no longer weird-mobiles that mainstream shoppers are afraid of. In fact, used EVs offer excellent value for the money as the price of new and used conventional cars keep going up. Electric cars haven’t gone mainstream, exactly, but they are getting there.