Why Is Chevrolet Offering 0% Financing On Used EVs?
A few days ago, Car and Driver confirmed with Chevrolet that it is offering 0% financing on not only new Bolt EVs, but also certified pre-owned (CPO) Bolts and even Volts. There are obvious reasons to offer big incentives on the new Bolts, but stimulating the used market is less straightforward.
Before we get into the reasons, let’s look at what the details of the offers and look for some clues.
New Deals
For new Bolt EVs, GM is offering $8500 off if you pay cash or find your own financing. If you go through GMAC, you can get 0% financing and an additional $7000 off.
In other words, the company really wants to get the 2020 and 2021 Bolts out the door, and they need to make up for the lack of a $7500 tax credit. GM and Tesla sold enough EVs for their tax credits to phase out, while competitors are still able to use this as a selling point for customers. Throwing in the $8500 discount only levels the playing field a bit, and the other $7000 is actually sweetening the deal.
When I looked at the inventories of various dealers, it became pretty clear why it needs to move Bolts. Some dealers are stuck with several 2020 Bolts and stopped ordering more. Others have several 2021s and still have 2020s in stock. There’s a backlog of the cars, and with Chevrolet will soon be selling a refreshed 2022 model, and that’s going to be a problem.
The Real New Deals
Now, let’s look at what people are actually paying for a Bolt EV.
If you’re a fool, you’ll pay what is shown in the screenshot from my local dealer’s website. If you’re smart, you’ll know that the $8500+$7000 comes off of the dealer’s cost BEFORE negotiations over price begin. With the above example, you don’t start doing the math at $40,335, because only absolute morons pay MSRP. You look online and find out what the dealer’s actual cost is. In this case, the dealer actually pays Chevrolet around $35,078 for the vehicle. Let’s round it off to $35,500 just to make sure options are covered.
So, you take the $35,500 and subtract $15,500 for the discounts, and that makes the dealer’s cost $20,000. Thus, a smart buyer would pay $21,000-$22,000, because the dealer does need to make some money on the sale. If you pay the “sale price” listed in the screenshot, the dealer is basically pocketing GM’s discount.
What CPOs are Going For
Now, let’s look at some CPO Bolts on CarGurus.
Once again, you’re going to talk the dealer down from these prices, and they’ll need to move about 10% below what CarGurus recommends before it’s a truly good deal. Even then, the CPO Bolts aren’t much cheaper than what you’d pay for a new one.
Also keep in mind that the Volt CPOs are up for 0% as well. While they’re not a direct competitor to the Bolt EV, they are discontinued. For some buyers, they may be seen as the better option, with EV range for in-town driving and a range of hundreds of miles from any gas station on road trips. Getting them out the door makes sense, but for different reasons.
The Big Reason
Price is likely the big reason GMAC is offering 0% on the used Bolts. If the new car is only $2000-3000 above what you’d pay for the CPO, and the new car has 0% financing, there’s no motivation to buy the CPO, as the monthly payments will likely be about the same once you factor in interest on the used Bolt. The only way to level the playing field and make the CPO a slightly better deal is to offer the same free financing.
These big Bolt deals have been going for over a year, too, and that’s gotta be hurting the used market. Dealers need something to dangle in front of buyers to get them to jump on the used ones, and this is it.
As for the Volts, GM probably wants them completely off the lots by the time they make a big BEV push next year. Plugin hybrids are going out of style as newer BEVs have better range than the older ones did, but it’s still going to be a tempting thing for people to want to buy when they’re sitting side by side.
Another Pressure Point
On top of all that, there’s the recent recall. After some 2017-19 Bolts caught fire, GM let everyone know that a recall was coming. The temporary fix was that the owners of affected Bolts shouldn’t charge the battery above 90%, because only vehicles charged above 90% were catching fire. The software patch they then offered made the loss of range permanent.
Late 2019, 2020, and 2021 Bolts weren’t affected, as they used a different cell design.
GM says it is still investigating the issue with its suppliers that caused some Bolts to catch fire, and it’s possible that there’s a better fix coming that will give affected owners the top 10% of their batteries back, but having an EV lose 10% of its range is a pretty big deal. The fire risk, while apparently managed, has also got to scare off some potential buyers all by itself.
With these additional pressures on the Bolt’s value, offering 0% makes that much more sense. The fact that new prices were approaching used prices was likely the primary motivator, but the recall pressure can’t be helping either.
The Volt doesn’t have any fire recalls, so it’s got a lot going for it there. That’s yet another reason they’re also getting 0%.
Other Pressures
There are some other factors that could be pressuring Chevrolet to offer these deals.
First off, there’s the competition. These used EVs on the lot can’t help but compete with the new Bolt coming out, and other manufacturers are coming out with more EVs about the same time as the new Bolt and Bolt EUV. If inventories aren’t cleared out a bit, they’ll find themselves fighting themselves on one front and the competition on the other. European history tells you all you need to know about wars on two fronts.
The limited range and charging speeds compared to competitors makes the 17-21 Bolt a tougher sell. Yes, when the Bolt came out, it had decent range compared to everything in its price range, but that was 4 years ago. EVs with around 300 miles of range are proliferating, and we can expect the newer models to be closer to that figure.
Charging speeds are also likely to be much better for newer models, so being limited to 55 kW (max) will be a tough sell. The ID.4 is expected to charge at 125 kW, or over twice as fast. The Nissan Ariya and others coming out about the same time are also going to charge a lot faster than the Bolt. While home charging will be about the same for Bolts as anything newer, that extra time on longer drives is going to scare some customers off next year. Better to unload those CPOs now before they’re hopelessly outgunned.
The low, low prices of the new Bolts are likely the main driver for Chevrolet offering 0% on used Bolts, but we can’t ignore all of these other factors and pressure points. Chevrolet is smart to try to get these cars out the door now before they’re a tough sell.
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