You know you're old when - the headline instantly reminds you how fast those newfangled "desktop computers" depreciated, compared to the adding machines and typewriters that they were trying to replace.
Well, sure. EV'S are smart phones on wheels. Are you going to grab your Samsung 5s in 2030, power it back up and use it to store your most sensitive personal data? Even the lowest-end varieties are always-on, internet-conected devices. Their safety and function is on the same tier as today's phone models. Expensive today, junk in 5 years.
Trying to compare an EV to a smartphone is self-serving, you wanted to convince yourself that your already-made decision was the right one. Reality wouldn't be so kind.
Easier way to change the battery would decrease the cost of ownership by a ton and decrease the profits of EV companies also a ton. Which I guess is why it doesn't happen.
gas-powered cars will become much more expensive to operate. Perhaps not in the US and A, but everywhere the Climate treaty of Paris has any value.
In Germany, you can buy used luxury cars at high discount due to being fuel inefficient for years now, and that is with barely a price increase for gas and barely 1 l/100km to through 3 l/100km cars taking up more market share.
Basically, we don't understand batteries and their lifespans that well while we understand wear and tear on an engine quite well. Sure, these concerns are valid, but it seems like you could voice the same concerns over any "early" technology.
EVs range degrades in a meaningful fashion with time and new EVs are improving faster than ICE cars, thus faster depreciation.
The flip side of this is a general over correction as the new car tax break ends used EVs are really compelling today. A slightly used Long Range Model 3 is a far better option than their new Base Model 3.
Eventually ICE cars were designed for their resale value so people buying a new car every 3 or 5 years could afford to spend more money. That’s coming for EVs as the technology improves battery degradation means the range sweet spot will be chosen to keep the used market happy not just new buyers etc.
The electricity and ICE fuel costs should be included if the battery is included. The battery is some sort of upfront fuel cost in a way the gas tank isn't.
Since mileage wear is proportional to fuel use anyway.
The article is making a huge mistake though, comparing apples to oranges.
Resale value of EVs doesn't depend on mileage nowhere near as much as ICE cars. EVs are just much simpler machines and electric motors can do a million miles with no maintenance, and the only maintenance you have is the oil in the differential, which is often simpler because it is single-speed. Compare that to thousand different mechanical parts that all wear out in a ICE engine. Which is why ICE cars resale value is determined by the odometer.
What drives EV resale value is the health of the battery, which is influenced more by recharge cycles and straight up passage of time.
And the anecdotal evidence of a commercial fleet going bankrupt and not getting much for their EVs... Well yeah, would you buy from such a source? I wouldn't. They usually don't follow longevity advice for battery charging, because they have to optimize for time-in-use.
As an anecdote, I bought all my ICE cars second hand, and would usually sell them 3-4 years later just before major maintenance was needed. My EV is now 8 years old, runs like the day I got it and had 1 repair, when the motor that drives the window up and down broke and battery capacity is still the same, or if it changed it's such a small change I didn't notice. I don't expect to sell any time soon, if ever. I expect I will just do a battery swap in 5-10 years.
I was hoping you would have said that the issue is that article is comparing a $50k SUV to a $30k work truck, and then turning the price drop into percentage drop.
I'd like to see them compare two similarly priced SUVs.
I am sure the ICE vehicle will still depreciate slower, but perhaps not as drastically different.
The buyers of these two vehicles used in the example are very different.
So much of this, but not all, could be mitigated with a guaranteed battery "refurbishing" program. Large part of an EV's value is tied up in the battery, which is a (longer term) consumable. So when an EV hits the second hand market, and there is no battery guarantee (or clear and trusted state and history reporting), the estimates on battery value will have to be on the low side, and the overall car value depreciated accordingly.
Traditional gas cars also have wear and tear with parts on the "consumables" spectrum, but these are considered more open to state inspection by a semi knowledgeable amateur, and the car's value is less tied to one specific black-box item.
Computers get old and EV tech is constantly improving. ICE has been stable for decades. Tesla believes they can increase the market value of older EV's eventually by pushing autonomous driving.
I like the direction of https://slate.auto. Module, bring-your-own-computer. We'll see if they allow affordable trade-in's for upgrading battery/motors.
Aren't they deprecating mainly because new EVs are better? In this case, it is not "derailing" but simply the actual replacement happening. And this effect will become smaller as the industry matures and EV prices stabilise.
At least that's what happened in 2022-2023 when prices of EVs and ICE cars quickly converged. No surprise existing EVs on the road deprecated rapidly.
The upside of this story might be a change of culture in EVs in North America. Everywhere else in the world, EVs are cheap cars to urbanites. In the U.S./Canada they're muscle/status cars for rich people. This cheaper second hand market might help popularize them.
I live in Canada where the distances are long and the weather is freaking cold. These are 2 circumstances very adverse to EVs.
But, still, I love my Kia Niro EV. It is the best car I've ever had. The driving experience is so good that it made me enjoy driving; I always hated driving before this car.
EVs run much smoother, are more stable and more powerful. Besides, if you charge them at home, they're far cheaper; even if you don't have solar panels (I do have them, too).
In the UK I think most EVs are leased, especially through "salary sacrifice" schemes from employers (which saves the whole income tax on payments). Is it the same in the US?
In such case I suspect the impact is mostly on leasing companies with issues on viability and leasing costs (for consumers).
In UK/Europe this might also explain why depreciation after 3 years is so high: Leasing companies trying to dump EVs returned at end of leases.
EVs are simply immature products. The first truly mainstream models (car manufacturers making EVs their flagship model) outside of Tesla were released this year, or maybe last.
The first few generations of smartphones didn't last very long either (1-2 years). But now they last much longer (5-7 years). EV lifespans will expand in the same way as they mature as a product.
I’ve noticed hybrids are filling up dealers lots as well. They can’t sell them or won’t take a big loss on them. “Too heavy, expensive, less cargo space, and not enough benefits.” per sales.
There aren’t many EV’s on the lots either as the configuration team doesn’t see a need to order them from manufacturers if people aren’t buying them.
This story doesn’t really gel with my understanding as an EV owner in Europe.
The post says that Tesla hold their value better than Chinese newcomers but that absolutely isn’t the prices I’m seeing in Europe.
In Europe Tesla resale value has plummeted due to brand destruction. Tesla was super popular when they launched as the first realistic EV to hit the main time. But they quickly got a poor reputation for build quality and never delivering on self-driving, and that was before the political damage the owner did which seems never recoverable in at least a generation.
Meanwhile comparable Chinese entrants are so new they aren’t yet at the 3 year mark where fleets sell off to second hand market.
Another interesting thing about non-Tesla EVs is that there aren’t a lot being resold; if you got one, you likely hang onto it. Personally I’ve just not yet let go of my Kia EV6 even though it sailed past the normal trade in point recently.
I’d love to have an EV. I’m not even too frightened about the battery.
It’s just that the cars are aging like iPhones. Last years hardware package, hardware compatibility with latest software, etc are all people seem to talk about on Reddit. I think that’s a factor in the steep depreciation.
I just bought a new Corolla hybrid, it gets 60 miles per gallon and should last a good while. Maybe next purchase.
I'm currently leasing an EV for 24 months 7.5kMi/yr. The residual price is over $20k lower than MSRP. Without subsidy and steep discounts, nobody would buy these things. And IMO, the residual is about $5k higher than it will be worth based on low-mileage used vehicles of the same model for sale. That finally gets us to the price, almost 50% lower than the MSRP, which I personally value this car new with 0 miles.
These EVs should be much cheaper. Either batteries are so outlandishly expensive that this will never be economically viable for the vast majority of the world outside of cities, or companies are playing accounting games.
In any case, when purchasing a used EV, you're essentially risking the entire purchase price if you get a battery lemon. Buying a Bolt or what have you for $15-$20k, and having to replace the battery at 60%+ of your purchase price, that's too much risk. Whereas if you bought a used ICE vehichle for $15-20k, and your engine fails, you might might need to spend $1500-5k for a repair, it's not all or nothing. And with a moderate amount of research, you can determine which makes or models are prone to early large repairs.
If EV manufacturers would sell a no-questions-asked insurance policy that guarantees the life of the battery to 250k miles, there would be no issue.
I think there are other factor's beside the battery and EV's being dumped in the market that may affect the resale value that are not mentioned in the article.
First of all I believe that the car manufactures (especially for electric cars) these days use planned obsolescence tactics to limit a car's lifespan at one side, while also promising the buyers that the car could last for far longer compared to their old ICE cars. However this promise often doesn't seem to hold up in the real world which will decrease confidence once the cars start breaking earlier.
This is especially problematic when you are running an business calculating in the promised lifespan instead of the actual lifespan, once a business finds out (and does the math) often it will make economical sense to dump the fleet.
On top of that I think a big problem with certain cars on the second hand market is big onetime investments. You can see that already in certain internal combustion engine cars that are know to require a costly fix after x amount of miles.
This is quite important in the second hand market since you often have to expect to do the "big maintenance" once you purchase a second hand vehicle as people like to sell slightly before this maintenance is due (and often not tell you).
Where EV's may run for a long time without problems they require costly repairs once they do break. Most EV's are build in a mostly non repairable way, like many modern vehicles, and you have to pray that the parts will be available after 10 years. Also a lot of maintenance on EV's can not easily be done by an enthusiast in a shed as it requires special equipment, certification and skills.
Where with an ICE engine you may run into smaller maintenance earlier you are paying these fixes incrementally, and may be able to do a lot of the maintenance yourself.
On top of that I think there is a certain saturation in the electric car market where people that care about buying an EV increasingly have a EV and the people that don't care (or prefer ICE) don't want to invest the additional premium, or uncertainty to buy an EV.
For example I don't buy an EV because it's very impractical to charge it where I live and I like the added flexibility (miles) that an economy ICE car can provide.
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[ 663 ms ] story [ 3233 ms ] threadThanks, but I'm hanging in to my old Subaru.
They're objects that lose value when you use them. That's normal.
As the battery tech and service infrastructure matures we probably will see less of this though.
In Germany, you can buy used luxury cars at high discount due to being fuel inefficient for years now, and that is with barely a price increase for gas and barely 1 l/100km to through 3 l/100km cars taking up more market share.
The flip side of this is a general over correction as the new car tax break ends used EVs are really compelling today. A slightly used Long Range Model 3 is a far better option than their new Base Model 3.
Eventually ICE cars were designed for their resale value so people buying a new car every 3 or 5 years could afford to spend more money. That’s coming for EVs as the technology improves battery degradation means the range sweet spot will be chosen to keep the used market happy not just new buyers etc.
The electricity and ICE fuel costs should be included if the battery is included. The battery is some sort of upfront fuel cost in a way the gas tank isn't.
Since mileage wear is proportional to fuel use anyway.
Resale value of EVs doesn't depend on mileage nowhere near as much as ICE cars. EVs are just much simpler machines and electric motors can do a million miles with no maintenance, and the only maintenance you have is the oil in the differential, which is often simpler because it is single-speed. Compare that to thousand different mechanical parts that all wear out in a ICE engine. Which is why ICE cars resale value is determined by the odometer.
What drives EV resale value is the health of the battery, which is influenced more by recharge cycles and straight up passage of time.
And the anecdotal evidence of a commercial fleet going bankrupt and not getting much for their EVs... Well yeah, would you buy from such a source? I wouldn't. They usually don't follow longevity advice for battery charging, because they have to optimize for time-in-use.
As an anecdote, I bought all my ICE cars second hand, and would usually sell them 3-4 years later just before major maintenance was needed. My EV is now 8 years old, runs like the day I got it and had 1 repair, when the motor that drives the window up and down broke and battery capacity is still the same, or if it changed it's such a small change I didn't notice. I don't expect to sell any time soon, if ever. I expect I will just do a battery swap in 5-10 years.
Do you expect it will be an OEM part or a remanufactured battery?
I'd like to see them compare two similarly priced SUVs.
I am sure the ICE vehicle will still depreciate slower, but perhaps not as drastically different.
The buyers of these two vehicles used in the example are very different.
Traditional gas cars also have wear and tear with parts on the "consumables" spectrum, but these are considered more open to state inspection by a semi knowledgeable amateur, and the car's value is less tied to one specific black-box item.
I like the direction of https://slate.auto. Module, bring-your-own-computer. We'll see if they allow affordable trade-in's for upgrading battery/motors.
They could also work with CommaAI for autonomy.
At least that's what happened in 2022-2023 when prices of EVs and ICE cars quickly converged. No surprise existing EVs on the road deprecated rapidly.
I live in Canada where the distances are long and the weather is freaking cold. These are 2 circumstances very adverse to EVs.
But, still, I love my Kia Niro EV. It is the best car I've ever had. The driving experience is so good that it made me enjoy driving; I always hated driving before this car.
EVs run much smoother, are more stable and more powerful. Besides, if you charge them at home, they're far cheaper; even if you don't have solar panels (I do have them, too).
In such case I suspect the impact is mostly on leasing companies with issues on viability and leasing costs (for consumers).
In UK/Europe this might also explain why depreciation after 3 years is so high: Leasing companies trying to dump EVs returned at end of leases.
The first few generations of smartphones didn't last very long either (1-2 years). But now they last much longer (5-7 years). EV lifespans will expand in the same way as they mature as a product.
There aren’t many EV’s on the lots either as the configuration team doesn’t see a need to order them from manufacturers if people aren’t buying them.
The post says that Tesla hold their value better than Chinese newcomers but that absolutely isn’t the prices I’m seeing in Europe.
In Europe Tesla resale value has plummeted due to brand destruction. Tesla was super popular when they launched as the first realistic EV to hit the main time. But they quickly got a poor reputation for build quality and never delivering on self-driving, and that was before the political damage the owner did which seems never recoverable in at least a generation.
Meanwhile comparable Chinese entrants are so new they aren’t yet at the 3 year mark where fleets sell off to second hand market.
Another interesting thing about non-Tesla EVs is that there aren’t a lot being resold; if you got one, you likely hang onto it. Personally I’ve just not yet let go of my Kia EV6 even though it sailed past the normal trade in point recently.
It’s just that the cars are aging like iPhones. Last years hardware package, hardware compatibility with latest software, etc are all people seem to talk about on Reddit. I think that’s a factor in the steep depreciation.
I just bought a new Corolla hybrid, it gets 60 miles per gallon and should last a good while. Maybe next purchase.
These EVs should be much cheaper. Either batteries are so outlandishly expensive that this will never be economically viable for the vast majority of the world outside of cities, or companies are playing accounting games.
In any case, when purchasing a used EV, you're essentially risking the entire purchase price if you get a battery lemon. Buying a Bolt or what have you for $15-$20k, and having to replace the battery at 60%+ of your purchase price, that's too much risk. Whereas if you bought a used ICE vehichle for $15-20k, and your engine fails, you might might need to spend $1500-5k for a repair, it's not all or nothing. And with a moderate amount of research, you can determine which makes or models are prone to early large repairs.
If EV manufacturers would sell a no-questions-asked insurance policy that guarantees the life of the battery to 250k miles, there would be no issue.
First of all I believe that the car manufactures (especially for electric cars) these days use planned obsolescence tactics to limit a car's lifespan at one side, while also promising the buyers that the car could last for far longer compared to their old ICE cars. However this promise often doesn't seem to hold up in the real world which will decrease confidence once the cars start breaking earlier. This is especially problematic when you are running an business calculating in the promised lifespan instead of the actual lifespan, once a business finds out (and does the math) often it will make economical sense to dump the fleet.
On top of that I think a big problem with certain cars on the second hand market is big onetime investments. You can see that already in certain internal combustion engine cars that are know to require a costly fix after x amount of miles. This is quite important in the second hand market since you often have to expect to do the "big maintenance" once you purchase a second hand vehicle as people like to sell slightly before this maintenance is due (and often not tell you).
Where EV's may run for a long time without problems they require costly repairs once they do break. Most EV's are build in a mostly non repairable way, like many modern vehicles, and you have to pray that the parts will be available after 10 years. Also a lot of maintenance on EV's can not easily be done by an enthusiast in a shed as it requires special equipment, certification and skills. Where with an ICE engine you may run into smaller maintenance earlier you are paying these fixes incrementally, and may be able to do a lot of the maintenance yourself.
On top of that I think there is a certain saturation in the electric car market where people that care about buying an EV increasingly have a EV and the people that don't care (or prefer ICE) don't want to invest the additional premium, or uncertainty to buy an EV. For example I don't buy an EV because it's very impractical to charge it where I live and I like the added flexibility (miles) that an economy ICE car can provide.