Used EV resale values

November 6, 2023

Sales of new electric vehicles are growing at a rapid pace in Australia, but what will happen with used ones, and why are battery health scores so vital? 

More than 65,000 new EVs have been counted as sold in 2023 to the end of September – more than triple the previous year’s figure and equivalent to almost one-in-10 new passenger car and SUV sales. 

All told there are an estimated 130,000 pure EVs out there on Australian roads, most of which by virtue of their age remain with their first owners.  

But what comes next? What happens as these EVs start to enter the second-hand market, either as private sales or trade-ins on an individual level, or via remarketing services such as Manheim in the case of fleets? 

As we have seen overseas, preliminary data shows that at this admittedly early stage, used EV resale values aren’t holding up as well as owners might have hoped.  

There’s always a degree of consumer and dealer scepticism when it comes to less-established technologies, and plenty of people are wondering if a five-year old EV might be as outdated as an iPhone 4.  

Throw in other factors such as government rebates and tax breaks that target new EVs only, new EV price cuts from market leader Tesla in particular, and a tendency for early adopters to spend more of their income on the latest and greatest, and you can explain to a degree what we’re seeing right now. 

This doesn’t mean the sky is falling in. It’s early days yet and we firmly believe that EVs are the future. But it’s important to understand what’s happening and why, and to canvas potential tactics to improve the situation for owners and operators.  

Resale values impact purchasing decisions, especially by fleet managers who look at whole-of-life costs. That means a link exists between ongoing EV sales growth on the new side, and resale values on the used side. If fleets buy fewer EVs, that means fewer affordable used ones down the line.  

That would be a problem for everyone. 

Cox Automotive Australia’s data regarding retail and wholesale used EVs has a small sample size at this stage, with just 0.5% of active used and demo dealer inventory being EV or plug-in hybrid (PHEV). The figure is even smaller for Manheim wholesale stock.  

We can nevertheless look under the bonnet and compare what we’re seeing to what has been observed in markets that are ahead of us on the EV transition.  

Cox Automotive Australia has an internal measurement called the used vehicle price index, which tracks price movements for used vehicles over time, adjusted by changing list prices and volume weighted, with a baseline or starting point of December 2019 – at which point all indexes sat at 100.  

In September 2022 the sold price index for used EVs and PHEVs aged between 2 and 4 years was 138.9, meaning on average prices were 38.9% higher than December 2019 for the same vehicles. But as of September 2023, the index for this same subset was 108.5, a 22% decrease.  

For context, the year-over-year decrease in the price index for pickups aged 2-4 years was 8.6%, and for internal combustion passenger cars the decrease was 8.1%. SUVs aged 2-4 years fared slightly worse, down 10.9%, but used EVs and PHEVs remain the outlier at this stage.  

Now there are some positive signs here, with notable stabilisation in recent times. The EV and PHEV retail used price index is down just 0.3% over six months ago, suggesting some stabilisation. As consumer awareness grows, so too should consumer trust.  

But what can we glean from elsewhere? The US currently has similar EV market share to Australia, and for context the 873,000 EVs sold there in the first three quarters of 2023 is about equal to the entire Australia new car market.  

However, as our colleagues at Cox Automotive US found, EV transaction prices in the case of new vehicles have fallen 22% year-over-year, and inventory as measured by Market Days’ Supply sat well above the market wide average.  

EV and internal combustion engine (ICE) inventory started the year off at about 52 days’ supply. Since then, EV days’ supply dramatically increased while ICE remained consistent between 52 and 58 days. EV supply at the start of October was 97 days, down from the peak of 111 days in early July.   

This suggests that increased production and consumer choice is outpacing demand which, alongside the economic upsides of greater scale and evolving technologies, has a downward effect on sticker prices for new EVs, which in turn is reflected in the used market.  

Australia is little different in the sense that the number of EV makes and models is growing rapidly, and the Australian car dealer peak body recently made it quite clear that showrooms had plenty of available EV stock. Great for buyers, less so for sellers of existing models…  

At this point we should ask what can be done to ensure customers are willing to buy used EVs. One crucial issue we hear all the time is the difficulty establishing digestible battery health scores, which would give people clarity around the status of a used EV’s battery. 

A new white paper published by the Vehicle Remarketing Association in the UK – chaired by Cox Automotive Europe Insight and Strategy Director Philip Nothard – investigates this issue.  

“We know that worries over battery health and the rate at which batteries decline are key barriers to many consumers when it comes to considering buying a used EV. This white paper is designed to give people working in all areas of remarketing the information that they need to help allay those fears, which are largely unfounded,” Mr Nothard said.  

“This is the second in a series of white papers on EV remarketing that the VRA has produced and the first, on charging, has been very well received. We’re planning on creating more, covering a range of areas concerning electrification for the remarketing sector. There remains a huge appetite for information in this area from our members and others in the sector.”

Cox Automotive Australia is monitoring this space closely, as we expect you are too. Stay tuned for more about these issues and reach out to discuss how our retail data solutions such as XTime, our remarketing service Manheim, and our valuation service Kelly Blue Book can help you.