Amid falling prices for second-hand electric vehicles (EVs), it has become an opportune time for individuals to acquire their first electric cars. The dramatic price reductions of new EVs are significantly contributing to the availability of affordable second-hand models. This, however, may not be pleasant news for those who previously purchased new EVs at their original, steeper prices. It appears to be a factor that somewhat suppresses the global sales of electric cars. Yet for second-hand EV purchasers, the situation represents a chance to obtain premium, high-powdered, extensive-range electric vehicles at a greatly reduced cost.
As always, auction sites serve as a haven for incredibly profitable deals. This is mainly because these platforms are where car dealers typically source their used car inventory, enabling buyers to occasionally purchase at what is practically the wholesale cost. Although acquiring a car from an auction can be an intimidating process for an average used car buyer, particularly due to the lack of opportunity for a pre-purchase test drive or comprehensive assessment of the car’s condition, it has proven to be financially beneficial if approached with adequate preparation and the correct mindset.
However, does this apply to electric cars too? It is evident that the prime factor to consider when purchasing a used EV is the battery’s condition, which can be challenging to evaluate at an auction. Merlin O’Reilly, the owner of Ireland’s leading vehicle auction house, Merlin Car Auctions, situated in Naas, informed that the information regarding a vehicle’s battery state can be limited. He mentioned a device capable of assessing the battery’s health that currently only works with Nissan Leafs. He explained that without this facility, acquiring an electric car such as a 2012 Leaf, which once had a 200km range, could be risky if it now has only half of the battery capacity left. He suggests that such cars are virtually throwaway. O’Reilly likens the current generation of electric vehicles to the Betamax video before the arrival of VHS, insinuating a considerable evolution that is yet to come in the EV industry.
The automotive industry appears to be growing more sceptical towards electric vehicles (EVs), a shift from previous years where the purchase of a new Tesla could ensure nearly the same resale value after one year. Nowadays, pre-owned EVs have seen a steep devaluation, leading to these electric cars remaining unsold in dealerships whilst many dealers show reluctance to take them as part-exchanges.
One notable example put forth by O’Reilly was a Volkswagen ID.4 of 222-registration. The vehicle, almost as fresh as new, has a brand-new cost around €41,000. However, despite its fresh appearance, the ID.4 was listed in an auction with an initial bid of just €20,000, yet did not receive a single bid. A reduction of one-half the price after only two years of use seemed illogical. This vehicle could have made a fantastic purchase at such an affordable price.
This specific ID.4 was previously owned by a finance provider, signifying that the previous owner either returned it to settle a car finance debt or it was seized due to missed repayments. Despite the unfortunate circumstances, it implies that such vehicles can present substantial bargains for keen shoppers.
O’Reilly says that finance providers attempting to offload cars usually establish a minimum price. However, they may be open to discussions for a lesser price. Nevertheless, a bank or a finance house must not undervalue their vehicles as it could damage the confidence base which their finance schemes rely upon. Nevertheless, there is definitely an opportunity for shrewd buyers to negotiate.
The potential instability of electric car resale values was highlighted by O’Reilly, who commented on how a drop in price of €4,000 could occur just within a week with the ID.4 model. He suggests the uncertainty surrounding EVs is similar to the situation back in 2008 with the sudden alteration in motor tax legislation that incurred significant financial losses. The concern stems from favorable projections of new innovations such as hydrogen-fueled vehicles and groundbreaking battery tech, essentially viewing the current generation of electric cars as analogous to Betamax videos before the advent of VHS.
Equally noticeable, however, is the negative impact of price depreciation on lenders who had financed plenty of Teslas, only to suffer when the new price dropped by €10,000. Financial institutions remain cautious due to the repercussions they experienced with electric cars on their finance rosters.
Simon Acton from Next Eco Car, an electric used car retailer based in Dún Laoghaire, shared his perspective. While there may be reluctance from traders to fully embrace electric cars, this presents opportunities for the astute buyer to get more affordable deals. Acton commented that he purchases a substantial portion of stock from UK auctions without significant risk, as long as one is knowledgeable about the process. He added that he always observes for models with which he’s familiar and those that especially offer valid battery warranties and necessary service histories.
Acton emphasises the importance of battery health and warranty when giving advice. He typically prefers models he has previously dealt with, particularly those that still have a remaining battery guarantee, coupled with the necessary servicing history to confirm its validity. Upon each vehicle’s arrival, they carry out their own battery check. Adopting this approach to purchasing, Acton until now has not faced any troubles. If issues were to occur, the warranty serves as his safety net. Most automakers provide battery warranties for up to 8 years, often with a 160,000km restriction.
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Furthermore, Acton believes that the combination of comprehensive education and quality battery testing tools is crucial for the blossoming of the second-hand EV market from its present stagnation. He mentions ongoing discussions with auction houses locally and in the UK through their associates, Maverick Diagnostics. These discussions focus on the potential adoption of the Aviloo battery testing mechanism to offer customers clarity and confidence regarding the battery health of the vehicles on sale. However, due to its commercial implications, he prefers to keep the details under wraps.
Though parties initially welcome this concept, recognising its potential benefits, discussions about the service’s cost are currently underway. Acton is confident that a resolution will be reached in due course but insists that it is vital for progress to be accelerated. He stresses the need for those who complain about EV residuals to back such proposals, as they hold the potential to alleviate concerns and debunk the unfounded claims circulating in the media about EV battery health.