From the moment they first hit dealer lots five years or so ago, today’s modern electric cars have been treated particularly cautiously by finance and leasing companies, used car salespeople and industry valuation firms. Hindered by fears surrounding how long their batteries would last after a few years of abuse, not to mention high initial sticker prices, many perceived the depreciation on an electric car would be far higher than a comparable gasoline vehicle.
Even in the years when oil prices were peaking at over $100 a barrel, electric vehicle residual values were still perceived as being particularly low. Buyer ignorance, combined with both range and charger anxiety meant that many customers just didn’t feel ready to make the jump to an electric car. Add in the falling price of new electric car models, improved, longer-range battery packs and more consumer choice, and things didn’t get any better, as many would-be electric car customers opted to buy new rather than used.
Today, crude oil is now worth less than a third of what it was at its peak less than two years ago, and the automotive industry has enjoyed a renaissance of interest in larger, less efficient vehicles like pickup trucks and SUVs. But although that may seem like the perfect storm for even lower residual values on plug-in cars as buyers stick with the familiarity of the internal combustion engine, it turns out that isn’t necessarily the case.
That’s because while the overall average depreciation on electric vehicles during Q4, 2015 was around 6.9 percent, one car — the Nissan LEAF electric hatchback — actually appreciated in value during a period where the value of used cars at auction experienced an accelerated decline, managing to appreciate an average of three percent during the quarter.
The news comes from Kelley Blue Book (via Autoremarketing) and its Q4 2015 Blue Book Market Report. Tracking the value of used cars sold at auction against other factors such as fuel prices, vehicle age and segment, the industry valuation specialist says that Q4 2015 wasn’t a great month for those looking to make money from a used car sale. With 1- to 3-year old vehicles in the high-end luxury car and luxury car segments the worst performing, dropping on average 8.7 and 8.1 percent of their values respectively during the quarter, buyers were opting to pick a brand-new car rather than a used one.
When it comes to high performers, fuel-hungry mid-size trucks and high performance cars experienced the smallest depreciation during the quarter, their small 2.4 and 3.7 percent depreciation highlighting the plummeting price of gasoline in the U.S. during the same period.
But while the electric car segment on average experienced an average depreciation of 6.9 percent during the quarter, and the now discontinued Mitsubishi i-Miev electric car fell a massive 14.1 percent in value during the quarter, the Nissan LEAF appreciated by three percent in value. That, says Kelley Blue Book, is equivalent to around $300 in value over the quarter.
Or to put it another way, a used Nissan LEAF purchased at the end of December 2015 would have cost an average of $300 more to buy than an identical car would have done three months earlier.
Why the appreciation? Kelley Blue Book Analyst Sean Foyl says the prices of newer used electric cars may have hit a sweet spot after an extended period of simply being too high for many customers to stomach.
“Despite the continued drop in fuel prices, the Nissan LEAF was the best performing vehicle across all segments, appreciating 3 percent, or roughly $300,” he said in the official Blue Book Market Report for Q4, 2015. “This rebound could be attributed to consumers now finding the current value of electric vehicles more attractive at their current price point following months of steady declines.”
Here at Transport Evolved however, we think there’s another reason: next-generation models.
In the past few months, we’ve encountered many more customers looking for an electric car for the first time who have decided to make their first electric car a used vehicle ahead of the launch of cars like the 200-mile 2017 Chevrolet Bolt EV this fall, the next-generation Nissan LEAF (expected some time next year), and the mass-market, ‘affordable’ Tesla Model 3 (expected in 2018).
Aware of the high initial depreciation and with plenty of evidence to suggest that used electric cars and their battery packs will survive far longer than many had previously feared, those buyers are opting for a used electric car rather than being tied in with a lease deal. That way, when their chosen longer-range electric car arrives, it’s easier to be at the front of the line for a trade-in on a new model.
While we’ve only anecdotal evidence to suggest this, the low new sales volume of cars like the 2016 Nissan LEAF last month only serves to back our theory up.
That said, this isn’t the first time we’ve heard of used electric car prices stabilizing. As we reported back in March last year, European automotive valuation firm Glass’s said that residual values for electric cars and plug-in hybrids were moving closer to that of diesel-powered vehicles.
As always, we’re interested to hear if you’ve recently purchased a new or used plug-in car — and more importantly what price you paid for it. Do you think plug-in cars have increased in their used values lately? Or perhaps you managed a really good deal on a used car that you’d like to share?
Do so in the Comments below.
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