Sales of new electric cars are collapsing. This is also due to the used car market, because electric cars are having a very difficult time there. Gerald Puhl from the vehicle exchange “heycar” does not believe that older electric vehicles can even be sold.
Thanks to the environmental bonus and innovation bonus, significant numbers of electric vehicles were sold in Germany for the first time. Then the subsidies were cut off. And now the next problem arises. The lessees or original owners want to sell their cars, but hardly anyone wants an electric used car. A circumstance that will probably remain – and also threatens the new electric car market.
The corona crisis led to a disruption in supply chains and a shortage of semiconductors. New vehicles could sometimes only be obtained with long delivery times, which meant that the supply of used cars became scarce and prices rose sharply. That’s over now. Electric vehicles are also available in sufficient numbers. “Prices are falling in the market for electric vehicles, this applies to both new and used cars. You can talk about price wars, for example when Tesla lowers prices in the short term,” says Gerald Puhl from “heycar”, a brokerage agency specifically for high-quality used vehicles, in conversation with the star. His calculation: Falling prices for new cars always reduce sales for used cars, which in turn reduces interest in the entire vehicle class. A vicious circle.
Decline in residual values of electric cars
The market for used electric vehicles is getting bigger, and that is exactly a “challenge,” says Puhl. The industry is faced with one question: How is the residual value risk dealt with? The so-called residual value indicates the price at which a used vehicle can be further marketed. “Electric vehicles are now coming back onto the market used, and the big question is what value they still have.” When it comes to combustion engines, the laws of pricing are known. Things look completely different with electric vehicles. The battery accounts for a significant portion of vehicle costs. Customers rightly ask how resilient the battery will be after two, three or four years. But that’s not the only problem. New vehicles are heavily discounted and are more technically advanced than the models offered used.
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“We are currently seeing that there is very little demand for used electric vehicles. We therefore expect price reductions in the future,” says the used car portal expert. For electric vehicles, the pace of innovation in terms of range, charging speed, etc. is greater than for combustion engines. Accordingly, the guys “age” faster.
Phase with high innovation speed
“This is a huge problem for the customer,” says Puhl. The pace of innovation will continue for some time. The customer then asks himself: Do I even want a used car? Or is it completely outdated now? “We are living in a transition phase in the area of e-mobility. The question of who assumes the residual value risk will be crucial. If it is the private buyer, demand is unlikely to increase and can only be increased through discounts.” The private customer is well advised not to take the residual value risk, but rather to rent, lease or finance the car so that he can return it at a defined price.
From an economic point of view, the problem does not disappear; the risk remains with retailers and manufacturers. “I don’t think you can easily market electric cars that are more than five years old,” is the expert’s verdict. You can already see on “heycar” that two or three year old cars are difficult to sell. “How should this be the case with even older vehicles when there are several generations in between?” One can assume that the pace of innovation in electromobility will even increase. If new electric models with current battery technology are offered in the price segment under 20,000 euros, it will be even more difficult to sell used ones from higher classes.
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Maybe not for sale at all
In theory, it was thought that maintaining an electric car would be cheaper than maintaining a combustion engine. Because of the technology: an electric motor is much simpler than a diesel engine. The wear on the brakes is reduced. Wear parts like the exhaust don’t even exist. In practice it has often been shown that repairs to electric cars can be much more expensive – for example if the entire battery fails. A point that makes older vehicles outside of the warranty unattractive. The high electricity prices in Germany are destroying another advantage of electricians. In many countries, charging for electricity is much cheaper than gasoline.
This doesn’t mean anything good for sales of electric vehicles. The low residual value makes the car very expensive in the first few years when it is turned over. This means that major customers in the fleet business are already withdrawing from e-models. The manufacturers will not be able to offer the vehicles permanently below price – for example with “subsidized” leasing rates. One solution could be renewed subsidies for this transition phase. If things stay as they are, there is a risk of a standstill. “If two to three-year-old cars don’t flow into the market, it clogs the sale of new electric vehicles,” says Puhl.