On March 20, 2024, drivers were charging their Tesla in Fountain Valley, California.
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Cars lose value once they drive off the lot, but electric vehicles take that adage to the next level. Some industry and investment experts say this is becoming a major obstacle to wider adoption.
recent study According to iSeeCars.com, the average price of a used electric car in the United States that is one to five years old has dropped by 31.8% in the past 12 months, which is equivalent to a loss of value of $14,418. In comparison, the average price of internal combustion engine vehicles of the same age fell by only 3.6%.
iSeeCars executive analyst Karl Brauer said that while lower used electric vehicle prices may increase some buyers’ desire to buy, it will also reduce demand for new electric vehicles.
“The loss of value in the first few years of a new car is one of the most expensive aspects of owning a new car,” he said. “As more new car buyers realize that electric vehicles have significantly reduced value, they will not Would be interested in purchasing one again.”
Smart Investor stock analyst and co-founder David Kuo said on CNBC’s “Street Signs Asia” program on Monday that electric vehicles cannot retain their value, which prevents him from investing in the industry.
Guo said electric vehicles are similar to other consumer electronics such as laptops and mobile phones, which tend to lose value and relevance soon after they are sold.
“The same (depreciation) happens with electric cars; you might pay $20,000, $30,000 for one, but after a year it’s going to depreciate much faster than an internal combustion engine car,” he said.
Industry insiders also pointed out the problem of electric vehicle resale. Interviewed by Bloomberg At the end of last year, from Volkswagen and toyota Says depreciation is hurting the value proposition of its battery-powered cars.
Guo further believes that the software and computing power of used electric vehicles may be outdated and incompatible with updates when they are sold or even in advance. He added that it would be a “eureka moment” when buyers realize they paid too much initially.
adverse market conditions
Although electric vehicles have obvious depreciation problems, the reason may have less to do with the technology itself and more to do with market conditions.
According to iSeeCars, the value of used electric vehicles in the United States has dropped significantly, largely due to the U.S. government’s steep price cuts. Tesla A wider price war in the electric vehicle market.
Tesla is the leading seller of electric vehicles in the United States, and because of the lower prices of its new electric vehicles, buyers are less likely to accept used alternatives at the same price level.
“If (Elon Musk) continues to lower Tesla prices to stimulate sales, he will continue to bring the entire market down, just as he has done over the past 15 months,” iSeeCars’ Brauer said.
During an October earnings call, Musk defended the price cuts, emphasizing the importance of cost to consumers.
“This is not an optional thing for most people; it’s a necessity. We have to make our cars more affordable so people can buy them,” he said.
During the next quarter’s earnings call in January, Chief Financial Officer Vaibhav Taneja said the company would continue to focus on cost reduction efforts in 2024.
Since then, the electric vehicle price war between Tesla and its Chinese rivals has shown few signs of stopping.
In addition, Brauer said overproduction of electric vehicles relative to demand has created a supply glut that makes new and used electric vehicle prices unlikely to rebound in the short term.
However, continued problems in the EV market could be a boon for electric and combustion-powered hybrids, which are showing increasing strength in the new and used car markets.
Last year, the average price of a used hybrid dropped just 6.5 percent, to $2,135, a fraction of the average drop for electric vehicles.
“Hybrids are a great stepping stone between gasoline and electric vehicles, and I expect them to become increasingly popular over the next 10 years,” Brower said.
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