After a couple of years of demand outstripping the supply of electric cars, it’s suddenly a buyer’s market.
Research by Car Dealer magazine shows that over the past six months, 29 of the 30 biggest depreciating used cars are electric models.
And the scale of the average decrease is especially astounding. While diesel cars dropped an average of 1.3 per cent and petrol vehicles just 0.5 per cent, electric cars’ auction prices have fallen by a massive 33.6 per cent since December.
There are a couple of caveats to this before we get onto the ‘why’. Firstly, the data looks at “three-year-old cars with average mileage”, so it doesn’t include the very newest models.
Secondly, these are trade figures: the prices that dealerships pay at auction, rather than the cost to the consumer. One will impact the other, of course, plus resale value is an important factor for shoppers in the market for a new car.
What’s driving the electric car price fall?
There isn’t one answer to this, and it seems to be a number of factors creating a perfect storm for plummeting resale prices.
Firstly, they have further to fall than their fossil-fuel-guzzling counterparts. The electric premium is sometimes as much as £10,000 on a car’s petrol or diesel equivalent, and that means the percentage drop can appear larger.
Secondly, there’s the matter of supply and demand. Over the past two years, demand for electric cars has seriously outstripped supply, with long waiting lists for those wanting to make the switch from petrol or diesel to something more environmentally friendly.
That’s no longer the case. Factories have largely caught up, and there’s now a ready supply of new models available to drive away today.
The word ‘new’ is important here. The models in this list are three years old and, while consumers may have settled for a pre-owned model in the absence of new supply, they no longer have to.
And, of course, battery technology is improving all the time, leaving buyers wondering whether it’s a false economy to pick up an older electric car when newer models can get further on a single charge.
Speaking of false economies, the sky-high cost of energy hasn’t helped the electric car, either.
While the upfront cost for EVs was always higher than a petrol or diesel vehicle, consumers had the comfort of knowing that low running costs would always beat the pricing of the pumps. With Russia’s ongoing war in Ukraine and the subsequent hit to energy prices, that’s no longer quite such a clear selling point.
On another cost-related note, you can also add in the end of certain government incentive schemes — like the Plug-In Car Grant — to the pile of reasons why interest in EVs may be drying up in general terms.
High-profile price cuts from Tesla have also had a knock-on effect, as Electrifying.com editor Tom Barnard told Car Dealer magazine: “We also can’t underestimate the impact of Tesla’s sudden price cuts on the used markets.
“Residuals spiralled downwards as owners and traders alike became frightened of losing more money. This then hit the values of rival cars.”
With all these factors in play, it’s perhaps no surprise that the resale value of electric cars has dropped so much in the past half year.
Still a bright future for EVs?
That may sound pretty grim news for EV evangelists, but some of this hides hidden positives.
The most obvious of these is that one of the biggest criticisms of electric vehicles has historically been their high cost — and that is clearly coming down fast.
That should ultimately drive adoption — especially as the UK is still committed to end the sale of new petrol and diesel cars in just seven years’ time. Said timeframe should also see the electric-charging infrastructure improve immeasurably, too.
The reluctance to jump in on an older model as technology advances also highlights the innovation in the sector, and the improvements happening every day. One of VW’s partners is now claiming a battery with 1,000km range, for example. That’s double the range of the most popular EVs today, and should go some way to alleviating the phenomenon of charger anxiety for longer journeys.
And, environmentally speaking, the best may be yet to come as the actor, comedian, and car enthusiast Rowan Atkinson wrote in a widely shared opinion piece for The Guardian this weekend.
Highlighting the potential of solid-state and hydrogen batteries (as well as synthetic fuels for existing non-electric cars), Atkinson wrote that although, as an early adopter, he felt “a little duped” by the environmental benefits, the future still looks bright.
“Electric propulsion will be of real, global environmental benefit one day,” he wrote, “but that day has yet to dawn.”
Which electric cars have fallen in value?
These are the five cars with the biggest falling prices in the last 6 months by percentage drops, according to Cap HPI.
1. Nissan Leaf
Drop: 39.4 per cent
2. Seat Mii electric
Drop: 38.7 per cent
3. Kia Soul electric
Drop: 37.8 per cent
4. VW Golf Electric
Drop: 37.3 per cent
5. Hyundai Ioniq electric
Drop: 36.3 per cent