Published on March 19th, 2019 |
by Steve Hanley
March 19th, 2019 by Steve Hanley
The folks at Kelley Blue Book are experts at valuing used cars and they have some interesting things to say about the prices of used electric vehicles. In general, cars with shorter range suffer far more depreciation than cars with longer range. The line of demarcation today seems to be 200 miles. Below that number, cars plummet in value as soon as they are purchased. Cars above that number fare much better when it comes to maintaining their value. In fact, as we reported in January, the Tesla Model 3 has the second best estimated 3 year resale value of any passenger vehicle in the United States.
“We are currently seeing the Chevrolet Bolt hold its value at auction much better than other EVs with shorter range,” Eric Ibara, KBB’s director of residual values, tells MyEV.com. “We think range could be an important factor in determining an EV’s residual value.”
Another important factor is the federal tax credit, which can reward the buyers of electric cars with as much as $7,500. Not surprisingly, that credit is immediately factored into used EV values, meaning a car that sold for $35,000 new is worth only $27,500 by the time it gets parked in somebody’s driveway the first time.
The federal tax credit is reduced once a manufacturer has sold 200,000 electric cars in the US market. Tesla has already crossed that threshold. Between January 1, 2019 and June 30, 2019, people who buy a new Tesla will only be eligible for a credit of $3,750. On July 1, it drops to $1,875, and on December 31 of this year, it will expire altogether.
General Motors is up next. On April 1, the tax credit on its electric cars will be cut in half, and then in half again on October 1 and again on January 1, 2020. It will expire completely on March 31, 2020. Manufacturers may adjust prices on their new electric cars in order to adapt to the decreasing tax credits as Tesla has done already.
The Under 200 Mile Club
Cars with less than 200 miles of range suffer the most depreciation according to InsideEVs. KBB says the current Kia Soul Electric, with a paltry 111 miles of range, will be worth just 29% of its original MSRP after 3 years. The current Nissan LEAF with 150 miles of range will retain 34.3% of its original cost. The Hyundai Ioniq Electric with 124 miles of range will retain 35.5% of its value.
All those cars are scheduled for significant range increases soon. The new Kia Soul Electric will share the electric powertrain used in the Kia Niro Electric and Hyundai Kona Electric, which should give it a range of about 225 miles. The Nissan LEAF+ coming later this year will have 226 miles of range and the Ioniq is scheduled for an upgrade soon.
What this means is that people who are comfortable with short-range electric cars can get some fantastic deals on used EVs, especially the original Nissan LEAF, which can often be found on the used car market for prices below $10,000.
The Over 200 Mile Club
Prices for the Chevy Bolt are beginning to rise at auction, thanks to its 238 miles of range. KBB estimates its 3 year value at 41% of MSRP. The new Audi e-tron SUV with 248 miles of range is projected to be worth 52.5% of MSRP 3 years down the road. The Jaguar I-PACE with 234 miles of range will be worth 52.8% of sticker price, KBB says. The firm has provided no pricing information on the KIA Niro Electric or Hyundai Kona Electric.
That leaves the Tesla Trio. KBB rates the Model X, which has more range than any of its competitors, as being worth 52.7% of its original cost after 36 months. The Model S has not yet been rated by KBB, but one look at the prices asked for used examples confirms that the model is in strong demand by used car buyers.
Kelley Blue Book rates the Tesla Model 3 as the used car value champion among electrics, and nearly #1 among all vehicles, predicting a 3 year old example will be worth a whopping 64.3% of its original cost. There are reports today of used Model 3s being sold for more than what their owners paid for them.
Statistics Are Subject To Change
The numbers from Kelley Blue Book are subject to change. A lot can happen in the course of three years, and what any particular car will be worth used is a composite of many factors. One of them is demand for new cars. If the Audi e-tron or Jaguar I-PACE are sold out, prices for used ones will rise. If they are languishing on dealer lots, used prices will fall. New models may still appear that make the latest models today appear hopelessly out of date in three years.
Figuring what your car will be worth in the future is a crap shoot. One prediction that can be made with a reasonable degree of certainty is that used Teslas will retain their value very well relative to the competition. If resale value is an important part of your new-car buying decision, a Tesla may well be your smartest choice.