Why Used EV values are falling

There are many upsides to owning an electric car, though one downside is proving financially tough for early adopters.

Used prices for electric cars are falling due to fierce competition, deep discounting and a lack of trust in emerging brands pushing the technology.

Resale values for electric cars are 15 to 20 per cent behind equivalent petrol models, according to data from wholesale auction house Manheim.

Used car values for electric vehicles are dropping. Photo: Thomas Wielecki

Mike Costello, corporate affairs manager at Cox Automotive Australia, which owns Manheim, said used values for EVs were “typically not as good” as other vehicle types.

“The average selling price of a two year old EV has dropped from about $70,000 a couple of years ago to $53,000, though the sample size is still small and volatile,” he said.

“The average expected used value on a late model petrol car might be 75-80 per cent whereas for an EV it’s 60-65 per cent.”

Electric car customers typically save money while owning the car, due to reduced running and servicing costs, and cheap leases under the Federal Government’s EV Discount.

But they could be in for a shock when trading in for a new model, particularly when thousands of vehicles bought under the discounted lease scheme start hitting the second-hand market from July.

Tesla’s price slashing has hurt all electric cars. Photo: Mark Bean.

Mr Costello said there are several factors behind the drop in used EV prices.

“The big one is Tesla slashing its prices, then there are the new EV brands entering the market, largely from China which has huge cost advantages,” he said.

“Fundamentally used car buyers often aren’t risk takers the way new car buyers can be.

“Someone buying a used car doesn’t want to take a risk, they just want a set of wheels to get them from A to B. That person doesn’t necessarily want a product from a brand with fewer runs on the board.”

Fraser Ronald, chief commercial officer at Pickles Auctions, agreed there are “notable pressures on EV values”.

Mazda introduced the MX-30 electric car in 2021.

Priced from about $70,000 drive-away, it now costs about $29,000 on the second-hand market, and is no longer available to order.

Similarly priced Mazda CX-9 petrol SUVs now cost about $50,000 second-hand.

Vinesh Bhindi, Mazda Australia’s managing director said sales of electric models have “sort of stagnated”.

EVs such as the Mazda MX-30 are dropping in value. Picture: Thomas Wielecki.

“Whether it has stagnated because people are waiting for more new products, they’re waiting for more of the promised infrastructure to roll out or whether they’re not sure it’s fit for purpose, or whether the value in the proposition is compelling … it’s going to be a transition, and a transition takes time.

“In the end it is the consumer who will decide.”

While manufacturers such as MG, Peugeot and Ford have slashed the prices of electric cars to keep up with Tesla’s price fluctuations, others such as Kia promise that early customers will not be hurt by deep discounting.

Kia Australia chief executive Damien Meredith said the brand believes it is “really important to protect the residual value”.

Mr Costello agreed that snap discounting “immediately impacts your resale values”, resulting in “a slightly ugly situation in some cases”.

“EV sales have pretty much plateaued this year and that’s before new Chinese companies bombarded the industry,” he said.

“You’re going to have a massive oversupply of EVs in the new market that are going to push down prices in the used market.”

New brands such as Deepal are launching in Australia. Picture: Supplied

Emerging brands such as Deepal, Zeekr, Xpeng and Leapmotor are in the process of launching new electric cars in Australia.

Mitsubishi Australia chief executive Shaun Westcott said the “plethora of new brands” will result in “a period of excess supply, and not everybody will survive that”.