Strength of second hand electric market shows gathering pace of EV revolution

For some time now I have been pointing out the initial stages of a coming ‘death spiral’ of new and used ICE (Internal Combustion Engine) vehicle sales and prices.

In my mind – it should look like this:

1. The public first holds off on their next new car purchase in anticipation of EVs becoming available ‘soon’ (resulting in an ongoing fall in new car sales); (covered here and here , and here)
2. Whilst waiting for EV mass market availability (and personal price points) the public turns to buying used cars, so used car sales volumes (and prices) start to rise; (covered here)
3. As EV price and availability points comes closer, the age of used cars sold increases (as they have a shorter time to fill-in before the buyer’s choice of new EV becomes available) (covered here);
4. As EVs with the desired range and style begin to come onto the used market at price points closer to the public’s perceived EV worth – buyers begin to snap them up in place of used ICE cars – resulting in a short-term spike in their used prices as more and more of the public begin to tune in to the EV revolution;

This fourth stage now appears to be the point some overseas EV markets are reaching.

A recent study of the four most searched for used EVs (the BMW i3, Nissan Leaf, Renault Zoe and Tesla Model S) by UK car site CarGurus found that the used prices of these electric cars in the UK have risen over the past year.

As an example, the most popular selling EV in the UK and Europe over the last few years has been the Renault Zoe. In the UK, prices for a 2015 model Zoe have gone up by 14% between January 2019 and November 2019. (And are 18% up on their January 2017 price).

Even luxury brands (renounced for ballistic levels of depreciation) have been bucking this trend with the average price of a used 2014 BMWi3 rising by 1% in 2019 and the Tesla Model S depreciating by a smaller level than petrol/diesel equivalents.

Snapshot of CarGurus data

Note:
*IMV: Instant Market Value or ‘fair retail price’

So where to from here in the EV revolution? My suggestion for the remaining stages of the EV takeover are as follows:

1. Used ICE car prices fall at an ever increasing rate as more EVs hit the second-hand market;
2. New ICE car sales tank as EVs begin to hit the market in numbers and people can finally get their hands on a new EV that meets their needs and price point. (With the added incentive to avoid buying new ICE cars as they become almost unsellable at any price on the used market!)

However, we here in Australia may have to wait a bit longer for such pricing and availability signals of the change.

Firstly, we have never seen many EVs in our country so there are bugger-all second-hand ones to be had, so price variations are too hard to map using such a small sample size.

Secondly, given the massive demand for EVs in the larger market overseas (and the lack of significant Australian federal government support for EV purchase or infrastructure) the manufacturers are focussing their efforts in supplying the pent-up demand in those other markets, meaning we still see very little in the way of models or import numbers of the few that are available here.

As an example of how far behind we are here in comparison to comparable markets: Australia had just over 600 first generation Nissan Leafs officially imported here (plus a few more brought in as ‘grey’ imports since). However New Zealand has over 8000 first generation Leafs, and that is with a population barely 20% of Australia’s. The reason?

Unlike Australia, the NZ government has had a strong, long-term approach to meeting its climate change obligations with EV support a major component of their approach.