Does Australia have a viable second-hand EV market yet?

There’s been a lot of talk recently about the growth of Australia’s second-hand EV market.

In 2019 (just pre-covid) I remember checking Australia’s biggest online car sales site to find it had close to 200,000 cars listed, of which barely 500 were full electric battery electric vehicles (BEVs). Of the BEVs, most were new as that was when cars like the Kona electric, original 28kWh Ioniq and Tesla model 3 were just arriving … and there had been extremely few BEVs sold here to that point. The only ongoing models then were the BMWi3, the Tesla models S and X and a few stray Renault Zoes and Kangoo ZEs. (Both the Leaf and the iMiEV had long since ended sales and the new Leaf was yet to arrive).

This was simply a reflection of the tiny percentage of the total new cars sales here that BEVs represented to that point. As a result, the few second-hand ones available were mostly low driving range Leafs, iMiEVs and early i3 BMWs – plus expensive Teslas models S and X. This also reflected that many BEV market offerings available overseas were not brought here due to unsupportive federal government policy at the time.

As nature (and business) abhors a vacuum – to fill that gap in the market, businesses like the Good Car Company, Ion DNA and Kilowatt Cars began importing that wider range of second-hand BEVs from other countries (mainly Japan – these by the way are often referred to as ‘JDM’ models – short for ‘Japanese Domestic Market’).  While these can be a good buy, you do need to be aware of the issues surrounding this part of the market. (For more information on what to look for in JDM and other private import vehicles, see my article here).

Fast forwarding to today’s Australian car market: a quick look at that same major car sales site shows around 231,000 cars available, with almost 4,400 of these being BEVs. Looking a little deeper, 196,000 of the overall total are classified as ‘used, demo and near-new’. (For simplicity, I’ll call these ‘second-hand’).

Of those, 2,450 are second-hand BEVs. That would put BEVs at a mere 1.25% of its second-hand listings. (As compared to 7.2% of the 2023 Australian new car market). Of that second-hand number, 28% are Teslas, reflecting its long-term presence as well as its ongoing market dominance. (53% of Australia’s 2023 BEV sales were Teslas). Table 1 shows how many second-hand BEVs from each year are available on that website.

Given some of those are recent 2023 demonstrators, at a guess most of the ones previous to that are true ‘second-hand’ whilst the 2023 models are a good way to effectively buy a new car at a reduced price.

The third column is the telling one: the number of manufacturers offering BEVs here tapers off rapidly below 2021. Given many private buyers get their cars at the four to five year-old mark – we can see that 2017, 2018 or 2019 BEVs are few in number, with not many brands or models to choose from.

So having put our market in perspective as to what and how many we have now, what does our current second-hand market look like?

First-up, it becomes obvious the market is still in its early stages as Tesla predominates since the Model S arrived in 2014. That however is soon to change with BYD likely to take that crown here in 2024. So if you want a Tesla, there is plenty of choice. For those who don’t, the market is only just getting started!

As for those rest: the cheapest on that website is a 2011 UK spec Leaf at $9k. However it has only 53% battery range left and would soon need a battery replacement. (Unlike later BEVs, early Leaf batteries have not held up all that well). Replacement cost for an original spec Leaf battery for a 140-ish km range is around $11k from a dealer, or $16-17k for an aftermarket one giving you a bigger-than-original range of 220-ish km.

At 9k, it is relatively cheap electric motoring if you want a 50 to 60 km range car – which  can suit many people. It is perhaps not so attractive at an overall cost of $26k-ish with a replacement battery, even if it gives you 220 km. For that sort of money, you could get a 2017-2019 Renault Zoe with 280 km range. (There are two Zoes currently listed for that sort of price). In fact there are 119 used BEVs from seven different manufacturers listed under $30k.

Lower that limit to $25k, though, and there are only 50 left from a mere three manufacturers. Most of these, by the way, are Nissan Leafs (mainly JDM imports) – plus the two previously mentioned Renault Zoes, one Renault Kangoo ZE and three Mitsubishi iMiEVs.

In the $25k to $40k range, we find 243 BEVs from 11 manufacturers. MG at 79 and Nissan at 70 make up a big chunk of these though. Hyundai is next at 40 (mostly Ioniqs, but three 2019 Kona electrics are available at $40k) plus GWM sneak in a few 2023 Ora demonstrators … and there are even two Teslas. (A 2014 Model S and a 2019 Model 3).

From $40 – $45k you get 163 additional BEVs to choose from – including nine Mazda MX30s. Seems the buying public has cast it’s vote and this $65k plus new car from 2022 with (from new) barely 200 km of range now lurks in the low $40k bracket of the second-hand market.

As I mentioned back in June last year, the BEV market here is progressing down much the same track as in the UK – albeit a couple of years behind. As such, we can use markets like that one to see what might happen here in the near to medium future.

So what can we expect from the second-hand BEV market in the next one to three years? First-up, the numbers available will increase exponentially in line with new car sales. Secondly, we will soon see the first of the vehicles from fleets as groups of BEVs turned over at the end of their leases, resulting in some volatility in used prices for these models. (As shown in the UK market recently).

This volatility will likely last until a batch arriving on the market makes up only a small percentage of the overall number of BEVs available. Good for watchful buyers though, as there will be for a while some value buying when big fleets turn over a batch of one particular model. Thirdly, as new BEV prices continue to fall, there will be downward pressure on less desirable and/or older BEVs with shorter driving ranges.

Summing up:

The Australian second-hand BEV market is only now beginning to develop after years of lurking in the background. It is still early days though, and as such prices will bounce around for some time to come, due to both supply and demand factors.

On the supply side, when batches of BEVs are turned over by fleets, there may be some temporary depressing of a particular model’s price. On the demand side, prices will stabilise, or even rise, as more people start to find a second-hand BEV that fits their budget, increasing demand on what is still a numbers constrained market segment.

Between the two, that volatility will remain until BEVs make up a significant part of both the new and second-hand markets. Another factor will be the increase in budget BEV models putting downward pressure on used models. (As has been seen in the Tesla market on the numerous occasions that Tesla have dropped their prices to drive new car sales).

After that, it is probable that used BEV prices will simply follow the same trends as the ICE market has done until now. Mind-you, once that happens it will be interesting to see what the used ICE market does. Will it begin a death-spiral when people simply don’t want to buy one anymore??

As a final point: if you are in the market for a second-hand EV (BEV, PHEV or HEV), make sure you still do all your due-diligence checks. EVs are still cars and can have accident damage as well as faulty and worn parts – all the usual things in fact, just like ICE ones. For tips on how to check a used EV, see article here.