Economies around the world have been bonkers the past several years, since COVID hit. That has been more evident in the auto industry more than most others, probably because cars are such expensive products and get so much attention. One thing we saw as inflation started increasing was record high car prices, and that included used car prices as well as new car prices. And this has especially been the case in the electric vehicle market. The good news is that, at long last, prices have been dropping strongly in the used EV market.
In this story, we’re looking. at the case of the UK. Whereas used car prices were up slightly (2.8%) in May, EV prices dropped dramatically, by 18.6%. That’s according to data from the Auto Trader Retail Price Index.
The used EV market is changing fast in part because the many EVs that surged onto the market a handful of years ago are now delivering many more EVs to the used car market. The Tesla Model 3 started really selling in high volumes in 2018, five years ago. Many new car buyers keep a car for 5 years and then upgrade. In general, the EV market has grown rapidly in the past few years, and we’re just going to see a better and better used EV market as those cars start to make it to second buyers. Regarding last month, “the huge surge of stock entering the market (up 201% YoY in May) continues to outpace very robust levels of consumer demand (up 44% YoY),” Motor Finance Online writes.
Simply supply and demand says that if supply grows more than demand, prices go down; and if supply grows much faster than demand, prices go down a lot.
“Looking at the used EV pricing data at a more granular level reveals just how fragile the used electric vehicle market is. Although the current rate of used EV supply growth is slowing – at 201% YoY, May marked the lowest rate of growth since October 2022– the market continues to see a huge influx of stock.
“There are currently circa 15,000 used EVs for sale each day on Auto Trader, 29% of which is now under £20,000, which is up significantly on the 7% recorded in August 2022.
“As the availability of more affordable electric cars has increased, so too has consumer demand, with the share of EV enquiries generated through Auto Trader for the one-to-five-year age range almost doubling over the last 12 months, from 4% to 7.3%, the highest level ever recorded.”
The exciting thing is that some electric models that have gas-powertrain equivalents have dropped below the latter in price on the used car market. For example, a 3-year-old Jaguar I-PACE is currently £600 less than a 3-year-old Jaguar F-PACE.
Of course, the big dog is the Tesla Model 3. This is the EV that started flooding the market first, and this is the model many buyers still want. It is not cheaper than a gas-powered competitor up front (probably is if you take into account operation, though), but it is getting more competitive. “And with retailers slashing the prices of used Teslas more than any other brand in response to new car price reductions, the average price of a used 3-year-old Model 3 (£30,700) is now just £3,600 more expensive than a BMW 3 Series of the same age – in August the price gap was a whopping £22,000. As a result, the Model 3’s market share of electric enquiries through Auto Trader has shot up from 8% to nearly one in five (18%) over the same period.”
We’ll see what happens in coming months and years, but one thing is clear: right now is a great time to buy a used electric car, including a used Tesla Model 3, in the UK — and also beyond.
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