US Electric Vehicle Resale Values Plummet by Nearly One-Third in 2023

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Resale Value Decline in the US: The second-hand market for the top 10 selling battery cars in the US, which includes prominent models from Tesla, General Motors, and Ford, witnessed an average drop of 28% in 2023, highlighting a significant setback for electric vehicle resale values.

International Comparisons: In the UK, the depreciation of used EVs was even more pronounced, with a roughly 20% decline, far surpassing the overall market’s 3.7% decrease, as reported by HSBC using Auto Trader data.

Future Challenges for EV Pricing: Analyst Mike Tyndall predicts a challenging year for EV pricing in 2024, emphasizing the potential impact of subsidy reductions in countries like Germany and France. Carmakers may face intensified competition, possibly leading to aggressive pricing strategies.

Profit Margins and Market Share: The looming threat of competition from more affordable Chinese EV models may force established carmakers to compromise profit margins to maintain market share. Tyndall suggests a delicate balance between profitability and market share retention in the face of aggressive new entrants.

Impact on Lease Prices: The decline in resale values holds significant consequences for lease pricing, affecting around 60% of new vehicle purchases in Europe. With a larger value loss, motorists will require more substantial financing over a three-year lease, potentially influencing consumer decisions.

Challenges for Carmakers: Deeper skepticism among mainstream buyers towards EVs has compelled car manufacturers to reassess pricing strategies and scale back sales targets. Weaker resale values present a challenge, making new EVs comparatively less affordable than traditional petrol or diesel models.

Regional Variances: In both the UK and California, where sales of fully electric vehicles are mandated to increase annually, the sharp decline in resale values poses challenges. Car manufacturers may face fines unless they can adapt to the evolving market dynamics.

Incentives and Market Transition: Industry representatives, such as Mike Hawes, head of the Society of Motor Manufacturers and Traders, advocate for additional incentives, cheaper insurance deals, and expanded charging infrastructure to drive consumer adoption of electric models in the mass market.

Specific Model Performance: Detailed analysis reveals specific model performance, with the Tesla Model X experiencing a significant 36% drop in resale value in the US. Other best sellers, including Ford’s F-150 Lightning and Chevrolet Bolt, also saw substantial declines.

Increasing Discounts and Offers: To stimulate demand, carmakers are resorting to increased discounts, with roughly half of new EVs in the UK offering 0% finance and substantial cash discounts. The US market witnessed a doubling of discounting offers throughout 2023, with top-selling models offering significant price reductions.

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