Prices of used electric cars ‘more volatile’ than other cars, data shows

Electric cars have skyrocketed in popularity. In 2023, electric cars obtained a 7.2 per cent share of the Australian new-car market, a 161 per cent increase over 2022.

RELATED: Used electric car prices plummet after two years, data finds

But while the new electric car market continues to trend upwards, the used market has been less consistent, with data from Moody's Analytics showing price volatility for used electric cars "has been significantly higher than that of internal combustion engine (ICE) vehicles".

"Since the beginning of 2022, when fuel prices hit record highs and interest rates soared, an unprecedented influx of new EV models debuted in showrooms," the March 2024 analysis from Moody's Analytics stated.

"This confluence of expanding supply and external demand shocks plunged the EV market into a phase of heightened price-level volatility. As the EV market continues to evolve rapidly, we anticipate that the price volatility of used EVs will remain higher than that of ICE vehicles as the market seeks a stable equilibrium between supply and demand."

Michael Brisson, Director of Economic Research at Moody’s Analytics, says people who bought an electric car a few years ago will face a higher depreciation on their EV over those who purchased an ICE vehicle at the same time.

"People who bought a few years ago are in a tougher spot than those entering the market now because they will face higher depreciation than someone selling their ICE vehicle," Mr Brisson told Drive.

"However, if they were to purchase a new EV to replace their two or three-year-old vehicle, they would pay less for the switch than they did for the original [EV they purchased a few years ago]."

For those looking to buy an EV second-hand, it may pay to wait for more options to come into the Australian market. This will lower the price of a used model further.

"For individuals currently purchasing EVs in Australia, they should have noticed that the price for new EVs has decreased over the past year as new entrants have entered the market," Mr Brisson said.

"This, along with government subsidies for novated leases, is likely the reason for the considerable uptick in EV purchases in 2023. We have limited data on the second-hand market, but the expectation is that the retention value for second-hand EVs has decreased, making the purchase of a used EV relatively more affordable at the same time."

According to previous data shared by the Australian Automotive Dealers Association (AADA) and automotive insights company AutoGrab, taken from dealer and private used-car listings in Australia in December 2023, electric vehicles (EVs) are currently losing a large proportion of their value after the two-year mark.

Retained value reflects how much of a car's value when purchased new it would hold if sold today. For example, if a 2018 Toyota HiLux purchased new for $80,000 has a retained value of 85 per cent after two years, that means it would be worth roughly $68,000 if sold on the used-car market in 2020.

While electric cars less than two years of age retained a respectable 82.8 per cent of their original value when resold in December 2023, electric cars between two and four years old held on to just 57.6 per cent of their value, while electric cars five years of age or older were worth less than 25 per cent of their original purchase price when resold.

Source: AutoGrab