Charging ahead…What’s the story with used EVs?

The EV market is fast-moving. It seems every day brings with it another headline about consumer demand, living with them or the volatility of their values. Vicky Gardner, Director of NextGear Development, navigates through the chaos and asks if EVs could soon be a feature of every used car dealer’s forecourt. 

A year of volatility  

Sales of new EVs reached a record level in 2023. By the year’s end, statistics show that nearly 315,000 battery-electric vehicles were registered. Indeed, 2023 saw more EVs hit the road than in 2020 and 2021 combined. Lots of new models have come to market, including some very compelling propositions from players new to the UK, including Chinese brands Nio and BYD. So, on the one hand, the picture looks rosy. 

However, it hasn’t been plain sailing for manufacturers and retailers. The cost-of-living crisis, inflation and rising interest rates have left new EVs out of reach to many private buyers (the typical new EV costs considerably more than its ICE equivalent). Manufacturer and dealer incentives for private buyers have been thin on the ground until very recently, plus concerns about range, charging infrastructure and future values remain real. For those with the means, it can be a leap of faith.  

Additionally, the government’s recent ICE ban U-turn will almost certainly have cast widespread doubt on the need to switch anytime soon, although it’s fair to say the true impact of switching the deadline from 2030 to 2035 is yet to play out. 

Fleets and the rise of used EVs 

Given the weak appetite from private buyers, it’s therefore unsurprising to find that, according to The Society of Motor Manufacturers and Traders, nearly four out of five new battery electric vehicles were registered by fleets in 2023.   

That’s largely due to the generous incentives fleet bosses are offered to purchase EVs, and because it makes financial (and environmental) sense as buying EVs for business use is a tangible way of addressing net-zero ambitions. Company car drivers are motivated too by the attractive benefit-in-kind perks EVs provide. 

These fleet vehicles, as they progress through their lifecycles, will create the used market. With the number of new EV registrations growing, ever-increasing numbers are reaching the used market too. Auto Trader reports that roughly 180,000 used EVs were sold in the UK in 2023. That’s compared to about 100,000 in 2022, a rise of 80%.  

Yet many used dealers are understandably cautious about stocking EVs. They’re unsure of the product and values have been tricky to determine. This hasn’t been helped by the likes of Tesla slashing their retail prices numerous times last year. That’s meant that in some cases, used models have suddenly felt expensive versus their new equivalent. Caught short, many dealers with EVs in stock have had to adjust prices accordingly which, of course, has hit profit opportunities. 

However, there is evidence that suggests EV values are now settling. While used values across the board have dropped, EVs have already suffered their biggest drop and are therefore not falling as quickly as petrol or diesel cars. This makes them arguably less of a depreciation risk than ICE in the short term. There are even some who think used EVs are at a level now that makes them feel like good value and that we’re approaching price parity with their ICE equivalents. 

To stock or not to stock? 

The rise of EVs is unstoppable and the used EV market, though in its infancy, is growing rapidly. Manufacturers have pivoted their product strategies and diverted their resources, billions of pounds of investment is being pumped into gigafactories and legislation will ensure ICE will fade away whether we like it or not.  

So despite the past year’s volatility, simple economics tells us that the market for used EVs will soon find its level and consumer demand will increase. That means there will be opportunities for savvy dealers to make decisions based on the right data, insight and market knowledge. I’ll be watching with great interest. 

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