Depreciation is something every car owner needs to think about. Sadly all cars lose value as they age. Market conditions also have a huge impact on values, causing some models to depreciate faster than others. What we want to do today is have a look specifically at second-hand EVs and why they can have a big problem with losing value. Then, if you have an interest in becoming a car broker and helping to find quality used cars, you can speak to us.
Technology
The main reason EVs depreciate so much actually ties to their very nature. These vehicles are relatively young in technological terms. As a result, they are advancing all the time. That means in just a few years the tech in one car can be massively out of date. It can have a gigantic impact on resale values.
EV buyers typically want a state of the art vehicle with impressive equipment and features, fast recharging, and the longest range. Sadly, generally the only way to get that is by buying a new car. The average buyer won’t pay a premium for an older electric vehicle.
The batteries
Another cause of the depreciation is the fact people have concerns about the batteries in EVs. Everyone knows that a battery won’t last forever. Whether it is an iPhone or a laptop, the power source will degrade with time. The degradation means the device doesn’t last as long between charges. This is even worse with electric vehicles as it gradually reduces the range. So, people generally think older EVs won’t offer a good enough range for their needs.
The battery concerns also extend to ownership costs. With things like phones and laptops, battery replacement is relatively affordable. It can be very expensive for EVs though. As a result, buyers will usually steer clear of any vehicles where it will cost a lot to replace the battery. It means a car broker typically won’t get many requests for second-hand EVs.
Is there a market?
The used car market in the UK is huge, but the majority of the activity is around petrol and diesel vehicles. There simply isn’t as much interest in older EVs. So, depreciation can be much faster simply because people aren’t buying.
Government intervention
The UK Government has and is doing a number of things to encourage more people to make the switch to EVs. This includes things like grants, initiatives, and investing more in the infrastructure. While this is a positive thing, it can have a negative impact on the second-hand market. Some of these measures make it more attractive to buy a new EV. So, it means lower demand for older ones and ensures they lose more value.
Perception
Finally, second-hand EVs can see little demand and high depreciation because of perceptions. Some people simply aren’t ready to try an electric vehicle. They would rather wait until they are more mainstream and the tech is mature.
Do you think you could be a car broker?
While there is a problem at the moment with the second-hand EV market and depreciation of vehicles, there are positives for the future. Dealers and brokers need to keep an eye out. They’ll need to be ready when demand does start to pick up, especially if certain EV models gain a reputation for being reliable.
Whatever happens, the UK is a great place to be a car broker. We are a nation of car lovers and people love to find deals for reliable vehicles. You can help with that if you get into broking. Learn how on our website. Then, have a look at our materials for resources that make it easier to start a business. You can also contact us if you need any advice.
