Take a Decade to Get There
At the close of 2022, used car prices rose by an astounding 31% Experts attribute the COVID crisis and supply chain problems, as well as the rising demand, to the high prices. Experts also predict that electric vehicles (EVs), will continue to grow in demand over the coming years. How will EVs perform in ten years?
Used cars with internal combustion engines sell very well as long as they’re maintained. People will not be afraid to buy a 10-year-old car that has 100,000 miles. It doesn’t take long to restore a well-maintained internal combustion engine, even with all the wear and tear expected from so many miles.
EVs can be a little different. An electric motor that is well maintained should run as smoothly as an internal combustion engine. Problems are caused by the batteries. Even with modern technology, ten-year-old batteries pose a significant risk.
Batteries degrade over time
Modern EVs run on lithium-ion batteries. At the moment, it doesn’t appear that there is another technology available to replace lithium-ion. Let’s say that you purchase a new Tesla Model 3 in 2022. The battery pack comes with an eight-year warranty. This warranty guarantees at least 70% capacity retention over the warranty period.
Why are 70% of the population satisfied with their current level? Because batteries degrade over time. Even batteries that have never been used can lose their capacity over time. Rechargeable batteries will eventually lose their capacity. They are eventually destroyed by natural degradation and repeated charge-discharge cycles.
The warranty of Tesla is valid for only eight years. They only guarantee 70% capacity retention, even though they offer an eight-year warranty. What happens in the ninth? What happens in the tenth year? What will happen to the battery pack 10 years after it is replaced?
Performance and Mileage
People buy cars based on what they see. However, used cars are valued based on more than just cosmetics. Edmunds and Kelley Blue Book value used cars based upon their expected performance, mileage, fuel mileage, and physical condition.
A brand new car can be purchased with an internal combustion engine. Then, you could turn it around and sell it off to Car Fast Cash. This company pays cash for cars in San Bernardino and Kern. They would give a price that is based on a standard valuation tool, such as Kelley Blue Book.
If you take good care of your car, it will retain its value and you will get a fair offer by Car Fast Cash. Now, let’s say you buy a Tesla Model 3. It would still be fair to offer it but it would have a lower price due to the age of its battery pack and how many miles it has.
It is important to remember that EVs will lose value more quickly than gasoline-powered cars due to battery degradation. Even with less mileage, EVs will lose value if both cars are maintained equally.
The Trade-In Question
Trade-in value is another thing to think about. Before investing in EVs, this is something that people need to consider. Will they rely on trade ins if they can’t sell their EVs on a private market? If so, will dealers be more willing to pay a higher amount?
This could be the EV owner’s salvation. Dealers could pay top dollar for used EVs if the motors and mechanics are in great shape ten years from now. The batteries can be replaced at wholesale prices by dealers, while private buyers would need to purchase them retail.
The dealer’s margin would be cut if the batteries were replaced. Accepting EV trade-ins might still prove to be profitable. All of it would depend on whether wholesale batteries are available at a reasonable price. This is the big question. Cheap batteries won’t become the norm if carmakers stick to proprietary batteries.
Interchangeable generic batteries
The current battery technology is proprietary because automakers are competing for the best technology. After the race is over, the winner could license its technology to other generic battery manufacturers. We could then have cheaper interchangeable batteries.
This would allow EVs to have a longer resale life and a higher resale price. A generic, interchangeable battery pack that can be replaced by the owner would alleviate any fears about purchasing an EV used and then having to spend thousands replacing it.
EV Charging Infrastructure
If it isn’t addressed quickly, there is another thing that could disrupt used EV markets: the absence of EV charging infrastructure. Although charging stations are appearing in new locations, there isn’t enough infrastructure to support widespread adoption. Consumers want fast charging. Consumers want EVs to be charged as fast as possible.
The charging infrastructure issue will not be solved. This will limit the potential audience for EVs beyond the current market. Because, aside from cost, the only thing that is keeping many Americans away from switching to EVs are the charging issues.
Before EVs can replace gasoline-powered cars, they have a long way to go. There are still questions about their resale potential. What will their performance be a decade later? Will consumers be more inclined to purchase used EVs in the future if they are reluctant to buy new EVs now? The truth will come out in the end.