China’s used car dealers have set an expiry date for electric cars.
About four out of five used car dealers in China refuse to accept a fully electric vehicle older than five years, over worries about battery life and replacement costs, according to the International Energy Agency’s Global EV Outlook. A 3-year-old EV in China now resells for about 45% of its original price, down from almost 55% in 2023, according to the China Automobile Dealers Association.
China has been the world’s largest EV market for a decade and now has 44 million of them on its roads. This makes it the first country where EVs are aging in large numbers. Yet its dealers can’t reliably price a used EV, because there is no agreed way to measure the health of its most expensive part, the battery, according to industry experts. The countries that have imported Chinese EVs will face the same valuation problem as the cars turn five.
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“Exporting the car is the easy part,” Bill Russo, founder of the Shanghai-based advisory firm Automobility, told Rest of World. “Building the ecosystem that supports its second and third owner is much harder.”
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Chinese carmakers exported more than 2.5 million EVs last year, twice the previous year’s total, the IEA reported. Europe was the largest market, followed by Southeast Asia. Chinese cars now make up 55% of EV sales in countries outside Europe and the U.S.
Buyers in the Gulf back away at the same five-year mark, as mileage climbs and the battery warranty winds down, Harsh Chaturvedi, an independent automotive consultant in the United Arab Emirates, told Rest of World.
“Customer interest drops significantly after the fifth year,” said Chaturvedi, who co-founded and ran the Indian electric fleet company MyEVPlus before selling his stake. “The fifth year therefore becomes an important psychological and commercial point in the used EV market.”
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Analysts, lenders, and leasing companies calculate how much a car loses at three and five years, the length of a typical lease and loan, Karl Brauer, executive analyst at U.S. car search firm iSeeCars, told Rest of World. EVs fall faster in those calculations because new buyers pay extra for the latest technology and for the statement the car makes about them — as much as they would for a luxury badge, he said.
“Used car shoppers are much more value-oriented,” Brauer said.
Battery warranties add to the concern, and explain why dealers turn older EVs away. Manufacturers typically cover the battery for eight years or 160,000 kilometres (99,419 miles), and a replacement can cost a third of a new car, Chaturvedi said. Every year of age eats into that warranty, and once it expires, the cost of a failed battery falls on the owner.
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A car is a tool, not an investment. Why should I care about it holding value?
As replacing the battery costs a third of a new car, it might have an effect how you calculate the price you are willing to pay. It will effect the lease rates in case you lease the car.
As the used car market currently has limited visibility on the actual condition of a battery and no one buys the used car in case you want to sell, it may also be a recycling issue.
Another point is that most Chinese EV makers are in the red. Global research company AlixPartners say only a handful of the more than 100 of China’s EV makers will be financially viable within the next five years. What if one of them goes bankrupt and you need spare parts or a battery?
The article raises a lot of good questions imho.
A typical EV battery will last 10 years before any meaningful degradation starts.
Thanks for the response, good points.
My impression is the battery is the most important consideration for the “lifetime” of the vehicle before real expensive maintenance happens, so for me the question is can you get your value from what you paid before that? I’m just a person, not running a business, so I’m not considering my car as a “depreciating asset,” ain’t nobody got time for that.
I’ve also seen posts around the real lifetime of car batteries exceeding expectations, so it seems to have positive evidence building up.
OEM manufacturers disappearing is definitely an issue. I wonder if Fisker has a working aftermarket battery?
as a buyer of not one, not two, but three second hand EVs from Japan, I can confidently say that they are cheaper once they are older, but guess what… batteries are outlasting most projections by a significant amount.
There are indeed buyers for older secondhand EVs. And while new buyers are paying a premium, this is an excellent democratising feature of this new market.
It’s not so much what you can sell it for as it is how much a dealer can resell it for, and thus how much they are willing to give as trade in canoe value or as a direct purchase.
Since a lot of people rely on trade in value to be able to get the next car, it isn’t an investment, but it still matters to the owners’ overall financial interests. You know it isn’t going to value up, it isn’t about making money, it’s about losing as little as possible over time
Hey, it still works. Battery’s still excellent. Guess it’s holding its value.
