If you're thinking about buying a used car, there's a great reason you should consider a used electric vehicle (EV). Electric vehicles depreciate faster than traditional petrol or diesel cars in the first three years—while not such good news for a new car owner, it's potentially great news for those considering a used EV. The first owner takes the depreciation hit, leaving second-hand buyers able to buy notoriously more expensive EVs at a more affordable price.
As we found in our analysis comparing depreciation of a Nissan Leaf to that of a Nissan Pulsar, by the end of the third year a Leaf depreciated 44% whereas a Pulsar only depreciated 30% from the estimated purchase price (including dealer discounts and a government grant for the Leaf). That means EVs are closer in price to comparable petrol or diesel cars once they are a few years old.
Should You Buy a Used EV?
If you've already decided that an electric car is for you, there are a few additional considerations to take into account when buying a used EV instead of new. The largest factor is range. Due to the nature of battery advancement AND battery degradation, older EVs produce less range than new models.
Let's take the example of the UK's most popular EV, the Nissan Leaf. Today you can buy a new Leaf with either a 24 kWh battery or a larger 30 kWh battery. The larger battery was introduced in the 2016 model year, and produces a real-life range around 130 miles. Pre-2016 model year cars were only sold with the 24 kWh battery, and provided maximum real-life ranges of around 80 miles - when they were brand new.
Add battery degradation into the equation and the range on a three to five year old, 24 kWh Leaf may have dropped to 60 - 70 miles per charge. If you just need a car to run around town, this may be plenty.
Saving Money on Running Costs with an EV
In terms of fuel costs, driving an EV will save the typical driver around £800 a year over a petrol car that sports an average fuel efficiency of 36 mpg. This assumes mileage of 8,000 miles per year, a petrol cost of £1.1/litre and an electricity cost of £0.17/kWh. Drivers who put more miles on their cars each year will save even more in fuel costs. This analysis holds for both new cars and used.
Why Does an EV Depreciate Faster than a Petrol Car?
We found two main contributing factors to the accelerated loss in value of an EV. First, car battery technology is continuing to advance which means older technology becomes obsolete sooner, kind of like in the mobile phone market. To be fair, an older, smaller battery isn't necessarily a concern for everyone - 60 miles of range may be plenty for you.
Second, many EVs are sold on a three-year lease - when the lease is over the cars are returned to the dealer and sold as used. This flushes the market with lots of supply, suppressing prices of used cars of that age. According to our analysis, the Leaf takes the biggest hit to its value between years 2 and 3, losing 19% that year alone.
Breakeven Analysis: Used Electric Car vs. Used Petrol Car
A used EV will come with a higher price tag than a comparable used petrol car, at least for the first five years. But the EV has lower running costs - so how long do you wait for the annual savings to make up for the higher purchase price?
Let's take the example of the used Leaf vs used Pulsar - two comparable Nissans, except for the fact the the Leaf is all-electric and the Pulsar is a traditional combustion engine. Note that the Pulsar has better than average fuel efficiency, with the petrol delivering an estimated 55 mpg, making the electric seem a bit less enticing than when compared to the average car on the road. Despite this, the used Pulsar has higher all-in costs after less than two years of car ownership.
Breakeven Analysis of Used 2014 Nissan Leaf vs. 2014 Nissan Pulsar (Petrol)
|Nissan Leaf||Nissan Pulsar|
|Annual Fuel Costs||£400||£868|
|Annual Road Tax||£0||£30|
|Total Cost After 2 Years||£11,915||£12,051|
The next question, of course, is what could you sell either car for at the end of these two years? You may have about £12k in both cars, but what is the resale value? It's hard to say for sure, because current C13 series Pulsar was first launched in Europe in 2014, so we don't have data on older cars. But looking at the chart at the top of this article, it seems apparent that the prices of the Leaf and Pulsar are converging as they age. If that's the case, the ongoing lower running costs make a used Leaf an attractive option.
Yes, you have the risk of the battery failing (with a replacement cost around £5k), but the batteries have been performing better and longer than anyone expected. To offset this risk, there are far fewer moving parts to break in an electric car. And according to dealers we've surveyed, the scrap value of a Leaf is estimated at £5k so we wouldn't expect your Leaf's value to drop below this point.
To get an idea of used EVs in your area, browse through one of the numerous online car sale sites such as the recently-updated "Sell My Car" service on Gumtree.