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.
Older models have smaller batteries and less range
Due to the nature of battery advancement AND battery degradation, older EVs produce less range than new models. Is the range on a used electric car enough for you? Let's take the example of one of the UK's most popular EVs, the Nissan Leaf.
If you buy a used EV your car will probably have a shorter range than a new car for two reasons. First, batteries tend to lose range over time. Similar to a mobile phone battery. For example, battery degradation on a Nissan Leaf means the range on a five year old car may have dropped nearly 20%. If you just need a car to run around town, this may be plenty. The chart below shows how the range on an electric car drops over time.
Second, older models usually have smaller batteries, which means a shorter range than a newer model with a larger battery. Take the Nissan Leaf. Today you can buy a new Leaf with a 40 kWh battery that delivers around 133 miles of mixed city and motorway driving range on a full charge (155 miles in summer and 110 miles winter), but older models had smaller batteries and therefore a shorter range. Their 30 kWh battery was introduced in the 2016 model year, and pre-2016 model year cars were only sold with a 24 kWh battery, providing a maximum real-life range of only around 80 miles—and that was the original range for a brand new battery.
Saving Money on Running Costs with an EV
In terms of annual fuel costs, driving an EV will save the typical driver around £850 a year over a petrol car that sports an average fuel efficiency of 36 mpg. This assumes average mileage of 7,600 miles per year, a petrol cost of £1.27/litre and an electricity cost of £0.163/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.
Electric car drivers will also save money because the vehicle road tax for electric cars is lower than for petrol cars.
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, however, because even used EVs produce enough range for most day-to-day driving.
Second, many EVs are sold on a three-year lease, at which point cars are returned to the dealer and sold as used. This flushes the market with lots of supply of three-year-old EVs, 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
Electric cars cost more than their petrol counterparts, at least for the first five years. But the EV has lower running costs—so how long does it take for the annual savings to make up for the higher purchase price of an EV?
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? 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.