An increasing number of car dealers are holding off buying used electric cars as prices continue to plummet.
The values of used electric cars have been falling rapidly since October and car dealers stung by losses are now refusing to stock them until prices realign.
The issue was featured yesterday on BBC Radio 4’s You & Yours programme when Car Dealer’s editor-in-chief James Baggott, Auto Trader’s Catherine Faiers and Car Quay’s Jamie Caple were interviewed about the problem.
Caple told listeners how he had dropped the price of a used Nissan Leaf on his pitch and still wasn’t getting any interest.
He said: ‘Already at what this car is [priced] up at we’re into a minus. And that’s before I’ve prepared it, advertised it, put a warranty on it and cleaned it – I’m into a big minus.
‘We were surprised at the rate [prices] collapsed. You went from having an electric car in stock for a very short amount of time and it would turn very quickly, but when Tesla reduced the price of their cars it created a sort of perfect storm of values just free falling.
‘Every one of our electric cars is listed for less than what we paid for it which is obviously not ideal as a car dealer.
‘Listing cars and then selling them at a loss is not something you need to make a habit of.’
Caple said he will buy electric cars again in the future but right now he was ‘pressing pause on the foray into electric vehicles’.
You can listen to the full feature, which headlined the popular BBC lunchtime show, here.
The feature on Radio 4 was inspired directly by the used car dealer panel discussion which took place at Car Dealer Live at the beginning of the month, after producers saw coverage of the event.
At Car Dealer Live, four independent used car dealers said they were now avoiding buying used EVs because of the rapidly falling prices.
Car Shop CEO Nigel Hurley said he wasn’t buying EVs ‘unless they were really cheap’, while Premier GT boss David Trigg said he refuses to buy Porsche’s electric Taycan, labelling the car a ‘disaster’.
Peter Smyth, director of family-owned car dealer group Swansway, told Car Dealer yesterday that he thinks there ‘isn’t one dealer in the country who hasn’t lost money on used electric cars in the past few months’.
Used EV values have been in free fall since October last year, brought on by increased supply at a time buyers have been scared off by electric prices and the cost of living.
The fall in electric values then accelerated in January when Tesla cut the price of their new cars.
Tesla Model 3 values reduced by 4 per cent (£1,325) in February after dropping more than 10 per cent in January. This equates to an almost £12,000 loss in just four months.
Swansway boss Smyth said: ‘We’re not buying used EVs unless they are really cheap. I’ve said to my buyers that they need to price them the same as an equivalent petrol or diesel model and not pay a premium.
‘Very few EVs are selling at auction and we’re taking them back and having to retail our way out of them. I’ve told the team they need to take their medicine, put their head under the water and keep dropping the prices until they get a nibble.
‘Of all my over age stock, the largest majority is electric cars. We will keep dropping the prices and then buy them next time far cheaper.’
Smyth said he had noticed many dealers in the motor trade hanging on to their EV stock in the hope that prices will stabilise.
‘I know a lot of other dealers just aren’t buying them at the moment – and I don’t blame them,’ he added.
In an update on used car prices for March shared with Car Dealer, Cap HPI’s director of valuations Derren Martin said the firm had seen some dealers ‘cautiously dipping their toe back in the water’ and buying some EVs.
However, the valuations firm still wrote down a large number of electric car prices this month.
Tesla Model 3 and Jaguar I-Pace price drops, which fell dramatically in the last few months, have begun to taper off.
Martin said: ‘Cautious is a really good word for it. It’s not that all dealers are not buying EVs, some are dipping their toe back in the water as there’s no bargains to be had in the petrol and diesel world at the moment as prices are high, but there are some relative bargains in the electric vehicle world.
‘My recommendation, though, would be keep [electric vehicles] in small volumes for now and see if you can get that consumer demand back.’
Auto Trader reported on the You & Yours programme that it is seeing high demand for electric cars on its platforms and said it was the ‘industry’s job’ to promote the benefits of EVs.
Tom Barnard, editor of Electrifying.com, said: ‘For years, one of the reasons consumers have cited for not making the switch to electric cars has been the higher cost of purchase.
‘In the new car market this has been offset by the tax incentives offered for company car drivers, but private used buyers have nothing similar and may have found it hard to make the sums add up.
‘The fall in used electric car prices may well mean that these potential buyers look again and decide that an EV could work for them. The prices of a lightly used Tesla Model 3 are now dipping below £30,000 and the cheapest are below £25,000. That will seem great value to drivers who may have thought this sort of sophisticated car was out of their reach.’