Quantifying Plug-in Electric Vehicle Mileage and Resale Value

## Quantifying Plug-in Electric Vehicle Mileage and Resale Value

**.white[John Paul Helveston]**, George Washington University 
Eliese Ottinger, George Washington University 
Lujin Zhao, George Washington University 
Laura Roberson, George Washington University

October 6, 2023

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### .center[.font90[Electrifying the passenger vehicle fleet is a critical climate goal]]

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# .center[Two Studies, One Dataset]

### Measuring Electric Vehicle **Mileage** in the United States

Lujin Zhao (Ph.D. Student) 
Eliese Ottinger (Undergraduate RA)

**Status**: Paper submitted for review soon

]

### Measuring Electric Vehicle **Resale Value** in the United States

Laura Roberson (Ph.D. Student)

**Status**: Exploratory phase

]

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### .center[**Data**: ~13M used vehicle listings from 60k dealerships (2016 - 2022)]

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## Going the Distance: Quantifying Electric Vehicle Mileage in the United States

Lujin Zhao (Ph.D. Student) 
Eliese Ottinger (Undergraduate RA) 
John Paul Helveston, Ph.D.

The George Washington University

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# .center[We really need to understand PEV usage]

### - PEV emissions reduction benefit **depends on vehicle usage** .font80[[Jenn (2020)](https://www.nature.com/articles/s41560-020-0632-7)]

### - Modelers typically assume **BEV miles = CV miles**

### - Revenue from proposed mileage tax **depends on vehicle usage** .font80[[Metcalf et al. (2022)](https://doi.org/10.1086/722672); [Zhao and Mattauch (2022)](https://doi.org/10.1016/j.jeem.2022.102747); [Davis and Sallee (2020)](https://doi.org/10.1086/706793)]

### - PEV adoption depends on **how well PEVs substitute for CVs** .font80[[Xing et al. (2021)](https://doi.org/10.1016/j.jeem.2021.102432)]

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### .center[Conflicting prior results on BEV mileage]

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### .center[.blue[Conflicting prior results on BEV mileage]]

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### .center[.red[Inconsistent data quality in prior studies]]

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## BEVs are driven significantly less than other powertrains

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### Teslas driven more than non-Tesla BEVs (but not as much as CVs)

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## BEVs are driven significantly less than other powertrains

`$mileage = \beta_0 + \beta_1age+\beta_2{age*powertrain}+\beta_3{age}*cents\_p\_mile+\epsilon_i$`

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### .red[BEVs driven 4,500 miles less than CVs on average]

]

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### BEVs driven 4,500 miles less than CVs on average

### .red[Non-Tesla BEVs: -5,400 miles]

### .blue[Tesla: -2,800 miles]

]

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???

BEVs: ~7k mi/yr

All others: ~11k - 12k mi/yr

Far less variability in BEV mileage than CV mileage

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**Non-linear range effect**:

+10 mi range:

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**Non-linear range effect**:

+10 mi range:

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### .center[BEV mileage less sensitive to operating cost than CV mileage]

1 cent increase in operating cost:

BEV: -69 mi/yr 
CV: -136 mi/yr

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### .center[BEV mileage less sensitive to operating cost than CV mileage]

]

1 cent increase in operating cost:

BEV: -69 mi/yr 
CV: -136 mi/yr

]

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# Why low BEV mileage?

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# Why low BEV mileage?

### **Intra-household substitution?**

Maybe current adopters have multiple cars?

Perhaps, but NHTS data suggests **secondary cars are only driven 1,000 - 2,000 miles less per year**.

]

]

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# Why low BEV mileage?

### **Maybe newer models are driven more?**

Some (limited) evidence this may be the case

(MY 2019: only 10,484 listings, max age of 3.2 years old)

]

]

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# Why low BEV mileage?

### **Selection bias?**

Maybe current adopters just have lower driving needs?

No way for us to measure this, but it seems very plausible

]

]

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## Key takeaways

### - BEVs are driven significantly less than other powertrains: .red[Non-Tesla BEVs: -5,400 miles]; .blue[Tesla: -2,800 miles]

### - Far less variability in BEV mileage than CV mileage (BEVs only substituting for lower-mileage CV usage)

### - BEV mileage less sensitive to operating cost than CV mileage

### - Can't say **why** low BEV mileage, but still relevant for policy

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### Battery-Powered Bargains? Measuring Electric Vehicle Resale Value in the United States

Laura Roberson (Ph.D. Student) 
John Paul Helveston, Ph.D.

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class: center

## The vehicle resale market is critically important

## 70% of sales are used vehicles

]

## Used vehicles are more affordable (pre-covid)

]

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# .center[We really need to understand PEV resale value]

### - Depreciation is a key component in "Total Cost of Ownership" (TCO) models, e.g. [ANL's TCO Study](https://publications.anl.gov/anlpubs/2021/05/167399.pdf)

### - "Resale anxiety" a potential obstacle to electric vehicle adoption [Brückmann et al. (2021)](https://doi.org/10.1088/1748-9326/ac3531)

### - BEV buyers nervous about depreciation tend to lease rather than buy [Dua et al. (2019)](https://www.sciencedirect.com/science/article/pii/S235248471930068X)

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## .center[Questions we hope to answer with this study]

### Are PEVs depreciating faster than CVs?

### Which PEV features matter for retaining value?

### Is this changing over time?

### What is the impact of **new** car subsidies on pricing in the **used** market?

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### We think PEV subsidies for new cars should impact used car pricing

### New Market

(MSRP - Subsidy = Price) 
$30,000 - $7,500 = **$22,500**

]

### Used Market

(Assuming adequate supply) 
Max Price = **$22,500** 
Max RR = **75%**

]

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## BEVs & PHEVs are depreciating worse than CVs and HEVs

## (Except Tesla)

Data: All listings between 2016 - 2019 (inclusive)

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## How you compute retention rate (RR) matters

### `$\frac{Price}{MSRP}$`

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### `$\frac{Price}{MSRP - Subsidy}$`

]

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# Modeling retention rate as exponential decay

# `$$r = \alpha \exp ( \boldsymbol\beta \mathrm{\mathbf{x}} )$$`

# $$\log(r) = \alpha + \boldsymbol\beta \mathrm{\mathbf{x}} $$

# Interpretation: `$$\Delta r= \exp (\hat{\beta}) - 1$$`

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## Newer PEVs are holding value better than older PEVs

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## Newer PEVs are holding value better than older PEVs

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#### Longer-range BEVs hold value better

Slopes are predictions after controlling for model years

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#### Mean used PEV price still lower than CVs post-COVID

Inflation-adjusted constant 2019 dollars

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#### Mean used PEV price still lower than CVs post-COVID

Unadjusted real dollars

]

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## .center[Questions we hope to answer with this study]

### Are PEVs depreciating faster than CVs? .red[Yes!]

### Which PEV features matter for retaining value? .red[Range & Model Year!]

### Is this changing over time? .red[Yes! Newer better than older!]

### What is the impact of **new** car subsidies on pricing in the **used** market? .red[A little pass through! (3%)]

---

# Thanks!

### Slides:

### https://slides.jhelvy.com/2023-rit-visit/

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