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

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

Laura Roberson, George Washington University<br>
Saurav Pantha, George Washington University<br>
**.white[John Paul Helveston]**, George Washington University

August 07, 2024

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## The vehicle resale market is critically important

## 70% of sales are<br>used vehicles

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

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

<br>

### - 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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## Prior research suggests PEVs depreciate faster than CVs

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### .center[**Data**: ~9M used vehicle listings from 60k dealerships (2016 - 2020)]

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# .center[Two Studies, One Dataset]

### Measuring Electric Vehicle<br>**Mileage** in the United States

Zhao, L., Ottinger, E., Yip, A., & Helveston, J.P. (2023) ["Quantifying electric vehicle mileage in the United States"](https://www.sciencedirect.com/science/article/abs/pii/S254243512300404X) _Joule_. 7, 1–15.

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### Measuring Electric Vehicle<br>**Resale Value** in the United States

Roberson, Laura A., Pantha, S., & Helveston, J.P. (2024) “[Battery-Powered Bargains? Assessing Electric Vehicle Resale Value in the United States](https://iopscience.iop.org/article/10.1088/1748-9326/ad3fce)” _Environmental Research Letters_.

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# Value Retention Rate:

# `$r = \frac{Listing Price}{MSRP}$`

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

### (Except .blue[Tesla])

Data: All listings between 2016 - 2019 (inclusive)

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# Modeling retention rate as exponential decay

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## Newer PEVs are holding value better than older PEVs<br>(except Tesla)

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## Newer PEVs are holding value better than older PEVs<br>(except Tesla)

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<br>

## Longer-range BEVs hold value better (w/diminishing returns at 200+ miles)

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

### New Market

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

<br><br>
.font70[.left[Image source: https://www.pngwing.com/en/free-png-yaftj]]

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### Used Market

(Assuming adequate supply)<br>
Max Price = **$22,500**

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## Used EVs gain additional benefit from new vehicle subsidies with no additional cost to gov’t

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### COVID-19 had substantial impact on used vehicle pricing

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## Key takeaways

### - BEVs have depreciated faster than CVs, but this is changing!

### - Newer model BEVs with higher ranges are holding their value more similarly to CVs.

### - Subsidies for new BEVs pass ~3% lower prices in used market

### - Post COVID19 pandemic used prices are up ~40%

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# Thanks!

### Slides:

### https://slides.jhelvy.com/2024-btr6/

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# Extra slides

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### How you compute retention rate matters

### We omit subsidies: `$\frac{Price}{MSRP}$`

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

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### .center[**Data**: ~9M used vehicle listings from 60k dealerships (2016 - 2020)]

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## Newer BEVs are holding value better than older BEVs