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

Laura Roberson, George Washington University
Saurav Pantha, George Washington University
John Paul Helveston, George Washington University

August 07, 2024

1 / 22

The vehicle resale market is critically important2 / 22

The vehicle resale market is critically important

70% of sales are
used vehicles

2 / 22

The vehicle resale market is critically important

70% of sales are
used vehicles

Used vehicles are more affordable (pre-covid)

2 / 22

We really need to understand PEV resale value3 / 22

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

3 / 22

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

3 / 22

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

- BEV buyers nervous about depreciation tend to lease rather than buy Dua et al. (2019)

3 / 22

Prior research suggests PEVs depreciate faster than CVs

4 / 22

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

5 / 22

Two Studies, One Dataset

Measuring Electric Vehicle
Mileage in the United States

Zhao, L., Ottinger, E., Yip, A., & Helveston, J.P. (2023) "Quantifying electric vehicle mileage in the United States" Joule. 7, 1–15.

Measuring Electric Vehicle
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” Environmental Research Letters.

6 / 22

Value Retention Rate:\(r = \frac{Listing Price}{MSRP}\)7 / 22

BEVs & PHEVs are depreciating worse than CVs and HEVs

(Except Tesla)

Data: All listings between 2016 - 2019 (inclusive)

8 / 22

Modeling retention rate as exponential decay

9 / 22

10 / 22

Newer PEVs are holding value better than older PEVs
(except Tesla)

11 / 22

Newer PEVs are holding value better than older PEVs
(except Tesla)

12 / 22

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

13 / 22

PEV subsidies for new cars should impact used car pricing14 / 22

PEV subsidies for new cars should impact used car pricing

New Market

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

Image source: https://www.pngwing.com/en/free-png-yaftj

14 / 22

PEV subsidies for new cars should impact used car pricing

New Market

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

Image source: https://www.pngwing.com/en/free-png-yaftj

Used Market

(Assuming adequate supply)
Max Price = $22,500

14 / 22

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

15 / 22

COVID-19 had substantial impact on used vehicle pricing

16 / 22

Key takeaways17 / 22

Key takeaways- BEVs have depreciated faster than CVs, but this is changing!17 / 22

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.17 / 22

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 market17 / 22

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%17 / 22

Thanks!

Slides:

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

18 / 22

Extra slides19 / 22

How you compute retention rate matters20 / 22

How you compute retention rate matters

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

20 / 22

How you compute retention rate matters

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

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

20 / 22

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

21 / 22

Newer BEVs are holding value better than older BEVs

22 / 22

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

Laura Roberson, George Washington University
Saurav Pantha, George Washington University
John Paul Helveston, George Washington University

August 07, 2024

1 / 22

The vehicle resale market is critically important2 / 22

The vehicle resale market is critically important

70% of sales are
used vehicles

2 / 22

The vehicle resale market is critically important

70% of sales are
used vehicles

Used vehicles are more affordable (pre-covid)

2 / 22

We really need to understand PEV resale value3 / 22

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

3 / 22

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

3 / 22

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

- BEV buyers nervous about depreciation tend to lease rather than buy Dua et al. (2019)

3 / 22

Prior research suggests PEVs depreciate faster than CVs

4 / 22

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

5 / 22

Two Studies, One Dataset

Measuring Electric Vehicle
Mileage in the United States

Zhao, L., Ottinger, E., Yip, A., & Helveston, J.P. (2023) "Quantifying electric vehicle mileage in the United States" Joule. 7, 1–15.

Measuring Electric Vehicle
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” Environmental Research Letters.

6 / 22

Value Retention Rate:\(r = \frac{Listing Price}{MSRP}\)7 / 22

BEVs & PHEVs are depreciating worse than CVs and HEVs

(Except Tesla)

Data: All listings between 2016 - 2019 (inclusive)

8 / 22

Modeling retention rate as exponential decay

9 / 22

10 / 22

Newer PEVs are holding value better than older PEVs
(except Tesla)

11 / 22

Newer PEVs are holding value better than older PEVs
(except Tesla)

12 / 22

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

13 / 22

PEV subsidies for new cars should impact used car pricing14 / 22

PEV subsidies for new cars should impact used car pricing

New Market

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

Image source: https://www.pngwing.com/en/free-png-yaftj

14 / 22

PEV subsidies for new cars should impact used car pricing

New Market

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

Image source: https://www.pngwing.com/en/free-png-yaftj

Used Market

(Assuming adequate supply)
Max Price = $22,500

14 / 22

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

15 / 22

COVID-19 had substantial impact on used vehicle pricing

16 / 22

Key takeaways17 / 22

Key takeaways- BEVs have depreciated faster than CVs, but this is changing!17 / 22

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.17 / 22

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 market17 / 22

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%17 / 22

Thanks!

Slides:

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

18 / 22

Extra slides19 / 22

How you compute retention rate matters20 / 22

How you compute retention rate matters

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

20 / 22

How you compute retention rate matters

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

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

20 / 22

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

21 / 22

Newer BEVs are holding value better than older BEVs

22 / 22

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

The vehicle resale market is critically important

The vehicle resale market is critically important

70% of sales areused vehicles

The vehicle resale market is critically important

70% of sales areused vehicles

Used vehicles are more affordable (pre-covid)

We really need to understand PEV resale value

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

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

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

- "Resale anxiety" a potential obstacle to electric vehicle adoption Brückmann et al. (2021)

- BEV buyers nervous about depreciation tend to lease rather than buy Dua et al. (2019)

Prior research suggests PEVs depreciate faster than CVs

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

Two Studies, One Dataset

Measuring Electric VehicleMileage in the United States

Measuring Electric VehicleResale Value in the United States

Value Retention Rate:

\(r = \frac{Listing Price}{MSRP}\)

BEVs & PHEVs are depreciating worse than CVs and HEVs

(Except Tesla)

Modeling retention rate as exponential decay

Newer PEVs are holding value better than older PEVs(except Tesla)

Newer PEVs are holding value better than older PEVs(except Tesla)

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

PEV subsidies for new cars should impact used car pricing

PEV subsidies for new cars should impact used car pricing

New Market

PEV subsidies for new cars should impact used car pricing

New Market

Used Market

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

COVID-19 had substantial impact on used vehicle pricing

Key takeaways

Key takeaways

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

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.

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

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%

Thanks!

Slides:

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

Extra slides

How you compute retention rate matters

How you compute retention rate matters

We omit subsidies: \(\frac{Price}{MSRP}\)

How you compute retention rate matters

We omit subsidies: \(\frac{Price}{MSRP}\)

Others: \(\frac{Price}{MSRP - Subsidy}\)

Data: ~9M used vehicle listings from 60k dealerships (2016 - 2020)

Newer BEVs are holding value better than older BEVs

The vehicle resale market is critically important

Help

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

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

The vehicle resale market is critically important

The vehicle resale market is critically important

70% of sales areused vehicles

The vehicle resale market is critically important

70% of sales areused vehicles

Used vehicles are more affordable (pre-covid)

We really need to understand PEV resale value

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

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

70% of sales are
used vehicles

70% of sales are
used vehicles

Measuring Electric Vehicle
Mileage in the United States

Measuring Electric Vehicle
Resale Value in the United States

Newer PEVs are holding value better than older PEVs
(except Tesla)

Newer PEVs are holding value better than older PEVs
(except Tesla)

70% of sales are
used vehicles

70% of sales are
used vehicles

Measuring Electric Vehicle
Mileage in the United States

Measuring Electric Vehicle
Resale Value in the United States

Newer PEVs are holding value better than older PEVs
(except Tesla)

Newer PEVs are holding value better than older PEVs
(except Tesla)