Selling new vehicles may be the main focus where fully electric models are concerned, but the pre-owned market also offers opportunity for dealers.
In the electric vehicle (EV) industry, new models get all the press. But without much fanfare, there’s a growing amount of action in another corner of the EV world — the pre-owned market.
The value of a used EV is heavily influenced by the state of its battery — and EV batteries don’t wear down in the same way most other car components do. Car dealerships with extensive used EV experience know this and are leveraging their knowledge to their advantage. Are you one of them?
Once limited to only a handful of models, the market for used EVs in Canada has grown exponentially in recent years. This growth is derived from three major factors: an increasing supply in used EVs, consumer demand for EVs outpacing new EV production capacity, and regional incentives that fuel the import of used EVs from the U.S.
Historically, when importing a vehicle or taking a trade-in, vehicle mileage acted as a proxy for wear of some major components. But this is not the case for used EVs.
In fact, a three-year-old EV with 60,000 km on the odometer can easily have less battery degradation than a two-year-old EV with 25,000 km on the odometer. It’s a situation that is clearly counterintuitive. Yet, recent data published by Geotab based on the tracking of 6,300 fleet and consumer EVs representing 1.8 million days of data, helps to better understand why this is the case.
Although Geotab’s data suggests that battery age and vehicle mileage do play some role in battery degradation, when compared to other factors such as climate, battery management, and charging patterns, it’s a role that is almost negligible.
Let’s look at these three important factors in more details:
First, according to Geotab’s published charts, the battery of a two-year old EV driven in a hot climate is on average 2.5 times more degraded than one driven in a temperate climate. The gap between the two continues to increase over time. In four years, an EV battery degrades three times more when driven in a hot climate than when driven in a temperate climate.
It’s an important factor to keep in mind, especially when importing a used EV from the southern U.S..
Different EVs have different battery management approaches. Some vehicles have sophisticated battery temperature management, with extra buffer capacity in the battery pack. This avoids having the battery charge and discharge at the extremes of its operating range, a zone where battery degradation is accelerated.
To see the effect of this, I compared two different compact hatchback EV models from 2017 using Geotab’s Battery Degradation Tool. One of these EV models is well-known for having minimal temperature management, while the other is often lauded for its battery management approach.
In less than three years, the vehicle model with the less sophisticated battery management system had on average more than four times more battery degradation than the other one, according to Geotab.
Geotab’s data suggests that EVs that charge frequently at DC Fast chargers (more than three times per month) see their battery degrade at about two times the rate of drivers who do not use these chargers. What does this mean for dealers? The biggest impact of this is that EVs defy the common conception that two similar vehicles with widely different mileage will have widely different degradation levels of key components.
EVs have significantly less components affected by wear than gas vehicles. In EVs, the battery is the main component affected by wear, and as demonstrated by real world data, this degradation is not primarily influenced by distance driven over time.
This highlights the importance for a dealership to get a battery health evaluation prior to assessing the value of a used EV. No dealer wants to overpay when acquiring a used vehicle or underprice it when it comes time to resell it.
For an EV’s most critical and onerous component — the battery pack — vehicle mileage means very little. Dealers must consider this in their used vehicle acquisition and pricing strategy.9