A couple of weeks ago, I had the opportunity to participate on a panel at the 8th annual Electric Vehicle Roadmap conference in Portland, Oregon. Founded by Portland General Electric and Portland State University, the conference provides a forum for manufacturers, suppliers, government officials, and other key stakeholders to discuss (and debate) the current and future state of EV affairs. Conference attendees were extremely well-informed and passionate about the opportunities EV technology presents. While their opinions on root-cause were varied, participants were quick to acknowledge the challenges faced by EVs as well.

Excluding those produced by Tesla, electric vehicles (no matter the form) have had a hard go of it. Higher upfront costs, range and infrastructure concerns, technology apprehension, and lower gas prices have dogged EV demand.

New plug-in hybrid sales were down by 34% through June and sales for the Chevy Volt, Nissan Leaf, and Toyota Prius PEV fell by 35%, 23% and 69%, respectively, over the first half of the year. Plug-in electric sales were up by 30%, however; the lift was caused by new model launches, rather than improving demand.

The used EV market — which my panel was tasked with discussing — has arguably been even more depressed. Used vehicle buyers tend to lean more toward frugality than their new vehicle counterparts. As such, concerns over upfront cost and long-term durability are more amplified. “How much will the battery degrade over time? How will this impact driving distance? What happens, and what will it cost, if the battery needs to be replaced?” are just a few of the unknowns eating into used EV demand.

These concerns ― combined with extremely low new vehicle lease programs, new EV tax credits, and discounts unavailable to the used buyer ― have taken a toll on used EV prices. For example, trade-in values for the 2013 Nissan Leaf are 30% lower today than last year. By comparison, trade-in values for 2013 gas powered compact and mid-size cars are down by just 12%. Lax demand doesn’t just affect the Leaf, as depreciation for the Chevy Volt, Ford Fusion and most other EVs (save the Tesla Model S and Porsche Panamera) is well above average.) 

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Abysmal depreciation is a major problem. It’s not only a poor reflection on the technology, it puts EVs at a cost-of-ownership disadvantage relative to internal combustion engine (ICE) vehicles. It also increases the amount of money automakers have to put toward lease-related expenses, which is a big deal given that leasing accounts for 55% of all new EV deliveries.

During our panel session named “Building a Healthy Market for Used Electric Vehicles,” some expressed the belief that such low prices on low-mileage, late-model EVs make them incredible values. The upfront cost can be very appealing. For example, the retail value of a 2013 model year Nissan Leaf SV with roughly 37,000 miles currently stands at $11,325. By comparison, the retail value of a ’13 Nissan Versa SV with similar mileage is $11,775. Even though we fully expect Leaf deprecation to remain high moving forward (not to pick on the Leaf, we expect this for most EVs), prices are now low enough that net energy savings and ― theoretically ― lower routine maintenance costs make the Leaf a competitive alternative to the Versa and other similar gas-powered cars.

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As we discussed at the conference, the opportunity is convincing consumers used EVs and their batteries can dependably hold up over the long haul. Consumers have experienced gas-powered cars in a hands-on fashion for over a century, but have only been exposed to plug-in electric vehicles for a handful of years. As such, an extraordinary amount of time needs to be spent marketing not only the benefits of the products themselves, but also touting durability milestones as time passes, which includes battery density, maintenance costs and more.

While EVs face numerous logistical challenges, battery prices, infrastructure development, etc., the prevailing sentiment during our session was that educating with quantifiable evidence will be critical in helping to maximize used EV demand moving forward.