Think your EV holds its value? China has some bad news for you
Used car dealers in the world’s biggest EV market are turning away 5-year-old cars, exposing a battery anxiety problem heading for Western buyers next.
China’s used car market has a newly discovered limitation for electric vehicles. About 80% of used EV dealerships in China are unwilling to accept a fully electric vehicle older than five years. This reluctance stems from concerns about battery life and replacement costs.
A 3-year-old EV in China now sells for roughly 45% of its original price, down from almost 55% in 2023. China has been the world's largest EV market for a decade, with 44 million on its roads.
However, dealers can't reliably price used EVs due to a lack of agreed-upon methods to measure battery health, the most expensive component of the vehicle. When Chinese EVs are exported, the valuation problem persists in the countries they are imported to.
According to the International Energy Agency, 55% of EVs sold outside Europe and the U.S. are Chinese. Buyers in the Gulf region, in particular, drop interest after the fifth year due to increasing mileage and the winding down of battery warranties.
Analysts, lenders, and leasing companies calculate how much a car depreciates over three and five years, the lengths of typical leases and loans. EVs depreciate faster in these calculations because buyers pay extra for the latest technology and the statement the car makes about the owner.
Battery warranties further complicate matters, with manufacturers covering the battery for eight years or 160,000 kilometers. Once this warranty expires, the cost of a failed battery falls on the owner.
Chinese EV makers have recognized this problem and have started to address it. Buyers now increasingly ask for inspection reports on batteries, motors, and electronics before purchasing a used EV. Dealerships are investing in equipment to run these tests.
However, the used car market currently lacks visibility into the actual condition of the battery. A car's driving habits and charging methods significantly impact its battery life, with those relying on fast charging degrading faster.
When a used EV no longer sells, the last value it fetches is from recyclers who pay a few hundred dollars for the lithium-iron-phosphate batteries used in most Chinese EVs.
Written by urgent.news from Rest of World Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
