As the automotive industry transitions from traditional combustion engines to electric vehicles, automakers now face the new challenge of selling used electric vehicles.
Globally, buyers are hesitant about purchasing used electric cars, impacting new car sales.
That is why, the used car market, valued at $1.2 trillion, sees electric vehicle prices dropping faster.
Buyers avoid these vehicles due to a lack of subsidies, a desire for new technology, and insufficient charging stations.
A price competition led by Tesla and Chinese brands has lowered prices for both new and used cars.
This trend threatens profits for major companies like Volkswagen and Stellantis.
In Europe, where leasing new cars is common, firms are raising interest rates to compensate for price declines.
This affects markets transitioning away from fossil fuels.
Rental companies, once major electric car buyers, are now hesitant. For instance, Sixt has removed Tesla cars from its fleet.
Christian Dahlheim from VW’s financial division warns Bloomberg Linea of potential industry-wide profit losses.
He links this to the struggles in the used electric car market.
The depreciation of used electric vehicles is more severe. This issue may grow as leases from 2021 expire, bringing more electric cars into the used market.
The industry’s response to this will be key to financial health, customer confidence, and carbon reduction efforts.
The EU’s goal to end new fossil fuel car sales by 2035 adds to the urgency.
Matt Harrison from Toyota Europe notes a low demand for used electric cars. This affects the overall cost of owning them.
Companies seek new strategies when facing limited demand for mobility services and car-sharing startups.
In Africa, where many combustion cars end up, electric vehicles are not viable due to the lack of charging infrastructure.
Tesla’s recent price cuts indicate a broader issue, triggering a price war and affecting automaker profits.
Unsold used electric cars become a burden
In Germany, unsold used electric cars become a financial burden.
Dirk Weddigen von Knapp of VW and Audi dealerships highlights the need for significant price reductions to attract buyers.
The industry is still adapting to used electric vehicles, especially in assessing battery quality.
However, some models like Teslas and the BMW i3 remain popular in the used market.
Companies are exploring new battery technologies for more affordable, efficient electric cars.
Mercedes-Benz, BMW, Volkswagen, Stellantis, and Renault are all planning new models.
Ayvens, a fleet management company, sees a growing trend in leasing over buying due to uncertainties in electric vehicle technology.
Annie Pin of Ayvens explains that this shift is changing the way we use cars, moving from ownership to a pay-per-use model.
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