Used EVs are growing in popularity, but beware to watch for these issues when shopping
Mandi Kindred had wanted to get off what she called the "gasoline hamster wheel," so when she made a recent career change that resulted in a longer commute she decided to buy an electric vehicle to save on fuel costs.
There was just one problem.
"It’s just priced out," Kindred said of most new EVs. "I think Kia has some good options for full EVs, but I don’t want a large payment."
As a result, last month, Kindred, of Shingle Springs, California, about 35 miles east of Sacramento, bought a used 2016 BMW i3 with 58,000 miles on it. She paid $12,000 for the car and the battery is under warranty until August. She knows if that battery dies, it will cost thousands to replace, but she is not worried.
“The previous owners treated it pretty gently and had their documentation of their upkeep," Kindred said. "It’s just like buying any used car, there could be something lurking around the corner. It’s just a chance you take.”
Car shopping site experts say consumers are increasingly interested in buying a used EV as more pre-owned EVs enter the used market inventory and are priced lower than a new one. The average transaction price for a new EV was $58,345 in March compared with a used EV at $41,844, according to Edmunds data.
But shopping for a used EV is a drastically different from shopping for a used gasoline car. There are different things to look for on an EV. And, because there are so few used EVs out there (albeit that is changing), there are not many other buyers with whom to compare notes. There are also limited experts or products to provide insight into the health of the battery — the kind of insight your local mechanic or a Carfax vehicle report might offer on a gasoline-powered vehicle.
"All of this is new to the consumer," said Dave Sargent, vice president of Connected Vehicles at J.D. Power. "On some level they have to trust the manufacturer and the dealer. It’s very difficult for the consumer right now to understand if a used EV has a healthy battery or not. Short of them driving it, charging it and driving it some more, all they have to go on is what the battery is telling them."
Getting some 'real contenders' in the used market
The first thing to accept is that there will be some degradation to the battery's life expectancy with a used EV, which will impact the range it can travel.
But there are some things that consumers can do to safeguard against buying a used electric lemon and there are evolving products to mitigate the chances of buying one with a battery that will need replacing right away — which generally costs half the price of the car, Sargent said. So if the used EV costs $30,000, a replacement lithium ion battery could cost $15,000.
In some cases, you can replace just the cells and get the battery back working well, Sargent said. But if the battery is part of the car's total structure, that won't work. He is not sure of the cost to replace only the cells.
Regardless of the challenges, the used EV market in the United States is on the edge of an explosion. According to data from automotive services and technology provider Cox Automotive, used EV sales are accelerating as more used EVs become available and buyers are snapping them up. Also there is the tax incentive. If you buy a qualified used EV from a dealer for $25,000 or less, you may be eligible for a clean vehicle tax credit of up to $4,000, according to the IRS website.
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The volume of EV transactions at wholesale used car marketplace Manheim soared in the first quarter compared with the year-ago period. Manheim processed nearly 9,800 used EVs, a 40% increase from 6,973 in the year-ago first quarter.
The sales of used EVs to retail customers through dealerships also increased in the quarter, Cox Automotive data shows. Those sales jumped 32% year over year, to 42,753 units. Cox Automotive data does not include consumer-to-consumer sales.
"We might be right at the cusp of finally seeing some usable used EVs other than Teslas," said Ivan Drury, director of Insights at Edmunds. "For years, the used EV market has been compliance cars, which I joke are just glorified golf carts. But in all seriousness, we are inching closer to having some real contenders."
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How to shop for a used EV
But finding a used EV priced at $25,000 or less to get that tax credit will be hard and could be risky, Drury said.
"You’ll find some cheap ones, which might be tempting at first, but that’s because you’ll have to replace the battery, which could be very expensive,” Drury said. “I joke that 100,000 miles on an (internal combustion engine) made in the last few years is a joke. It’ll go 150,000 to 200,000 miles before you need to rebuild a motor or get a new transmission. But with these EVs, it’s much more of a ticking time bomb. ... You know there’s a large expense down the road.”
Here is how consumers should shop for used EVs:
- First, do not pay much attention to the odometer. Unlike with a gasoline-powered car, with an EV there is no direct relationship between how many miles were driven on the car and the condition of the EV's lifeforce — its battery, J.D. Power's Sargent said. "What is more important is the age of the vehicle. Literally how long it’s been in existence combined with how it’s been treated over its life: How has it been driven and more importantly how has it been charged? Because that will affect the battery life."
- If possible, find out how the previous owner charged the car, Sargent said. If the charge was typically between 20% to 80%, that is good. If the battery's charge goes outside that range or it is fast charged too much, that degrades the battery's health. Also, over the long term, a hot climate will degrade a battery more quickly than a mild or cold climate, he said. It’s better to buy a used EV that was in a temperate climate because EVs like to be at room temperature. "So if you’re buying a secondhand EV, be careful buying one from Phoenix."
- Ask to take the used EV on an extended test drive ideally for a couple of days to see what kind of range you get based on your driving habits. For example, if you do mostly surface street driving, you will get better range than on a highway because of regenerative braking, which recharges the battery.
- If you cannot do an extended test drive, than get a written guarantee from the seller as to what kind of range the battery should deliver and its general health, Sargent said.
- Drury recommends taking the used EV to a dealer licensed to test the battery’s health. A test should cost $120 to $150.
New companies and products ahead to serve the used EV market
Most EV batteries will last a long time, Sargant said. Plus the federal government requires manufacturers to offer an eight-year or 100,000-mile warranty on all EV batteries. California mandates a warranty of 10 years or 150,000 miles. In most cases, batteries on both EVs and hybrid vehicles will outlast the vehicle, and could last 20 years.
But watch for new companies that refurbish EV batteries to spring up. For example, Cox Automotive Mobility is creating an EV battery service center network. It has two new facilities so far, one in Belleville and another in Las Vegas. The centers will offer storage, logistics, diagnostics, repair and remanufacturing services to support manufacturers, dealers and fleet operators in extending battery life.
Then there are partnerships to help shoppers. In February, Edmunds said it would partner with vehicle data analytics company Recurrent to offer free reports about battery health and range for many of the used EV car listings on Edmunds.
J.D. Power is working with connected-car data specialist Motorq to launch the J.D. Power EV Battery Health Report soon, Sargent said. The companies will work with automakers to study the data from a new EV — with the driver's consent — that shows how it’s being driven, how far it is driven, the state of the charge, et cetera. The report will build a profile over time for the next buyer to show how the car performed and the health of the battery. The idea is for the EV owner, whether it be the leasing company, a fleet operator, or an individual consumer, to then pay for the report to help them get a good price when they sell the vehicle.
“The buyer beware part is if I see 100 used (Chevrolet) Bolts out there and some have the J.D. Power sticker and some don’t — what does that tell me?" Sargent said. "Either the owner took the test and failed or they declined to not take the test. So maybe I will just buy the one with the J.D. Power sticker."
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None of these products will help Kindred now, but she feels good that her 2016 EV will deliver when she starts her new commute in it.
“I’ve mapped it out. I know where all the charging stations are. The app will show you which chargers are in use and if they’re broken and what others are nearby," Kindred said. "I am interested to see how long the commute will take it. It’s usually 2 hours so I figure I’ll add another 40 minutes with charging, but I’ll use that extra time to study."
This story has been updated to clarify that CarMax is not part of the partnership between Edmunds and Recurrent.
Contact Jamie L. LaReau: firstname.lastname@example.org. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.