The electric vehicle market has been rocked by one gloomy piece of news after another recently. The effective end of federal fuel-economy standards, combined with the demise of the $7,500 federal tax credit, lowered sales of new EVs in October, following record third-quarter sales that surged as demand pulled forward. As affordability pressures continue to affect the broader car industry, used EVs are emerging as the new bright spot, becoming the fastest-selling used vehicles of any powertrain in the third quarter.
Welcome to Critical Materials, your daily round-up of news shaping the world of electric cars and technology.
Also on the deck today: The head of Tesla’s Cybetruck program is leaving after serving over eight years at the company. And a new report explains why the failed Honda-Nissan merger wasn’t exactly a match made in heaven. Let’s begin.
30%: Why Used EVs Are So Popular Right Now
Photo by: Andrei Nedelea
Three-year-old used EVs are selling faster than used gasoline, diesel, hybrid and plug-in hybrid vehicles, according to market intelligence firm Edmunds.
The average number of days a used vehicle sat on American dealer lots increased from 37 days in the third quarter of last year to 41 days during the same period this year. That’s because even three-year-old used cars are bloody expensive right now, with the average transaction price increasing 5% year-over-year to $31,067. Interest rates are also high, making things harder.
Here’s more from Edmunds:
The longer selling window shows that buyers are becoming more selective, weighing high used vehicle prices against new-car incentives — a shift that continues to reshape dealer turnover across segments.
However, three-year-old EVs sat on dealer lots for only 34 days on average in the third quarter, with average transaction prices under $30,000 for vehicles with just about 35,000 miles on them. By comparison, hybrids sat on dealer lots for 40 days, purely gasoline vehicles for 43 days and PHEVs for 47 days before finding buyers.
The report continued:
Used EVs, meanwhile, deliver one of the strongest value propositions in the market. When viewed against their original MSRPs, many have depreciated dramatically, offering shoppers access to advanced technology and performance at prices far below new. In many ways, used EV buyers are embracing technology that’s just one generation old. By comparison, new EV buyers still face the risk of paying premium prices for models that evolve rapidly year over year.
Low prices and low mileage both made them sell faster than other powertrains, Edmunds said. The Tesla Model S was the fastest-selling used EV in the third quarter, turning in just 21 days at an average price of $44,621. That means its three-year depreciation stands at a whopping $70,763.
The second-best-selling three-year-old used EV was the Model 3, which sold in just 24 days at an average price of $24,447. The used Model Y took 26.3 days to find new buyers at an average price of $27,624.
Other cheap used three-year-old EVs include the Hyundai Ioniq 5 ($23,964), Ford Mustang Mach-E ($26,920) and Kia EV6 ($24,447), among others. Half of the top 20 three-year-old used vehicles in the third quarter were EVs or hybrids.
Over the next few years, a wave of three-year-old EVs will return to the used market, driven by record sales in recent years fueled by aggressive incentives and the $7,500 federal tax credit. Many of these vehicles were leased, which means they’ll be coming back to the used-car supply soon.
That’s a win for the EV ecosystem overall, as buyers gain access to affordable, high-tech models. At the same time, automakers continue to push to bring down the cost of new models and keep the momentum going. They can’t keep losing money on lease deals forever.
60%: Honda Faces A Growing Threat From China
Photo by: Honda
Honda expects to sell fewer cars in Asia this year and has slashed its profit outlook by a fifth, Reuters reported.
South Asia used to be one of Honda’s strong sales regions, but things have changed as BYD and other Chinese automakers have expanded in countries like Thailand.
Here’s more from that report:
“Southeast Asia is starting to be significantly impacted by Chinese players,” said the source, speaking before Honda reported its results. “The growth of Chinese EVs in Thailand over the past two years has been extraordinary.”
Its automotive division reported an operating loss for the third straight quarter on Friday, lagging behind the performance of its motorcycle division, which delivered record profits.
One expert said this imbalance, along with rising competition in China, meant Honda wasn’t in the best position to merge with Nissan, a proposal that fell apart early this year.
Yoshio Tsukada, founder of Tsukuda Mobility Research Institute, told Reuters that this partnership was far from ideal.
“A merger of Honda with Nissan or Mitsubishi would currently be an alliance of the weak,” he said.
90%: Tesla’s Cybertruck Chief Is Out
Photo by: Tesla
High-ranking executives continue to leave Tesla as the company steps away from its core passenger vehicle business and focuses on robots and AI.
Siddhant Awasthi, Tesla’s head of the Cybertruck program, spent over 8 years at the company. He’s now stepping down. “This decision wasn’t easy, especially with so much exciting growth on the horizon,” he said in a LinkedIn post.
Tesla sold 5,385 Cybertrucks in the third quarter of this year, a 62.6% year-over-year drop, according to Cox Automotive.
Awasthi’s departure adds to the string of senior leaders stepping down at Tesla since last year. David Lau, the company’s vice president of software engineering, also left early this year.
100%: Would You Snag A Low Mileage Used EV?
Photo by: Patrick George
Affordable new EVs are on their way. But before that category becomes properly competitive, the used EV market is already looking far more attractive as old leases come to an end.
Would you buy a used Tesla Model 3 or Hyundai Ioniq 5 if they were priced competitively? What red flags do you look for in an EV, and what’s the trade-off you’re willing to accept? Drop your thoughts in the comments.
Have a tip? Contact the author: suvrat.kothari@insideevs.com
