The used market is littered with cheap electric vehicles. But when going green, is it a good idea to pick up a used electric vehicle?
Like smartphones, electric vehicles (EV) have a rechargeable lithium battery. But as you’ve probably noticed with your phone after a year or two, these batteries tend to deteriorate. Of course, there are some differences between your tiny phone battery and a huge EV battery that can weigh more than 500kg, but the concept remains the same.
That, and a few other reasons are why you should approach buying a used EV with caution. However, it’s like any used car really - do all the checks and balances and you could save a ton over a new vehicle. So, read on to find out the considerations you’ll need to make when looking at a used EV.
In the market for a new car? The table below features green car loans with some of the lowest fixed interest rates for low-emissions vehicles on the market.
Base criteria: fixed and secured car loans for 'low emission' cars. Data accurate as at 01 July 2020. Rates based on a loan of $30,000 for a five-year loan term. Products sorted by advertised rate, then by company name (A-Z). Repayments are calculated based on advertised rates. View disclaimer.
Should I buy a used electric vehicle?
Before jumping into the cheapest Tesla and charging off into the sunset, it’s important to do some research, and first consider if a used EV is right for you. Some considerations to make are:
Used electric car batteries
The batteries in electric vehicles aren’t too dissimilar to what you find in your smartphone - just on a larger scale. And like smartphones, they deteriorate over time.
Generally, it’s estimated that an EV battery can last for 10-20 years before it’s deteriorated enough that it needs to be replaced. Mileage is also not often a factor in batteries, unlike internal combustion engines. Heat, age, condition and charging habits could all play a bigger role.
A study by Electrek.co in the US assessed more than 6,000 EVs and found those with lithium-ion batteries lost about 2.3% of their capacity every year. Those that were liquid-cooled lost capacity at a slower rate.
- For reference, Tesla covers its batteries for eight years or 240,000km for the Model X and Model S, with a minimum 70% retention i.e. lost 30% of its capacity.
- The Nissan LEAF is covered for eight years or 160,000km, with less than 9 out of 12 bars' capacity the threshold for replacement.
If your car battery is out of warranty, then you could be in for a big bill. Also check that the warranty transfers over to the new owner. Tesla chief Elon Musk estimates a replacement battery module could cost as much as USD $5,000-$7,000, and that’s just for one module - EVs can have multiple modules.
So, if you’re buying a used EV that’s say, five years old, chances are you could still be getting most of the battery capacity. However, it’s hard to get a gauge on the previous owner’s usage habits. Did they drive all the time in a really hot climate? Did they have poor charging habits, such as constantly letting the charge level dip below 20%? All of these things can compromise battery life over time and add up in big battery replacement costs long-term.
Electric vehicles are often very technology-heavy in the interior. This includes fancy entertainment units, heads up displays, electric seats, digital instrument clusters, fancy transmission levers and more. The long-term reliability of such electronics remains to be seen. Just like that old iPhone 4 sitting in your drawer inoperable, all of that technology in your EV has the potential to malfunction.
Ever taken notice of the Tesla entertainment screen? It’s 12.3 inches, which is massive compared to other cars. It’s also not just an entertainment screen. A lot of the vehicle controls and monitoring systems are managed through there, meaning if your screen goes black, a lot of your car’s ability to actually do its main job of driving is compromised. Of course, we aren’t singling out Tesla here - other cars carry the same potential technology problems too - petrol/diesel ones included.
General wear and tear
One of the main benefits of an electric car is that it doesn’t have an internal combustion engine (ICE). This is stating the obvious but ICEs carry with them a range of extra maintenance items.
Maintenance parts you won’t need to deal with on an EV include: oil and fuel filters and changes, spark plug replacements, emission checks, exhaust maintenance, and timing belt/chain replacements.
More moving parts equals more maintenance, but that doesn’t mean an electric car doesn’t require maintenance at all. One of the biggest maintenance items is going to be your tyres - a Tesla Model S has a 21-inch rim diameter, meaning you’ll need very large (and potentially expensive) tyres. A quick check of tyre retailers' sites reveals the cheapest 21” tyres are still around the $200 mark, however more well-renowned brands are up around the $400 mark.
Other, cheaper cars likely come with smaller and thus cheaper tyres, but they still need to be replaced every so often at some expense. Two other important items are brakes and their fluid, and coolant, which will still require upkeep.
Electric car depreciation
We’ve covered depreciation rates more broadly, but electric vehicles can depreciate even quicker than their internal combustion engine counterparts. This is because technology in EVs has come in leaps and bounds in the past few years. We’ve looked at Redbook.com.au’s price guides for private sales at the high end to determine various vehicles' depreciation rates over 1-3 years. They are:
- 2017 Tesla Model S P100D: Price new - $232,402, Price now - $105,600. Depreciation rate: 54.56%
- 2017 Tesla Model S 75D: Price new - $126,777, Price now - $86,200. Depreciation rate: 32.01%
- 2019 Nissan LEAF: Price new - $49,990, Price now - $36,500. Depreciation rate: 26.99%
Keep in mind, this is for private sales at the high end and are a guide only. It also assumes you paid full retail price, rather than haggled with a dealer. To fetch the best price at sale you usually need to have lower kilometres than other listings, a documented service history and a vehicle in good condition, and in an inoffensive colour. Trade-in values could be much lower, too.
Savings.com.au's two cents
Buying a used electric vehicle could present a great-value buying opportunity. New ones, especially fancier models, can cost more than $100,000. And in three years, they can lose a third or more of their value.
However, like any car, there’s checks you’ll need to do first. One of the main concerns is the battery’s longevity. While many manufacturers have a generous battery warranty upwards of eight years, who knows how well the previous owner treated it. No matter how trustworthy they might seem, there still might be some question marks over the battery.
Luckily, EV batteries can last ten or more years before they need to be replaced. However, that replacement cost can be astronomical if not done so within warranty. So, our two cents would be - if you are thinking of buying a used EV - buy the newest one you can afford. That way, you might be able to avoid a lot of the costs and problems associated with battery degradation.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states.
In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $30,000 loan over 5 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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