The market value of pre-owned electric vehicles has seen a significant decline since the beginning of the year, influenced by a large influx of inexpensive new models from Chinese producers into the UK market.
Research conducted by the AA reveals that the top 20 used electric and hybrid vehicles experienced a 12% drop in price over the last three months, compared to the same period last year.
This trend emerges as the availability of new electric vehicles (EVs) starts to surpass consumer demand, partly due to growing concerns about extended charging durations and limited travel ranges of these vehicles. Despite EVs still costing more than their gasoline and diesel counterparts, Chinese companies are making headway into Western markets by introducing more budget-friendly options.
For instance, vehicles from Chinese brands like BYD and MG, which are owned by China, are priced around £25,000 in the UK market. This is notably lower than the £39,000 price tag for a new Tesla Model 3.
Amidst this rise in low-cost imports, the European Union has initiated an investigation into what it considers to be unfair subsidies given by Beijing to its domestic manufacturers. The UK government is also considering conducting a similar investigation.
The market for second-hand electric vehicles is facing challenges due to concerns about battery longevity, identified in surveys as the primary worry for prospective buyers. This uncertainty has contributed to a dampening in sales.
Additionally, prices for the most sought-after used models with combustion engines have seen a 9% decline compared to last year in the first quarter. This decrease is attributed to the easing of chip shortages, which has improved the availability of these vehicles.
Previously, car manufacturers had difficulty fulfilling the demand for new cars due to disruptions in supply chains caused by Covid, particularly affecting the shipment of microchips from producers in the Far East. However, with the recent increase in chip supplies, the appeal of purchasing a low-mileage used car has diminished compared to the previous year.
The surge in new car sales, which increased by 26% in February according to the Society of Motor Manufacturers and Traders, was a significant development in the automotive industry.
Edmund King, President of the AA, commented on this trend: “There is now a better balance between supply and demand, which is resulting in the reduction of used car prices. However, this trend is not uniform across all models. For instance, vehicles that are in higher demand, like Audis, are experiencing a slower rate of price depreciation.”
The AA’s recent data revealed that the Nissan Qashqai, manufactured in Sunderland, emerged as the most popular used car in Britain during this period, overtaking the Ford Fiesta. In a comparison with the last three months leading up to December, prices for the top 20 models generally declined, with only four models showing a price increase.
In the realm of second-hand electric and hybrid vehicles, the Toyota Yaris took the lead in popularity for the first quarter, followed by another model from Toyota, the Prius.
