Challenges for the Electric Vehicle Industry in the Used Car Market

The feel-good stories about electric used cars saving whales and reducing pollution are great for the industry, but it’s facing a new challenge in the used car market: drivers don’t seem to want to buy second-hand EVs. This is a problem because EVs need more semiconductors to build than conventional cars, and a shortage of those chips has driven up the cost of new vehicles. Prices in the $1.2 trillion global second-hand market for gas-powered vehicles have remained relatively steady, while those for EVs have fallen much faster.

It’s not clear how long the semiconductor shortage will last, but it will probably keep many buyers away from EVs. Those that do buy will need to take care of the batteries to prolong their life. That’s important because battery failure is rare, but the cells can degrade significantly over time, reducing driving range and performance. Generally, batteries are covered under an eight-year or 100,000-mile warranty. If one degrades to the point that it no longer meets the vehicle’s driving needs, a replacement is expensive.

Going Green: The Rise of Electric Used Cars

To ensure that people have the best chance of retaining an EV for its full lifespan, policymakers need to provide targeted infrastructure support, such as installing charging stations in multifamily buildings. That will enable EVs to become more affordable in the used market and within reach of more people, including those without a garage at home. In the meantime, shoppers shopping for a used EV should decide whether their lifestyle can accommodate a vehicle with a short driving range or they’ll need to make sacrifices.

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