Despite realizing widespread awareness in a short period of time, electric vehicles (EVs) haven’t yet achieved mainstream adoption at scale. We have, however, seen the makings of a strong foundation. In the last year, California and Massachusetts committed to phasing out the sales of new gas-powered vehicles by 2035, President Biden pledged to convert the entire federal government fleet to EVs, and key players built more reliable charging infrastructure across the country. Even with this progress, an important question remains: how do we get more consumers on board?
Early adopters have responded well to the many benefits of EVs, including lifetime cost savings, superior performance, and a smaller carbon footprint. And with nearly every major automaker announcing their commitment to vehicle electrification, there’s no shortage of new EV options on the market. Yet in order to move beyond early adopters, we need to appeal to a wider range of consumers. Enter: the used EV market.
Attracting more customers with used EVs
One of the biggest challenges to widespread EV adoption is cost. According to CarGurus 2019 Electric Vehicles Survey Findings, 67 percent of consumers cite purchase cost as their top concern about EVs. And these concerns aren’t unwarranted – an EV can cost anywhere from 10 to over 40 percent more than a similar gasoline-only model.
The U.S. used vehicle market is sizable, representing about 65 percent of annual passenger vehicle sales and leases, so there’s an opportunity to engage with many customers. With the earliest EV models turning 10 years old, and newer EVs constantly coming off short-term leases, we’re seeing more emerge in the used car marketplace – and at significantly lower prices than new offerings. This lower upfront cost makes EVs a more reasonable purchase for the cost-savvy or low-income buyer.
To further appeal to consumers, EVs have lower operating costs than their gas-powered counterparts. According to recent analysis by Consumer Reports, owning an EV will save the typical driver $6,000 to $10,000 over the life of the vehicle, compared to owning a similar gas-powered vehicle. And, while the life of a used EV is shorter to the second owner, the elimination of routine oil changes, engine tune-ups and gas fill-ups still leads to major savings.
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Lower operating costs, coupled with less up front, opens up the possibility for EVs to appeal to a much larger customer base, particularly low-income drivers. Currently, transportation costs constitute a hefty percentage of overall household expenses, and with this more affordable, accessible option, low-income households will most benefit from these savings.
With less financial risk involved, used EVs provide a great opportunity for those on the fence about going electric to test how an EV fits in with their lifestyle – regardless if they’re commuters, second car owners or families with multiple vehicles.
But, what about battery life?
While the benefits of used EVs are evident, there are some unknowns about EV battery life that could challenge increased adoption. One tool to address these concerns is education, including on EV battery life in general and advancements in second use applications.
It’s a common misconception that EV batteries will give out completely. The fact is: EV batteries don’t typically fail, but, rather, lose capacity over time. Data collection efforts are underway to better understand battery degradation, but the average is estimated to be a small percentage (1-3 percent) of capacity each year. It’s a consideration to be aware of, but nothing that should prevent consumers from purchasing used EVs. Automakers and dealers can further boost consumer confidence by offering used vehicle warranties, extended service terms, buy-back refurbishment programs, battery swaps and more incentives to bolster trust in these offerings. Further, even if the battery must be replaced, the user is saving money from reduced operating costs over the years, largely negating this expense.
EV batteries can also be recycled and leveraged for second use applications, such as use in another vehicle or in a lower-power stationary application. While not necessarily the responsibility of the buyer, this creates an added intrinsic benefit for EV drivers that other cars don’t offer, as recycling batteries saves energy, reduces greenhouse gas emissions, decreases waste and more.
Boosting demand for used EVs
Key players across the transportation electrification industry, such as utilities and government agencies, are in a position to dispel common misconceptions that exist about used EVs and communicate to consumers that they’re a viable option.
As it stands, many utilities and agencies are working hard to raise general awareness around EVs, and used EVs should become a key part of that narrative. We’re still in the early stages of used EV availability in the marketplace, so educating consumers about offerings and affordability is a good starting point. Utilities should also expand their education and outreach programs beyond new car dealers by targeting used car lots, potentially incentivizing both new and used sales staff. Efforts by utilities, EV service providers, and others to build out charging infrastructure should continue to account for a variety of vehicle range scenarios within the on-road fleet.
Another way to successfully jumpstart used EV sales is incentive programs. For example, states like Oregon and Pennsylvania are offering residents rebates for the purchase of pre-owned EVs and other alternative fuel vehicles. These particular rebates are even higher than rebates offered for the purchase of new EVs. As government agencies and others pursue EV incentive programs, entities should consider ways to include used vehicles.
The number of EV options available will continue to increase, further opening the door for more consumers to make the switch from gas-powered vehicles. As these EVs find their way into the pre-owned market, utilities, government agencies and other key stakeholders have the opportunity to amp up awareness of used EV options as a way to increase EV adoption across the board. At the same time, these entities are helping their customers and constituents save money.