Used electric vehicles (EVs) now offer buyers the best value over the entire lifetime of the car, a study claims.
According to experts from the University of Michigan, compared to a new mid–sized SUV with an internal combustion engine, a three–year–old EV version offers lifetime savings of £9,486 ($13,000).
In comparison, buying a used petrol version would only save you £2,190 ($3,000) over the car’s lifetime.
However, the researchers point out that this difference is primarily driven by how fast EVs lose their value compared to other power systems.
New EVs are typically much more expensive than their internal combustion counterparts, coming in around 35 per cent more expensive on average.
But because EV and battery technology advances so quickly, older models depreciate much faster than cars with petrol engines.
‘It’s not the most positive news if you’re in the market for a new EV, knowing that your resale value may be impacted by the faster depreciation,’ said study co–author Professor Greg Keoleian, of the University of Michigan.
‘But if you’re in the market for a used vehicle, it’s very positive news.’
Used electric vehicles (EVs) offer buyers the cheapest option over their lifetime, according to new data analysed by scientists from the University of Michigan
To analyse the total cost of a car over its lifetime, the researchers analysed 260,000 listings for used cars on the classified advertisements website Craigslist.
The researchers looked at purchase price and depreciation data, as well as recurring costs such as fuelling, maintenance, and repairs.
Since their study was based in the US, they used data from 17 US cities to work out the costs of fuel, charging, and repairs.
Their results suggest that over the entire lifetime of a car, used EVs between three and 10 years old are almost always the cheapest choice.
Buying a used EV was a cheaper choice, whether buyers purchased a compact sedan, mid–sized sedan, small SUV, mid–sized SUV, or a pickup truck.
Dr Maxwell Wood, lead author of the study, said: ‘I was surprised by how consistent the result was. I expected EVs would be cheaper in some scenarios, for some cities or vehicle types.
‘But their costs were consistently lower across all vehicle classes and in almost all the cities.’
Not only were used EVs cheaper to purchase, but they also proved to have similar, if not cheaper, costs for fuel, repairs, and maintenance.
Used electric vehicles were cheaper largely due to how fast the deteriorate in value. This makes a used electric vehicle a significantly better deal than a petrol vehicle of the same age and make
However, the researchers do highlight some considerable caveats in their findings.
Dr Tien Viet Nguyen, a researcher from the London School of Economics who was not involved in this study, has conducted his own research into the lifetime costs of EVs.
Dr Nguyen told the Daily Mail: ‘Our research shows that battery electric vehicles’ operational costs are structurally lower, and their steep early life depreciation means second owners avoid the largest capital cost.
‘That said, factors such as higher insurance premiums and some repair costs could point in the other direction.’
Additionally, as the researchers of this study point out, the savings were most pronounced when people did most of their charging at home.
For drivers who can’t install a home charger or have to charge a lot on the road, the higher price of electricity means that the savings won’t be so high.
Likewise, the team found that the lifetime costs of EVs were actually higher in two cities – Boston and San Francisco – where the cost of electricity was especially high.
Additionally, the battery of a used EV won’t match the performance of a new vehicle in terms of capacity and range, making them a poor fit for long-haul drivers.
Experts point out that second–hand EVs are currently much cheaper because of rapid technological advances, which render old models out of date, and a flood of cheap, high–quality Chinese imports. Pictured: Electric vehicles await shipping at a port in Hangzhou, China
Dr Nguyen also points out that the use of Craigslist data is effective for capturing real market behaviour, but might not fully capture the rapidly changing EV market.
He adds: ‘Incentives, charging infrastructure, and model availability vary widely across regions, and these factors shape both operating costs and resale values in ways that are difficult to capture in a single dataset.’
In the future, the total lifetime savings might also change as the depreciation rate of EVs settles down.
Professor Robert Elliot, an economist from the University of Birmingham who was not involved in the study, told the Daily Mail: ‘Depreciation rates are linked to rapidly evolving technology and battery tech is getting much better. We will soon have solid–state batteries with very fast charging and long range.’
Meanwhile, fierce competition from Chinese EV brands in the UK and Europe has flooded the market with cheap cars, further pushing down the costs of second–hand vehicles.
However, Professor Elliot points out that the savings on a used EV might be even better for some drivers than this paper suggests.
He says: ‘Remember this is the US and not the UK. Their [Americans’] fuel prices are much lower, so the UK results are likely to be even stronger.’
Likewise, recent research shows that EV batteries also last a lot longer than people think, even outlasting the vehicle itself in some cases.
