Dramatic reductions in used values for some electric vehicles

Cap HPI says that the reductions in used values for some battery electric vehicle (BEV) models was expected.

However, it stressed that market adjustment to values were down to them previously being unsustainably high and it does not herald a collapse in demand for BEVs.

The used value for a one-year-old Tesla Model 3 Long Range with 20,000 miles on the clock has fallen by £11,600, or more than 25%, since the middle of September. Cap HPI’s forecast 12 months ago was for it to fall a little further.

Dylan Setterfield, head of forecast strategy, said: “Used values for many battery electric models were strong through 2022. In many cases, nearly new retail values were above list price, some by a considerable margin. This was clearly unsustainable and our forecasts reflected that, with large negative adjustments applied.”

In the case of Tesla Model 3 Long Range, the Cap HPI forecast from January 2022 is still slightly lower than the January used value, and the same trend appears across many other BEV models.

“In January, the average used value for every battery electric model remains above our forecast from last year,” added Setterfield.

“BEV values remained stronger for longer than anticipated in the face of prolonged new car supply issues and are now transitioning to more realistic, sustainable levels.

“For some models, there is more adjustment to come – there are still vehicles with used values above list price and significant reductions are expected in these cases over the coming months.”

Although the recent used car price reductions have reverberated through the industry, with some dealers and organisations reluctant to add battery electric vehicles to their stock, Cap HPI does not think that consumer demand has been permanently damaged.

Setterfield said: “The total cost of ownership situation generally remains favourable for BEVs. Even with fuel prices continuing to decline at the pump, any sensible charging regime still sways the economic equation.

“The implementation and ongoing development of clean air zones is also likely to continue to support demand for used BEVs. The ongoing pricing realignment actually helps in that regard, making BEVs more affordable.”

Tesla reduced the prices on its Model Y and Model 3 by thousands of pounds last week, in a move expected to help it compete in an increasingly competitive electric vehicle market in the UK. 

The price reductions have been introduced in the US and European markets.

The Model 3 is now priced from £42,990, while the Model Y is priced from £44,990, which represent drops of £5,550 and £7,000 respectively for the entry level models.

Prices have also been reduced by as much as £8,000 on models higher in the range like the Model Y Performance.

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