A new study from iseecars.com shows that out of the 10 fastest-selling used cars on the market in the US today, 6 of them have plugs – 3 plug-in hybrids and 3 fully electric vehicles.
The top spot belongs to the fully electric Fiat 500e, followed by the BMW i3. The i3 is listed in the study as a plug-in hybrid, despite the base model being electric – we’re not sure if the two models were counted separately or just bundled together for the purposes of this study. Both the i3 and 500e have been popular on the used market in the last year, as many of the cars have been coming off 3-year leases, putting a bunch of lightly-used lease return electric cars on the market at attractive prices.
Also in the top 10 are the Prius Plug-in in 4th place, the Nissan LEAF in 6th place, and the Ford Fusion Energi and Tesla Model S rounding out the list in 9th and 10th.
Why might this be? It’s likely that part of it has to do with the impact of incentives on the sale price of cars. Since EVs come with a $7,500 federal incentive, and often state incentives as well, used prices can be much lower than new prices. If a car costs $30,000 new but comes with $10,000 worth of incentives, that car’s effective price is $20,000. In order to sell the car on the used market, nobody is likely to pay more than $20,000, even if the car is in brand-new condition, because the real price of a brand-new car is $20,000 already.
To some, this looks like the EV “isn’t holding its value,” but really what’s happening is that people aren’t properly taking incentives into account. But this can lead to some benefit on the used market – when a used car shopper sees a 2 year old, $30,000 EV on sale for $15,000, they think they’re getting a smoking deal. Realistically that car has only lost 25% of its value, but the shopper thinks they’re getting half off of the price of a new car.
And, clearly, if an EV has a sale price which is artificially higher by $7,500, some consumers will see this and get sticker shock, then move on to another vehicle before learning about the availability of incentives. Consumers tend to place outsized importance on the up-front cost of a product, and relatively less importance on the running costs. So post-purchase incentives don’t work as well as they should to increase electric car demand because they don’t lower the up-front cost, even if the total cost of ownership of an EV might be significantly lower, when taking into account incentives and running costs.
This is why there have been some efforts to make incentives available at the point of purchase rather than as later tax credits or rebates, because it will help shoppers compare the realistic up-front costs of the vehicles. And it’s also one reason leases are popular for electric cars, because the federal tax credit is taken by the lessor and this results in lower lease payments when compared to gas cars with a similar purchase price.
This all helps to end the “how long does it take to pay off” conversation. Consumers are used to the concept of paying more upfront for cleaner vehicles, perhaps through the influence of conventional hybrids – hybrid models are often similar to gas models but cost more and are more efficient, leading to a better “payoff period.” This mentality has carried on into electric vehicles for many buyers, even though the calculations are less cut-and-dried since EV models are usually more different than their gas and hybrid counterparts were.
But when leasing or with a used car, where incentives are already taken into account, EVs have a much easier time selling themselves since they’re on a more even playing field. And leasing and used car markets have another benefit for EVs – consumers may not be ready to “take the full plunge” and buy a new electric car, since they’re unsure about the new technology. A lease or a used car will seem like less of a commitment, which probably influences some of the disproportionately high lease/used demand for cars with plugs on them.
This study puts the lie to the common refrain from automakers that “there’s just no demand” for electric vehicles. We’ve heard it time and time again, and though automakers are finally starting to come around with big investments and big promises, there’s still the occasional utterance that they don’t want to build EVs because customers simply don’t want them.
But customers clearly do want them. When EVs are given real prices – whether they be post-incentive or lease prices – so they can actually compete based on “real world” pricing with gas vehicles, EVs do very well.
Now if only we could truly level the playing field by removing the $5.3 trillion subsidy which dirty energy gets every year and results in a benefit of tens of thousands of dollars over the life of a gas-powered car ($1,700/year for the average gas car, according to another study) – then we’d really see the reality of what consumers think about electric cars.