Nobody in China wants a used electric car — unless it’s a Tesla. And according to one of China’s top auto industry bodies, this was “inevitable.”
In its weekly update on China’s ailing auto market, the China Passenger Car Association listed several reasons why value retention is “too low” for new-energy vehicles, including fully electric, fuel-cell and hybrid cars, Caixin reported.
The list includes a shortage of purchase statistics that could be analyzed to help manage risks. The discrepancy of technologies used in Chinese electric cars is also large, meaning certain models are not reliable and are “simply worthless,” the association said.
“As startups release more products, standards will rise incrementally,” the association said, adding the lifespan of electric car components and batteries are still inferior to that of similar components for traditional vehicles.
“It’s not very feasible to simply wait for electric vehicles to raise their value retention,” it said.
CPCA’s remarks come as Chinese electric vehicle sales start to contract alongside traditional vehicle sales that have been falling for more than a year.
The nation is the world’s largest NEV market, after building up huge capacity on the back of generous government incentives.
But the huge buildup, often using older technologies, has led to observations that much of the nation’s output is far from cutting-edge.
Sale of NEVs fell 16% in August, which followed a 4.7% drop in July, after the government scaled back subsidies, according to figures from the China Association of Automobile Manufacturers.
According to a report in Quartz, a Tesla’s residual value — basically the future value of a car after a certain amount of use — at one year is more than 70% of its original price, far higher than the value of any Chinese EV model at the same mark.
That’s a worrying sign for China, where government subsidies have created a slew of domestic EV giants, some of which are now looking to go overseas amid a slowing car market.
The Chinese EV with the highest value at one year was a sports utility vehicle from Roewe, a subsidiary under state-run SAIC Motor, while for many popular brands it’s under 35%.
The residual value of EVs drops far more quickly than a gasoline car’s, which can stay at about 60% to 75% even after three years, Quartz reported.
The typical profit for a dealer is also far lower, or below 3,000 yuan (US$423), a Beijing-based EV dealer told the Economic View, a Chinese financial publication.
That’s due to the more limited range of the first generations of EVs, and the perception of high risk due to consumer reports of frequent repairs with their new EVs and spotty after-sales service.
Most of the second-hand EVs on sale in China are about two to three years old, according to online searches, which means they typically have a battery range of just 200 km (124 miles)—or about two-thirds of typical ranges for a new car today. In addition, warranties on those cars have often expired, the report said.
At present, a three-year-old 480 km (300 miles) Model S which has logged more than 38,000 kilometers (about 24,000 miles) is listed for 475,300 yuan (US$66,908) on Tesla’s own Chinese site, or nearly 60% of the price of the current Model S with a range of 660 km.
Meanwhile on Guazi, BYD’s popular compact SUV, Song, is listed for 119,800 yuan ($16,903), or 40% of its original price in 2017.