Here is the latest reader Question, along with my reply:
Mark asks: Hi Eric! Long time reader, never contributed though because I’ve got no money. As soon as I do though, I’ll be a regular. I have a 1988 BMW 318i and it goes great, awesome engine tone. As you have pointed out, this is a car I can work on myself and it’s great. (One day I’ll get a 1991 Mercedes 560 SEC but I can’t afford it right now). My question though is about estimating the resale value of an electric car such as a Tesla. I’m not in the market for a Tesla (not only because I can’t afford one) but my friend and I were wondering about how do you value a secondhand one? With a combustion engine car I can check out if it’s using too much oil, I can check for rust on the exhaust pipes, check for oil and water leaks, and so on. But you can’t do that with an electric car. I can’t know if the battery has been run down too often, how hard it’s been driven, or how much life the battery has left. Any ideas? Cheers, love your work, Mark.
My reply: There are at least a couple of things to consider here.
On the one hand, there are some “insane” (to use Musk’s verbiage) deals available on used/off-lease electric cars. Their value plummets like Enron stock because their initial value is grossly inflated and also because, in the case of some of the early models like the original Nissan Leaf, the range is pitifully short and this really limits the usefulness of the things. That said, if you can pick up a used one for a third of its original cost, the math is more favorable. If your trips are generally short – and especially if you can plug in at your destination, before heading back home – then one of these things can also make some functional sense as well.
On the other hand, batteries inevitably deteriorate over time, the result of discharge/charge cycling. It’s chemistry. And while the 12V starter battery in an IC car is inexpensive to replace – about $70 or so – replacing an EV’s battery pack can involve thousands of dollars.
Another issue is that some EVS – Teslas – use radical body construction techniques, including composites, that can make them much more costly to fix if you get into an accident.
A third issue is that Teslas especially are gadget-laden to the nth degree. It is one of the car’s selling points, as it is for all high-end cars. But the complexity of these gadgets – whether they are in an IC car or an EV – always leads to big expenses post-warranty, once the car has some years and miles on it.
The worst possible car to buy used – if you don’t want a money pit – is high-end/luxury vehicle that’s more than about six or so years old.
If you do buy one, buy an extended warranty, too.
It will at least limit the damage to your bank account.
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My friends 2011 Leaf needed new batteries. If you look at the blue book value, one in good shape goes for a mere $3500. Very few cars from 2011 are only worth $3500. Many readers here would consider a 2011 a fairly new car.
I thought gas powered cars depreciated fast, but electric ones are way worse. And yup, my friend replaced the batteries, but it probably cost pretty much as much as the car is worth.
Hi Rich,
Yup – another facet of EV insanity.
My 2002 Nissan Frontier is now almost 16 years old. If I wanted to sell it, I could get around $4,000 for it. It cost about $14k when new.
So, about half the price of the Leaf to buy new. And still worth nearly a third of its original value after 16 years. The Leaf, meanwhile, is worth less than a fourth of its original value after six years.