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The latest electric car hurdle: What if you can’t resell it?

Much of the anxiety stems from batteries – the price, technology, density, and where to charge them.
Image: Bloomberg

Would you still buy an electric car if you knew you wouldn’t be able to resell it in the future? That’s the latest hurdle potential buyers are contending with, and it’s bound to become a big driver of demand.

The expenses of owning an electric vehicle have always stood in the way of mass adoption, even in China, which has an extensive subsidy program. Starting from the cost of the battery to how far a charge will take drivers, not to mention the shortage of points where they can plug in, there’s a lot to grapple with before green cars can overtake those powered by internal combustion engines.

Much of the anxiety stems from batteries – the price, technology, density, and where to charge them. Manufacturers have worked for years to bring down the price on a per kilowatt-hour basis. Technology has improved, with different materials helping cars run longer and further, thus needing less charge. The chemistry has become more stable. In May, for instance, Svolt Energy Technology, owned by the parent of China’s Great Wall Motor, launched the world’s first battery that doesn’t use the controversial yet once-essential cobalt. It costs less than the mainstream competition and has higher density, meaning more energy is packed into the same volume.

So the good news is, battery prices are dropping, down to 1.1 yuan ($0.13) per watt-hour in 2019 from 2.1 yuan per watt-hour in 2016. That also means that the cost of electric vehicles is coming down (though the good ones still aren’t that affordable), since batteries typically account for 50% to 60% of their value.

But therein lies the trap: As the technology evolves and drives prices of new vehicles lower, existing owners are taking a disproportionate beating in the secondhand market. The average resale value of electric vehicles and plug-in hybrids is less than 40% of the original purchase price, versus 50% to 70% on conventional cars. Goldman Sachs Group Inc. analysts note that consumer concerns about the quality and reliability of “old batteries appear to weigh on used cars’ prices.” That doesn’t really help make the case for current new buyers, either.

Then there are underlying demand trends. Sales of all cars were falling even before Covid-19. The market for batteries has been inching lower across the U.S., China and Europe. Installations fell around 30% in June from the previous year in the world’s largest auto market, China. Driven by regulatory pressures, vehicle manufacturers are tying up with and taking big stakes in battery makers to push forward ways to make greener cars. But confidence to buy them hasn’t picked up in most countries, despite subsidies in some shape or form to encourage sales. Meanwhile, the auto market in China is maturing and that has changed preferences, too.

Post-pandemic, the last thing consumers will want to buy is an asset that depreciates faster and is more expensive than its main competition, in this case, cars with internal combustion engines. Buying behaviour in China shows as much: Purchases are being delayed until automakers drop their prices for electric cars below 300 000 yuan to qualify for the government’s rebate program.

It’s unclear whether Beijing can shore up vehicle demand via subsidies in a big way as it has in the past, though some local authorities have extended rebates and tax incentives to boost short-term sales in recent months. The central government is trying a different tack, announcing a Green Mobility Initiative to push for electric buses in public infrastructure. Growth in batteries has been driven less by passenger cars than by installation in buses. In the Covid-19 era, it’s less clear if consumers (those with a choice) will want to hop on public buses to commute.

There is, of course, the Tesla Inc. caveat. Elon Musk’s company has a resale program that gives buyers a bit of assurance that someone will buy their cars in the future. But most companies can’t afford that, especially as they try to make electric vehicles more affordable while their margins are shrinking.

Buying an electric car is a lot tougher than it sounds, and will stay that way until consumers can justify the hole in their wallets.

© 2020 Bloomberg


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The big hurdle in SA is… What if there is no electric

SA will be dragged along by the rest of the world. If there are no more ICE vehicles we cant buy them.

Our vehicle factories may be in real trouble.

PS is this a propaganda article paid for by ICE?

Mercedes is already and soon BM and Toyota will also be assembling EV at their local plants. The big guys are pretty much agnostic : will assemble a car whether it has a diesel, petrol or electric drive train. The small guys are the zealots.

Toyota is upgrade its local plant to build hybrids. I don’t think the factories are going to die a quick death.

You should show us the way and buy two, given all this propaganda nonsense

Just don’t buy it! It’s overpriced, takes a long time to charge.Imagine how much energy it will drain going over Sir Lowry’s or Franschoek pass.


I am on my second EV, some feed-back:

Unbeatable metro car because costs about 22c/km and in metro you have to be doing something weird to need more than even half the 300km range per day. 150km recharge is simple on a normal wall-plug and if you get the big charger then 300km is under two hours. VERY quick over short distances. Small, easy to park (it parks itself too), great safety (follows other cars in stop start), etc

It is not for a single car family hough. So I still have gas guzzling big SUV for longdistance trips.

As to Franschhoek pass : remember that on the down-hill it recharges the battery 😉

In a car mag I read that coming down Franschoek pass only recharged about a quarter of the energy used to go up it. Would be interested in your experience Johan. By the way, I am not anti electric cars; however SA needs a lot more work done on our electricity supply and recharging stations, plus a drastic reduction in price to make them practicable for the masses.

Just a thought, perhaps if a size standard were developed an a modular approach used for batteries to swop them out quickly at for example “filling stations”, it could help. We follow the same principle with many other devices that use batteries. It should solve charging times for long trips and aging battery technology.

Yep. The problem right now is that every manufacturer is basically going the Apple route and not the Android route. We all share chargers but Apple users have their own.

Mmmm, so on the battery exchange you’ll then pay for the cost to charge the battery, labour and cost for exchange facility and then portion of battery life depreciation. I have a hunch it will be quicker and cheaper to fill my tank with diesel…

Batteries have a finite lifespan, and the costs of replacing them are totally exorbitant, in the order of hundreds of thousands of rand. Electric cars will remain a niche product for quite a few years still.

life has moved on since Trojan lead acid technology

BM’s EV batteries are warranted for 8 years to 80% capacity. How much life is left in a 1600 diesel after 8y and 200,000km?

oh sorry, the diesels had to be recalled and hardly anybody makes them anymore.

Those good Ol’ COAL FIRED electric cars, saving the environment??? What about the battery?? How many 1/2 lives does that have for the environment. Wait till this # takes off

It’s all about Virtue Signaling….

It is very evident in some of the comments here…

EVs are for hairdressers.

Been following and watching the EV development for a long time now. South Africa is really being left behind on this score. The EVs we have available to us is down to literally one — the BMW i3. Jaguar has the e-Pace but only the top 1 percent can afford that. Now Mini is bringing out their EV but once again it is priced way beyond the reach of most.

What most people dont know, however, is that in the UK it is actually priced LOWER than the Cooper S. Whereas in SA it is more expensive. So here in S. Africa we are paying a premium for this electric model due to import duty which is HIGHER for EVs than ICEs. So much for our Paris Climate Accord pledge to fight carbon emissions! The government is reneging on their commitments and putting their hands in your pockets without you even being aware of it.

Another factor that should concern every motorist: S. Africa’s fuel quality is increasingly too poor for newer model cars. Our fuel refining technology has not been upgraded for decades as the price tag runs into the billions and the fuel companies think government should pick up the tab and vice versa. Hence an ongoing stalemate. As newer cars come out with smaller, more fuel-efficient engines, our fuel is not higher enough grade. Hence manufacturers like Ford refusing to release the new Fiesta ST in South Africa. So what, you might say? But how many OTHER models are being affected by this issue without our knowledge?

The bottom line is this is superior technology and our government is doing absolutely nothing to facilitate the introduction of as wide a range of EVs as possible. EVs should come with a rebate to encourage their take-up. Air quality in cities like Johannesburg is very poor and much of this is down to vehicle emissions. With manufacturers like VW and Honda introducing the ID3 and e-Car respectively, as well as Nissan’s proven LEAF, we should be seeing more and more of these cars on the road. But as usual, S. Africa is going backwards instead of forwards.

If I may add, us “Westerners” get fed motoring media from companies from BMW, VW, Tesla, Jaguar, Nissan, etc. And we say…”oh, but EV’s are pricey”. And we become narrow-minded, thinking that’s all on offer for the global EV market.

Predicted that the Chinese will lead the world in EV’s in the not too distant future.

Drool om the websites below from Shanghai Auto Show, etc.

This YTube video will blow your mind:

End of comments.





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