Used Electric Car Prices Are Still Falling, Fast!
The used car market in the UK is transforming, with the growth of the electric vehicle (EV) segment taking centre stage over the past two years. Used EVs are gaining popularity as they address one of the key barriers in the electric car market: the high upfront cost. According to the BVRLA, used EV prices are expected to drop by an additional 28% between 2024 and 2030, making them the most budget-friendly option.
In Q3 2024, the Society of Motor Manufacturers and Traders (SMMT) published a report highlighting a surge in used EV sales as the used car market embraces greener options. Here are the key takeaways from the Q3 findings:
• The used car market grew by 4.3% in Q3, marking its seventh consecutive quarter of growth.
• Used EV sales increased by 57%, reaching 53,423 units and achieving a record market share of 2.7%.
AutoTrader’s, Road to 2035 Report, found the fall in used EV prices has helped drive the second-hand market forward and make EVs accessible to a wider market of people.
This article explores the link between falling used EV prices and rising sales, examining the implications for the broader industry and the role salary sacrifice plays in this trend. It also delves into the affordability challenges of new EVs and what they mean for individuals looking to make the switch to electric.
Why Were Used Electric Car Prices Falling?
There is not one answer to this, instead, there are many moving parts. Electric cars represent the fastest-growing sector of the used car market, with 41,505 entering the market in the first quarter of 2024.
The Influx In Supply
Finance and leasing terms of brand-new electric cars purchased three or more years ago have now ended, which has resulted in an influx in supply over recent months. Although consumer demand for used electric cars is high, it is unable to keep up with the increase in availability. Electric Cars that were leased 3 or more years ago are actually of good quality. For example, a Tesla registered in 2019 can have a range of 300 miles per charge.
Concern Over Older Batteries
Battery technology is constantly improving, leaving consumers to wonder whether an electric car with an older battery will cost less at first but result in more money later down the line. This is making consumers weigh up the cost of buying new electric cars, which can get further on a single charge compared to used ones. Furthermore, the majority of the public doesn’t understand what to look for when buying a used electric car. Many EVs are equipped with diagnostic tools that provide information about the battery’s condition.
Used EV Prices Have Started To Stabilise
The growth of the used EV market has been driven by a sharp decline in price, there are signs that the costs are starting to stabilise. Used EV prices started falling in the second half of 2022 because of an uptake in company car and salary sacrifice sectors along with limited demand when used EVs started entering the used markets.
The graph shows how the used EV retail prices (blue line) have changed from April 2022 to July 2022 compared with the overall market volume (in the white dotted line).
How Much Is A Used Electric Car Now?
In many ways, the used EV market is now making electric cars more accessible to a wider range of consumers - especially to those where this didn’t seem to be an option before. Used electric cars come at a lower cost, which is a huge selling point. The table below shows how much the value of electric cars dropped between January and June 2023.
| Car | Avg value 01/01/23 | Avg Value 30/06/23 | 6-month price fall |
|---|---|---|---|
| Nissan Leaf | £18,725 | £12,538 | -£6,188 |
| Hyundai Kona Electric | £22,238 | £14,794 | -£7,444 |
| Peugeot e-208 | £18,615 | £12,340 | -£6,275 |
| Vauxhall Corsa-e | £17,300 | £11,463 | -£5,839 |
| Kia Soul EV | £18,100 | £11,450 | -£6,650 |
| Seat Mii Electric | £14,500 | £8,700 | -£5,800 |
All cars included in this table are three years old and have completed 30,000 miles. This data has been taken from Thisismoney.co.uk.
How Are Used Electric Cars Performing In The Market Now?
Between January and August 2024, electric car sales in the UK increased by 10.5% compared to the same period in 2023, capturing 17.2% of the market share. A significant portion of this growth came from used electric cars. According to Autotrader, the second-hand market demonstrates strong demand for EVs, but high levels of depreciation risk undermining progress in the new car market, as lower residual values drive up monthly payments. Here are some key statistics from the Road to 2035 report:
54% more demand YoY for used EVs on AutroTrader,
63% more used EV sales based on stock from AutoTrader,
4.6% bigger market share for used cars based on stock.
Used electric cars have fallen to be broadly in line with ICE counterparts, which is positive considering the upfront costs of electric cars have continuously been one of the main barriers.
Depreciation Remains High
Electric cars rapidly decrease in value in the first three years of ownership, which threatens to derail progress in the new car market as lower residual values push up the monthly payment . From the fourth year, EVs depreciate at a slower rate than ICE vehicles. Electric cars over three years old will be a great opportunity for consumers in the future. The volume is expected to include by a lot over the next four years, and it is expected that 1.7 million of these EVs will be on the road.
Lease A Used Electric Car From The Electric Car Scheme And Save 20-50%
At The Electric Car Scheme, we have expanded our offering to offer salary sacrifice on used electric cars, making it the most affordable way to drive electric.
Usually, when a lease ends, the car goes back to the leasing company and is often sold at an auction. However, we wanted to do things differently. With our used car salary sacrifice scheme, electric cars that reach the end of their lease, or are returned early, are reconditioned and offered to members of The Electric Car Scheme at a discounted price.
Our used cars are chosen for their quality and condition. Although they may show some wear and tear from previous use, which is typical for any used car, we provide photos so you can see the details and make an informed decision.
Why Salary Sacrifice A Used Car?
There are three main reasons to salary sacrifice a used car from The Electric Car Scheme:
The most affordable way of getting into an electric car - you can save 30-60% on the price of a used EV, which is significantly less than a new car.
Available for quick delivery - every electric car on our website is ready for quick delivery. You can get a car on your driveway within 14 days of the order!
Wide range of used EVs - unlike any other salary sacrifice provider, we have a wide selection of used cars available from across the UK.
How much is a used electric car from The Electric Car Scheme?
Below are two examples of how much you could expect to pay for a used EV from The Electric Car Scheme. We have chosen two cars that differ in price range. The quote is built on the assumption that the person leasing the car is a 40% taxpayer, wants to lease the car for three years and travels 10,00 miles per annum. If you would like to explore the range of used EVs tailored to your preferences and salary, visit our quote tool for a personalised quote!
It is important to note that the used electric cars on our website are available on a first-come, first-served basis as stock is limited. The following shows an example of the savings that can be achieved by salary sacrificing a used electric car.
The lease cost of a used Audi Q4 from your salary is £715 without an electric car salary sacrifice scheme. However, with a provider like The Electric Car Scheme, you would save hundreds in income tax and national insurance contributions.
Every month, you will save £286 in income tax and £14 in national insurance. You will have to pay a small amount of Benefit-in-Kind tax (otherwise known as company car tax) - you can learn more about this by visiting our blog. Overall, instead of paying the original £715 per month for a used Audi Q4, you will pay £480! This is also cheaper than salary sacrificing a new Q4 model - it’s a win-win!
The same applies to a used Tesla Model 3. Without a salary sacrifice scheme, you would pay £567 per month, but with a scheme like The Electric Car Scheme, you will save almost £300 and only pay £383.
Our used car offering is the same as our new electric car salary sacrifice scheme, meaning you can bundle everything you need. You can get full tax savings on maintenance, breakdown cover, comprehensive car insurance, and a home charge point, keeping your net zero journey hassle-free.
Are Used Electric Cars Worth it?
You need to consider whether an electric car will suit you and your lifestyle. You need to think about:
The Average Distance You Drive Per Day
If you are travelling a considerable distance each day this will affect the EV you decide to purchase, as you will need one with a long range.
Options To Charge Your EV
The ability to charge your car is extremely important and must be taken into consideration. Do you have off-street or on-street parking? Would you like to install a home charger? If not, does your work or places you frequently visit have charging stations?
At The Electric Car Scheme, we’ve expanded our services with the launch of a market-leading product called The Charge Scheme. This innovative solution helps employees reduce the cost of EV charging - whether at home, the office, or public charging points - by enabling them to salary sacrifice their charging expenses.
Battery Health
The battery is the most important component of an electric car and this needs to be in good condition. This can affect charging speed, range and performance. This is especially important when purchasing a used EV.
Running Costs
You should consider how much your EV will cost to run and how that may compare to diesel or fuel alternatives. According to Oponeo, the average driver travelling 16 miles per day would spend £20 per month on electricity using the average electric car and a home charger.
Used EVs Are Now Cheaper Than Their ICE Counterparts
As new electric vehicles (EVs) become more advanced and offer better value, data from the HPI indicates that used EVs are also gaining appeal, with a growing number of consumers considering the switch to electric.
So far in 2024, more than 194,000 new battery electric vehicles (BEVs) have been sold, while HPI data reveals that in the first quarter alone, over 41,500 used BEVs changed hands, highlighting a popular route for EV purchases. According to HPI, pre-owned models like the Jaguar I-PACE, Mercedes EQC, and Tesla Model X are now priced more than £20,000 lower than they were in the summer of 2022, with some, such as the Porsche Taycan, seeing reductions of up to £40,000.
“The growing availability of second-hand electric models is driving demand as motorists want to reduce their environmental footprint and make significant motoring cost savings due to high diesel and petrol prices. However, switching from traditional petrol and diesel motoring to electric isn’t a like-for-like swap, and certain factors should be taken into consideration before going ahead.”
Why Salary Sacrifice An Electric Car When You Can Buy A Used One?
There are many reasons you can lease an electric car as opposed to buying new. Here are some reasons:
Depreciation
Leasing an electric car seems like the smartest option at the moment because the residual values for most new electric cars are unknown. According to Motorway, electric cars are thought to lose “60% of their original value after its first three years at a mileage of 10,000 miles a year.” It is worth noting that this value is better than petrol and diesel depreciation.
When leasing an electric car through salary sacrifice, the cost of depreciation is factored into the monthly payments - so you don’t risk the car reducing in value over time. However, with some newer models, depreciation is unknown.
Excess Mileage
If you own the car and drive more miles than expected, the value of your car will typically go down. In a car lease, you typically have to pay the lease company for any extra mileage driven beyond what was initially agreed upon in the lease terms. This is the same for petrol and diesel cars too. Most lease companies charge an excess mileage fee.
Flexibility And Changing Technology
Electric cars are changing quickly. Leasing allows for flexibility and allows you to take advantage of the latest technology available when you’re at the end of your lease. You can switch cars easily, which is something you’re unable to do when you own an electric car.
Early Termination Risk
If you wish to return your electric car before the end of the lease, the worst-case scenario will be that you have to pay an early termination fee. At The Electric Car Scheme, our Complete Risk Protection package ensures employers are fully protected from day one, eliminating concerns about early termination fees and other unforeseen costs associated with electric car salary sacrifice schemes. You can learn more about our Complete Risk Protection.
However, if you own the car, you will have to sell it and run the risk of getting back less than what you paid for the car originally.
At The Electric Car Scheme, we offer a Complete Risk Protection package, the best prices available on electric cars and all at no cost to the employer. By offering this as a company benefit, you could save employees 30-60% on any electric car by paying from salary before tax. To find out more about how salary sacrifice works companies visit our website.
If you’re interested in exploring how an electric car salary sacrifice scheme can benefit you - whether as an employee looking to participate or an employer considering implementation - visit our website for more information.
Last updated: 20/11/2024
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
