Resale values of used electric vehicles (EVs) are a hot topic of 2024. In the wake of the Clean Car Discount ending, and the rush to buy EVs during its time to take advantage of the cashback offer that was more than $8000, we’ve now seen the market shift with some of those EV purchases now appearing on the used car market.
The likes of Turners Cars and TradeMe have highlighted that residual values are on a sharp decline.
The past few years have been strong for Tesla in NZ: the Model 3 and its Model Y SUV offshoot have been top-sellers, the latter often holding market leadership for both EVs and in outright passenger car sales - and they are the core contributors to a national count that totals 20,000 Tesla Models S, 3, X and Y.
However, the brakes are on. Electric car buying has frozen since Clean Car incentives were cancelled on January 1.
From a sales share of 20 per cent in 2023, EVs have slipped to just five per cent, between January 1 and March 31, and then April 1 came the Road User Charges.
Tesla has not been immune to the market shift.
The market’s souring: consumers are being exposed to residuals on NZ-new electrics falling quite some way short of comparable ICE cars.
Year 2023 sales of Model Y were 3278, which was 291 down on 2022. In 2024, Model Y sold 25 in January, 145 in February and 74 in March, totaling 244 for the quarter – incredibly, that is less than one-third of Tesla Model Y sales in the single month of June 2023, Tesla NZ’s best sales month (765).
Sales of Model 3 peaked in 2021 with 3278 registrations, and with 8321 NZ-new Model 3s sold locally up to March 31. Last year, total sales of Model 3 dropped to 980. The March 2024 tally of 129 was a big jump and relief, after just two units were registered in January, and seven in February.
The market’s souring is happening as consumers are being exposed to residuals on NZ-new electrics falling quite some value short than comparable ICE cars.
Additionally, Tesla has been making headlines in North America with claims its products are depreciating excessively fast.
Tesla is different to most car brands, selling direct to customers. Additionally, it does not have a used-car operation.
One factor is that Tesla has been dropping new car retail prices to meet changing market circumstances and demand.
This also happened in NZ. At the start of 2023, the entry rear-drive Model 3 and Model Y were respectively $68,900 and $73,900. They dropped to $65,900/$70,990, and then dropped again to $62,500/$67,500 – an immediate 10 per cent equity loss.
Turners Cars and Tesla
Tesla is different to most car brands, selling direct to customers. Additionally, Tesla does not have a used-car operation. Instead, it has accredited Turners Cars, the largest national re-seller of NZ-new cars, to handle trades on first ownership Teslas, and to be the primary re-seller of any that are traded back.
Turners’ auto retail division boss Greg Hedgepeth says his operation is not the sole buyer/seller of all used Teslas, but likely gets enough to become the largest go-to for used Teslas, and therefore arguably the best insight into Tesla residuals.
“We're not doing absolutely all their cars,” says Hedgepeth, “but we work with them [Tesla] pretty closely to help them re-market.”
Hedgepeth says it’s hard to tell when residuals will improve and when new EV buying will return to previous health.
The used car industry believes a NZ-new electric car will lose 40 per cent of its value in its first year. That revised value will drop a further 40 per cent in the second year.
Is this also the case for Teslas in NZ? Hedgepeth offers that Turners is a good barometer of used car values due to its overall car sales - around 4000 a month - and that, because it moves so much metal, it has a used car value database he believes is second-to-none nationally.
He furthers belief that the transactional prices Turners deals with Teslas are fair and market-representative.
That’s where TradeMe comes in. Hundreds of pre-owned Teslas are on the country’s largest buy and sell site, as private sales.
Over the last two or three years, there have been significant and numerous legislative changes around emissions and vehicles… and that’s definitely having an impact on EV residual prices.
Hedgepeth believes these might largely be owners who have been dissatisfied by the trade-in value they’ve received – from dealers, more-so than just Turners - and are instead trying to secure a higher price through a private sale. He doubts that will be easy.
“Any dealer out there will hear 20 times a day: “But there’s one like mine on TradeMe for $xx dollars, yet you’re only offering me $y.
“The consumer normally picks the one closest in match to theirs, and at the highest dollar possible. And then they go: “Yeah, that's what my one's worth as well.
“But the reality is that car on TradeMe might have been there for six months, due to its high price.”
Hedgepeth says it’s hard to tell when residuals will improve and when new EV buying will return to previous health.
In his view, the legislative change, enacted by the previous and current Government, has been unsettling.
“Over the last two or three years, there have been significant and numerous legislative changes around emissions and vehicles… and that’s definitely having an impact on EV residual prices.”
The silver lining? If you’re looking to buy a used Tesla, now could be equally an opportune time as it was during the Clean Car Discount. While values are still higher than a used Nissan Leaf, there are similarities that are reinforcing that it might be a bad time to sell, but it’s a great time to buy.