New reports from the Society of Motor Manufacturers and Traders (SMMT) show that sales of used cars in the UK rose by 4.1% in the second quarter of 2023, with over 1.8 million vehicles finding new life with a new owner. The same period saw an 81.8% growth in the sales of used battery electric vehicles (BEVs), meaning their market share accounted for a record 1.7%.[i] Hybrid and plug-in hybrids (HEVs & PHEVs) also maintained strong double-digit growth (11.4%) in second-hand sales, meaning that the market share of internal combustion-driven vehicles fell from 95.7% to 94.3% over the last year. This comes despite a growth of 2.5% and 2.8% in petrol and diesel vehicles, respectively, since last year.[ii]
Mike Hawes, SMMT Chief Executive, said:
“It’s great to see a recharged new car sector supporting demand for used cars and, in particular, helping more people to get behind the wheel of an electric vehicle. Meeting the undoubted appetite for pre-owned EVs will depend on sustaining a buoyant new car market and on the provision of accessible, reliable charging infrastructure powered by affordable, green energy. This, in turn, will allow more people to drive zero at a price point suited to them, helping accelerate delivery of our environmental goals.”[iii]
The SMMT views this as excellent news for drivers and the industry, but in order to meet the undeniable demand for used electric cars, a strong new car market must be maintained. This requires prioritising the demands of consumers. Priority must be given to equipping all drivers across the nation with reliable, affordable, and accessible charging that is powered by cheap, green energy as net zero targets get closer and closer. Anything less could put us in danger of losing the assurance we need to meet these targets. Of course, manufacturers have made significant investments in decarbonisation and are dedicated to achieving, and in some cases exceeding, the 2030 target.[iv]
According to the AA's examination of used values, a used electric vehicle (EV) with fewer than 10,000 miles on the clock can be purchased for less than half the cost of a new electric vehicle. On the AA Cars website, a Vauxhall e-Corsa, which has a starting price of £33,930 when brand-new, is available for less than £17,000 with fewer than 7,000 miles travelled and having been produced in 2021. Similar to the Hyundai Ioniq Premium, which has a starting price of £43,445 but can be purchased for about £17,500 for a car that is only a year old.[v]
Since an EV has fewer mechanical parts than a petrol or diesel vehicle, it should be simpler to evaluate the calibre of the car when purchasing used. As they are anticipated to live longer and require less maintenance than petrol or diesel vehicles, they are a fantastic alternative for a used car in terms of a reduction in maintenance costs. On electric vehicles, the majority of manufacturers provide an 8-year or 10-year warranty (or 100,000–150,000 miles), which covers battery repair or replacement if its performance deteriorates below a certain level. Currently, available real-world performance data for electric vehicles indicates that they can go up to 100,000 miles before the battery's health starts to deteriorate, and even then, most drivers are not aware of the difference.[vi]
Recent data on new car registrations appear to be encouraging. EV sales increased 32.7% so far this year and by 39.4% in June. However, if you look closely at the numbers, you'll see that nearly 79% (24,953) of the total number of EVs registered were for businesses and fleets, a percentage that has been rising as private customers continue to prefer petrol and hybrid vehicles. Some experts suggest that it is the incentivisation of EVs to businesses that influence the dominance of businesses and fleets in the market. These incentives include salary-sacrifice programmes, in which an employee is given the option to lease an EV from their employer at an all-inclusive monthly rate with no deposit while paying reduced national insurance contributions.[vii]
Some industry analysts worry that the incentives would create a two-speed market, which might hurt private customers and undermine EVs. Philip Nothard, insight and strategy director at services provider Cox Automotive said:
“The fleet market is a huge opportunity for car makers wanting to sell EVs in volume,” “Already we can see the likes of new entrant BYD targeting it with £199-per-month deals and low deposits. But where are the incentives for private buyers? There’s no clear incentive for them to transition to EVs. There’s a big imbalance.”[viii]
With such an imbalance, there remains a risk that private buyers may depart from their desire to buy new EVs, which could have huge knock-on effects on the used market.
The British Vehicle Rental and Leasing Association suggests that in the face of such a potential crisis, its members are approaching the disposal of ex-fleet EVs more strategically. It read:
“EVs are expensive, and the consequences of disposing of them en masse can be severe. So instead, some firms are drip-feeding cars into the market or taking them back and re-leasing them to customers attracted by their lower monthly payments.”[ix]
[i] SMMT- Used car market electrifying as EV sales soar in second quarter
[ii] SMMT- Used car sales: Q2 2023
[iii] Ibid
[iv] SMMT- How do we supercharge the EV transition? By putting the consumer first
[v] AA- Slow charging costs rise, but used EV’s available for a bargain
[vi] Energy Saving Trust- Should you buy a used electric car?
[vii] Autocar- Used EV values could collapse due to fleet 'dumping'
[viii] Cox Automotive- Fleets driving the UK EV market
[ix] Ibid
Oscar is a recent graduate with a background in earth science. He is currently studying an MSc focussing on disaster responses, emergency planning and community resilience. His postgraduate research project will assess the link between climate crisis risk perception and attitudes to green energy projects. “Adapting to the climate crisis through the pursuit of net zero requires community engagement and understanding. Zero Carbon Academy’s goals closely align with this approach and I’m excited to have the opportunity to research and communicate a variety of topics relating to our environment and sustainability”.
