Used Pre-owned New Energy Vehicles (NEVs) are growing in popularity among China's youth population.
In the dynamic world of automotive technology, used electric vehicles (NEVs) are gaining traction in China, particularly among young people and the new middle class. This shift is largely due to the stabilization of prices for used NEVs over time and the advancements in battery technology that have eased concerns about range and battery replacement costs.
For the first time in history, the penetration rate of NEVs in China surpassed 50% in the first half of April 2024, overtaking gasoline cars. However, the low retention rate of NEVs can be attributed to several factors, including high premiums due to new technology, concerns about battery degradation, and subsidies.
A study by Guazi, a leading platform for used car sales, revealed that used NEVs not only have lower retention rates but also suffer a 10% higher price drop than gasoline cars in the first year of ownership. Despite this, the price curve for used NEVs tends to slow down significantly in the subsequent years. For instance, the price of a used Li One drops to 55% of its original price by the third year but retains 44% in the fifth year. This same trend applies to popular models like Tesla's Model Y, the Xpeng P7, and Leapmotor T03.
The study by Guazi also forecasted that the prices of used like-new electric vehicles would rise by approximately 5% in 2024. This upward trend is expected to continue as the industry matures and standards for pricing, inspection, and assurance of used NEVs become more established.
One of the key advantages of NEVs is the lower physical wear and tear on their three main components - battery, motor, and electronic control - compared to traditional gasoline cars. This provides significant durability advantages, contributing to the improved driving experience that users of used NEVs can enjoy, even compared to users of used gasoline cars.
However, the pricing strategy for new cars significantly impacts the value of used cars. Price cuts on new models make even well-performing used cars less competitive. To address this, large platforms like Guazi offer a seven-day test drive service, allowing users to thoroughly experience the vehicle before making a decision. With extensive and relatively complete vehicle information and resources, these platforms can digitize and informatize various indicators, gradually establishing and improving industry standards based on this foundation.
Despite the challenges, the appeal of NEVs is undeniable. Chen Yuan, born after 1995, plans to buy a new energy vehicle for commuting, citing factors like the low cost of charging, design, large screens, acceleration, and intelligence as attractions. Even freelancers like Xiao Chen in Shanghai are turning to used electric cars to start their businesses, calculating that they would cost less than RMB 100,000 (USD 14,060) and have lower charging costs compared to traditional gasoline cars.
As the market continues to evolve, both the prices of new and used cars will continue to fluctuate and adjust until they reach a reasonable and stable state, which may take at least 3-5 years to achieve. In the meantime, the appeal of NEVs, combined with the advancements in technology, is likely to keep them at the forefront of the automotive industry.
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