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An electric car for under $10,000? Used EVs becoming a more affordable, but risky, new market

Price is right for some older electric vehicles, but they come with early-model faults: range anxiety, unknown battery life -- and no tax credits

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When Maria DiBiase Eisemann went to Tynan’s Nissan in Fort Collins to turn in her leased Nissan Leaf last fall, she left the dealership as owner of the same electric vehicle. But it wasn’t for her. It was for teenage daughter.

“It’s the greatest thing because it doesn’t go far, and she doesn’t have to buy gas,” said Eisemann, who happens to work for the Colorado Energy Office and actively promotes the benefit of electric vehicle ownership. “… The dealerships are starting to tell us we want to sell these used vehicles, and they’re very inexpensive (for as low as) $8,000 to $10,000.”

The Nissan Leaf, which started selling in 2010, is one of the most popular plug-in cars, partly because of a relatively low starting price of around $30,000 (Teslas are more in the $50,000 to $100,000 range). State and federal tax credits offer up to a $12,500 discount on a new car for Colorado buyers.

The credits have pushed down the price of used electric vehicles, and that has widened the appeal of environmentally conscious transport. While there are risks to buying any used vehicle, especially one of a technology less than a decade old, the state is counting on electric vehicles to become key in its goal to become a clean-energy leader.

“We’re looking into ways to break into low-income communities, multi-family housing units or urban centers and having a discussion,” said Eisemann, pointing to the state’s Charge Ahead program, which awarded 18 grants last spring to help communities install charging stations. “If you can’t charge an electric vehicle (at home or work), you won’t buy an electric vehicle.”

Affordability is an enticing factor to buy a used electric car. But there are risks with earlier models, said Eric Ibara, director of residual values for Kelley Blue Book, which helps consumers research and value cars.

At the Denver’s Drive Electric Week on Sept. 12, 2018, a Chevy Volt shows off its electric insides in front of the City & County Building in Denver. (Tamara Chuang, The Colorado Sun)

Today’s electric cars can get 150 to 200 miles on a charge. But the earlier models lasted maybe 75 miles, causing “range anxiety” for drivers who dared not venture too far from a charging station. Most cars are also less than 10 years old. Nobody really knows how long the battery will last, or how well an older battery will keep its charge.  

“My guess is that after five years, the cost of buying a new battery may exceed the value of the vehicle. You’re taking a risk buying a used electric vehicle,” Ibara said. “But while they retain a lower value over time, it’s a great buying opportunity for consumers.”

At car-buying site Autotrader.com recently, there were 21 used Leafs, all three years or older, for sale within 50 miles of Denver. Prices ranged from $8,486 to $14,999. Ten used Chevrolet Volts were priced between $12,494 and $19,203. For comparison, Tesla, an exception because they retain their value like gas vehicles, cars started at $39,900 for a 2013 Model S and topped out at $89,999 for a 2011 Roadster Sport.

At the Denver’s Drive Electric Week on Sept. 12, 2018, a parade of electric vehicles were on display in front of the City & County Building in Denver. (Tamara Chuang, The Colorado Sun)

During Denver’s Drive Electric Week last week, a parade of electric vehicles lined the curb in front of the City & County Building. Tesla’s, Chevy Volts, Nissan Leafs, a Fisker Karma and even a Tesla police car.

“That Nissan Leaf is a 2018 and is $38,000,” said Luke Walch, founder of Green Eyed Motors, a Boulder dealership specializing in used hybrids, electrics and other fuel-efficient vehicles. “We sell the same car, 3-years old, for about $14,000 to $15,000. They’re a very fast depreciating car.”

According to Kelley Blue Book, gas-engine cars typically retain about 40 percent of their value after three years. Electric vehicles, excluding Tesla’s, come in at 15 to 20 percent lower than gas models.

“We get all walks of life, anything from college students or a 16-year-old’s first car to people who commute quite far and want to save money to elderly people that are just sick of the maintenance involved with a gas car,” Walch said. “Electric vehicles have proven to be reliable.”

A Fiskar Karma electric vehicle on display at Denver’s Drive Electric Week on Sept. 12, 2018. (Tamara Chuang, The Colorado Sun)

Most used electric cars are also still under the manufacturer’s warranty. Kia has a 10-year or 100,000-mile warranty no matter who owns it, said Joe Cross, value creation director for i25 Kia in Longmont.

“Electric vehicles are very expensive. You pay $3,000 to $6,000 more than its gas counterpart. In my personal opinion, I’m not sure the electric is worth that much more than gas because of how much it’ll take” to benefit in gas savings, Cross said. “But on the used side, you don’t have that big markup so it’s more in line with its gas counterpart. People tend to be OK with it. It’s more affordable, plus I’m going to save money.”

The fuel savings depend on the price of gas. According to Colorado Electric Vehicle Plan, an owner saves $54,468 over the life of the car thanks to fuel savings, reduced maintenance costs and emission benefits.

Danny Katz, with the Colorado Public Interest Research Group, calculates that an electric car’s fueling costs are about one-third the cost of gas. It takes 28 kilowatt hours (kWh) to drive 100 miles. At 12 cents per kWh, the cost is about $3.30 for 100 miles, he said.

“A 33 mpg car would take three gallons and cost about nine bucks. So it’s about one-third the cost (of gas),” said Katz, who was passing out toolkits at the Denver event to encourage local governments to make their towns more electric vehicle friendly.

In Colorado, the number of used electric vehicles is still very small. But it’s growing.  According to the Colorado Division of Motor Vehicles, the state had 9,012 registered electric vehicles as of July 31, a number that has tripled in four years. The number of charging stations built through the state’s Charge Ahead Colorado program is now at 685. And the state’s tax credit payouts to new electric vehicle buyers has doubled in since 2013.

Colorado Electric Vehicle Fund 
Here’s the amount Colorado paid out of the state’s fund offering tax credits to buyers of new electric vehicle.

YearInnovate Motor Vehicle Credit
2012$4,410,795
2013$4,917,529
2014$6,096,421
2015$7,534,297
2016$9,583,687

Source: Colorado Department of Revenue

The state has encouraged buyers to go electric. Colorado in 2016 passed a law allowing buyers to save $5,000 at the time of purchase, as long as the lender handles the complex tax-credit paperwork. That first year, the state credited new EV owners $9.6 million, up from $7.5 million in 2015, according to the Department of Revenue.

Electric vehicles remain a fraction — 0.002 percent — of the nearly 6 million vehicles registered in the state.

Ibara, with Kelley Blue Book, believes the popularity of electric vehicles will continue to grow, and not just among buyers who don’t want their car contributing to pollution. Many of the electric cars sold in recent years were leased, so they’re coming back on the market as the leases expire. The used market is reaching a wider audience because of the lower price.  

“My impression is that something north of 50 percent of the (electric) vehicles are being sold as leases. It might be more like 80 percent,” Ibara said. “We’ve actually seen an uptick in used electric vehicles at auction this year.”

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