“The volatility of the used electric vehicle market is a classic sign of a new market that has yet to establish its natural and correct level”, Alex Johns, Business Development Manager at Altelium says. Speaking at the recent event for the Vehicle Resellers Association, and commenting on the drop in second hand EV prices, Alex explained that the lack of access to information about individual car battery health is acting as a brake on the market, but this should be taken off soon as the use of battery reports becomes more commonplace.
In answer to the question ‘Why is a market with high information asymmetry likely to be volatile?” Alex quotes ChatGPT:
“A market with high levels of information asymmetry is likely to be volatile because buyers and sellers have different levels of information and knowledge about the products being traded, which can create uncertainty and increase the risk of making poor decisions.”
Buyers of second hand EVs tend to have just two questions when they look at a used car – what is its range and how long will the batteries last?
Without the answers to these questions, it is almost impossible for dealers to set a resale value with confidence. Without confidence in the second hand price, people are reluctant to buy new to begin with, and hence the lack of information affects both new and used car sales.
This challenge was highlighted at the VRA event where among a survey of members, 70 per cent said this was one of the key items on their wish list:
Top five wish list of used EV car dealers (VRA members)
- Better national charging infrastructure
- An independent, industry standard method of checking battery health;
- Reduced energy costs to make charging cheaper;
- Further improvements in EV range;
- Government support to encourage adoption of used EVs.
“The relationship between a battery and its lifespan isn’t as straightforward as a car engine and its mileage, and dealers know this.” Alex explained.
“As Donald Rumsfeld famously said, this is a case of a ‘known unknown’; dealers have been calling for an independent source of information, which tells them exactly what they need to know about the health of any individual car’s battery at the point of sale”.
The Altelium platform is able to read EV battery data, to produce a report indicating the State of Health (and vehicle range) and how that compares with what would be expected for that make/model with its particular age and mileage. This provides the independent assessment that dealers have been calling for.
“As information such as the Altelium EV Insight for Dealers become widely available, dealers and customers will gain confidence in the future condition and value of their EVs, which will steady the market and help both the used and new EV car markets grow. Our reports give a much-needed injection of information and confidence for the market”, Alex concludes.
Alex Johns will be speaking at the BVRLA Event “Battery Health Deep Dive” on Tuesday 16 May 2023