The Expert Podcast

Man, there's a whole lot going on in the electric vehicle market. A really good article talks about how electric vehicles are starting to get backed up in sales, and that it may not end anytime soon. This article from Tesla Roddy highlights how new electric vehicle reservations indicate the shortage may be here to stay.

Here’s the thing: shortage is a relative term. Back in the old days, you could walk into a dealership, see cars on the lot, buy one, and walk out. Now, dealerships don’t have cars on the lot anymore. There are no cars for sale—you either order them, wait for them to come in, or wait for them in transit. That seems like a shortage, but it may become the norm. Two or three years from now, it might not be called a shortage; it might just be the way you buy cars. Manufacturers aren’t building a lot of speculative inventory to sit around on lots collecting dust and interest or needing discounts. They’re just building barely enough for the market to absorb, so the "shortage" may be here to stay.

According to this, it gets a little deeper. An article from Recurrent discusses how this trend is affecting used EVs. Bloomberg reported that the U.S. hit a tipping point of sales by reaching five percent of new car sales. Now, this doesn’t mean five percent of the cars on the road are electric vehicles—it means five percent of the new cars sold are electric vehicles. Unstable and high gas prices, inflation, and record levels of interest in used EVs highlight the maturation of the used EV market.

The maturation means people are now starting to look at used EVs as a primary option. It used to be that people looking for a used car might stumble upon an EV at a dealership and decide to buy it. Now, buyers are starting out with the idea of purchasing a used EV. According to the article, interest in used EVs is relatively new. In the summer of 2021, surveys showed that just over 50 percent of EV shoppers were interested in buying a used electric vehicle. A year later, that number jumped to 80 percent. Demand for used electric cars is growing.

There are some clear trends here. This is a significant development in the automobile industry. Car dealerships are selling a higher percentage of EVs—it’s not just the unicorn customer looking for an electric vehicle anymore. Now, five to ten percent of customers coming in are considering an EV. You can even have a dedicated used car department for electric vehicles because 80 percent of EV buyers would consider a used one. However, keep in mind the importance of checking out the batteries and other factors we’ve discussed before.

Electric vehicles are becoming more mainstream. But what about pricing? Pricing is going up. You can see the trend lines consistently moving upward. Price trends, comparing the same EV models, show increases, even for new cars. People are flipping them—buying a new EV and then turning around and selling it because of the shortage. This is what’s driving the used electric vehicle market.