With its primary value in battery quality, electric vehicles are redefining how their used versions should be valued and resold on wholesale and retail markets that are still mostly unpredictable.

While the mainstream EV market kicked off more than a decade ago with the launch of the Tesla Model S sedan in 2012, it wasn’t until the 2020s that the market grew to a point where a viable second-hand market could take shape.

Two experts delved into recent EV market dynamics during a workshop hosted by the Automotive Remarketing Alliance on March 26 at the Conference of Automotive Remarketing in Phoenix, Arizona.

Improving Valuation Accuracy

The used EV market is gaining momentum as used EV sales will surpass 550,000 vehicles this year and lower price points are making them more affordable to a wider consumer segment, said Julie Woo, head of product for Recurrent, a company that uses technology to evaluate EV batteries and bring more clarity to used EV transactions.

In 2018, for example, a used Tesla Model 3 averaged about $40,000, whereas a new one can now be bought at the same price. Most used EVs this year average $25,000 to $30,000, and below.

Lower prices are happening in tandem with more precise valuations based on vehicle identification numbers (VINs), said Jared Kalfus, president of Black Book. Through VIN numbers, buyers and sellers can decode a vehicle’s history.

Called enhanced vehicle matching (EVM), the process enables customers to get a 96% value fit to the exact model, trims, and condition of the vehicles.

Black Book created this history adjusted value that enables 1.2 billion vehicles to be decoded each month through Auto Check by Experian which produces a full report that would include accidents, past rental car status, towing incidents, and certifications of a vehicle.

Each Black Book value has come standard with the history adjustment value, Kalfus said.

The pairing this year of Black Book with Recurrent yielded a battery adjusted value suited to electric vehicles, which means that every time an EV is decoded, the valuation tool makes an adjustment based on the condition and state of the battery.

“What matters for a used EV is the battery age, exposure, battery temperature, charging speed, charge-discharge cycles, depth of discharge, and states of charge,” Woo said. “An EV battery has a shelf life, where calendar degradation happens. Battery age matters more than vehicle age or mileage,” she added, comparing EVs to internal combustion engine (ICE) vehicles.

With electric vehicles, two major data pieces contributing to a valuation — the traditional market value of the EV overall and the specific battery adjustment based on data — can change daily in real time, Kalfus said.

3 Ways EV Driving Affects Resale Value

Woo explained how varying modes of EV usage affect the eventual resale value during the first ownership of the vehicle:

1. Exposure and battery temperature: Extreme heat and cold can impact an EV, with heat speeding up battery degradation and extreme cold diminishing the range.

2. Charging habits: How you charge an EV matters for battery quality, especially L3 fast charging versus the slower L2 charging and how much of each occurs during the life of the EV battery. The faster DC chargers with higher power and voltage generate faster electrons that cause more degradation over time.

3. Charge-discharge: What is the state of battery when you plug in and plug out? How much have you used before you plug in again? How often do you charge from 0% to 100%, which strains an EV battery more than 20% to 80% charges. It’s better to stay in that latter mid-range, which means less is more for the long-term. Battery performance depends on lifestyle,” said Woo, citing how and where a driver uses an EV and what range they need for daily trips and commutes.

Boosting EV Battery Performance

Woo referenced battery management systems that can control and optimize EV performance to preserve the balance between usage and longevity.

According to an article by Cyient, an engineering and technology solutions company, "a battery management system (BMS) manages the electronics of a rechargeable battery, whether a cell or a battery pack. It becomes a crucial factor in ensuring EV safety. It safeguards both the user and the battery by ensuring that the cell operates within its safe operating parameters. BMS monitors the state of health (SOH) of the battery, collects data, controls environmental factors that affect the cell, and balances them to ensure the same voltage across cells."

Data Benefits Growing for EVs

As more EVs enter the ground transportation system, the more data they produce. At Recurrent, analysts have studied 30,000 digitally connected electric vehicles covering 66 makes and models and their 440 million miles driven across 50 states. These are used to generate reports on individual vehicles.

“Real world miles and data can help us understand how far cars travel and how they are driven,” Woo said. “We tell you as owner and buyer what the range is, battery insights, and how the EV drives today versus the future and versus new cars.”

Another factor affecting range duration is seasonality in different geographic regions and climate zones.

“The range score looks at how far a used EV can go on a full charge compared to that of a new vehicle,” she said. “Sometimes a vehicle with more miles can get a higher battery and range score.”

A 93 score, for example, means a used EV gets 93% of its range when it was new. Those scores are shared with Black Book.

Kalfus emphasized that the VIN-based decoding of EV battery health nets out to a valuation adjustment based on the data. “It’s not art or going with your gut,” he said. “It’s about what the data is telling us. This data set can be used anywhere in the auto eco-system.”

With more EVs moving into consignor, auction, and dealer trade channels, such precise EV data plays into more accurate transactions, appraisals, and buyer-seller decisions, Kalfus said.

The process also helps other vendors and services along those channels, including lenders, insurance companies, extended warranty providers, leasing, and commercial fleets, he added.

To further expand the data sets, Recurrent is talking with OEMs about applying more telematics data, as well as information on the impacts of evolving EV battery technology, Woo said.

“The data helps with remarketing and valuation decisions in all sectors. This is a new era for EV valuations.”