As used electric vehicles become common, the largest auto auction houses grapple with how to value a car after factoring in the gradual degradation of aged batteries, which typically last eight to 10 years, or about 100,000 miles.
Accurately judging the remainder of the battery’s useful life is crucial to building confidence in the used-EV market and also will help drive new-EV sales, said Lea Malloy, vice president of battery solutions at Cox Automotive Mobility. The company is a division of Cox Automotive, which also owns auction giant Manheim and vehicle valuation company Kelley Blue Book.
Consumers will think, “I’m going to buy a new [EV] because I’m confident that when I’m ready to unload this vehicle, I have a market that is going to support my sale,” she said during a July media roundtable discussion in Detroit.
To help solve the problem, Cox developed software that tracks a battery pack’s chemistry, age, service event history and other factors that identify its health and lifespan.
“It’s the beginning of a passport system for batteries,” she said. “We need confidence in the data around how this battery was supported and handled and, ultimately, to know what its value is.”
Companies such as Cox are building systems to assess that value as the used-EV market grows rapidly. Electric vehicles accounted for about 5 percent of new U.S. light-vehicle registrations during the first half of this year, up from 2.5 percent during the same period in 2021.
Used EVs account for a tiny number of all used-vehicle sales, but that is expected to change as automakers launch dozens of electric models and as those vehicles find their way back to the market.
Much of the process for valuing a vehicle is the same for EVs and gasoline-powered vehicles, said Tom Kontos, chief economist at ADESA, the second-largest U.S. auction house. Online used-vehicle retailer Carvana owns ADESA.
“If you were looking at valuing a Tesla, you would probably begin by looking at the luxury-sedan segment and see what a 3-year-old luxury sedan is selling for, and that would be your starting-off point,” Kontos told Automotive News.
Most of the evaluation mimics the process for a gasoline vehicle, with the battery being the big question mark.