Used battery electric vehicle retail prices have begun to fall on the back of surging stocks, but some models are still seeing strong demand.

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New data from Auto Trader for January shows that the current average value of a second-hand EV across the whole retail market (£36,445) is down 0.8% YoY and 0.9% on December, marking five consecutive months of month-on-month decline. Yet, average prices of used petrol and diesel cars are up 0.6% (£16,666) and 0.5% (£16,723) respectively.

The digital automotive platform said the fall comes as the rate of growth in supply has accelerated past the growth in demand. Its data reveals that used EV supply in the market has rocketed, surging from just 2% of all used cars advertised on Auto Trader in June, to over 6% in January.

But Auto Trader warned that it’s far from being a universal situation and that the immature electric market is incredibly nuanced, with the negative price adjustment of over-supplied premium models distorting the overall picture of EV market health. Plenty of models and derivatives are not only outperforming other EVs, but also their fossil-fuelled counterparts.

This is backed by its figures; while the Tesla Model S and the Audi e-tron recorded respective month-on-month declines of 3.1% and 2.6% between December and January, the Peugeot e-2008 and the Citroen e-C4 rose 11% and 7.7%.

Auto Trader’s analysis also reveals the impact that Tesla’s price cuts on new car prices has had on used values. The electric carmaker announced on 13 January that it had significantly cut UK prices for its Model 3 and Model Y in a bid to boost demand; prices are down by between £3,500 and £8,000, depending on the model.

Following the announcement, Auto Trader figures show the price of a one-year-old Standard Range model fell by around £1,400 overnight on its marketplace, although demand for new models spiked.

Richard Walker, director of data and insights, cautioned the used car industry from thinking all EVs are in decline.

“Those models that are seeing levels of supply grow at a faster rate than demand are experiencing a price adjustment, but there’s plenty of models where demand is as strong, if not stronger than supply, and as a result are selling quickly,” he stated.

Dramatic fall in battery EVs was expected, says Cap HPI

Cap HPI has also spoken out on the dramatic reductions in used values for some battery electric vehicle models, which it says need to be seen as part of a shift to more viable pricing levels for the long term.

The automotive data specialist said the falls were entirely expected as part of a market adjustment to values that were previously unsustainably high and don’t herald a collapse in demand for EVs.

Dylan Setterfield, head of forecast strategy, commented: “Used values for many battery electric models were strong through 2022. In many cases, nearly new retail values were above list price, some by a considerable margin. This was clearly unsustainable and our forecasts reflected that, with large negative adjustments applied.”

Setterfield said that BEV values had remained stronger for longer than anticipated due to prolonged new car supply issues and were now transitioning to more realistic, sustainable levels.

He added that the average used value for every battery electric model remains above the Cap forecast from last year – but cautioned that some models were likely to see more adjustment to come.

“There are still vehicles with used values above list price and significant reductions are expected in these cases over the coming months.”

Setterfield also said Cap HPI does not think that consumer demand has been permanently damaged.

He elaborated: “The total cost of ownership situation generally remains favourable for BEVs. Even with fuel prices continuing to decline at the pump, any sensible charging regime still sways the economic equation. The implementation and ongoing development of Clean Air Zones is also likely to continue to support demand for used BEVs. The ongoing pricing realignment actually helps in that regard, making BEVs more affordable.”