With EVs losing value twice as fast as ICE vehicles, the auto industry has been quickly looking for reasons to explain it. Battery Health ranks highly with consumers as a deterrent to considering a used EV. It’s a topic that comes up frequently on panel discussions at industry conferences such as AM Live and Fleet & Mobility Live with Retailers hoping the Leasecos drive it and the Leasing industry hoping OEMs will standardise how it’s assessed.
Problem
1. Battery Degradation is a Natural Process
Lithium-ion batteries, the primary energy source for EVs, degrade over time. Factors such as charging habits, extreme temperatures, and high usage accelerate this process. While modern EVs boast improved battery management systems, degradation remains inevitable, creating uncertainty for potential buyers.
2. Rapid Technological Change and Obsolescence
The transition to EVs is driving huge levels of change in the auto industry. In the past three years, nearly 200 new models have been launched, compared against a traditional trend of 40 per annum. In 2023, 45 new models debuted in the third quarter alone. Each new model typically comes with more sophisticated technology and larger batteries, making “Nearly New” used EVs look less impressive by comparison.
3. Consumer Education Gaps
Buyers often lack the technical knowledge to interpret battery health data. Terms like “State of Health” (SOH) and “Depth of Discharge” (DOD) may appear complex, adding to hesitation when considering a used EV. Without accessible and clear information, buyers default to caution. The range is already confusing buyers, expecting to achieve the WLTP range under all driving conditions. The car industry needs to get better at selling what the real-world range is at higher speeds and lower temperatures.
The Impact on Resale Values
Battery health concerns translate directly into lower resale values. Unlike ICE vehicles, where maintenance and mileage are the primary indicators of value, EV resale values hinge heavily on battery performance. Buyers worry about expensive replacements and reduced driving ranges, making them less willing to pay a premium for used EVs. This uncertainty exacerbates the depreciation gap between EVs and ICE vehicles.
Why Battery Health Issues Won’t Disappear
1. Technology Advances Won’t Eliminate Degradation
Even as battery technologies improve, degradation remains a fundamental characteristic of lithium-ion batteries. Advancements may slow the rate of decline but cannot eliminate it. Future breakthroughs, such as solid-state batteries, are still years away from mass adoption.
2. Growth in the Used EV Market
The used EV market is expanding as more early adopters trade in their vehicles. With growing supply, buyers have more options and higher expectations for transparency, placing greater emphasis on battery health as a key purchasing factor.
3. Regulatory Pressures
Governments worldwide are pushing for greener transportation, which means a larger share of EVs in circulation. However, regulations on battery disposal and sustainability may increase scrutiny on older EVs, amplifying the need for clear health assessments.
How Regular Testing Addresses These Concerns
1. Transparency Builds Trust
Regular testing provides an objective measure of battery health, enabling buyers to make informed decisions. Reports detailing the battery’s SOH and historical performance foster confidence, reducing perceived risk.
2. Supports Pricing Accuracy
Accurate battery assessments allow sellers to price used EVs appropriately, avoiding undervaluation due to blanket depreciation assumptions. This transparency ensures fairer transactions and incentivises resale activity.
3. Preventative Maintenance and Early Detection
Frequent testing identifies potential issues early, giving owners time to address them before they escalate. This proactive approach improves battery longevity, protecting both the owner’s investment and resale value.
4. Promotes Industry Standards
As testing becomes more widespread, it pushes the industry closer to standardisation. Battery health certification could become a benchmark similar to MOT tests for ICE vehicles, offering buyers a reliable reference point.
BatteryCycle’s Role in Addressing the Issue
BatteryCycle offers an asset-light solution to assess battery health. It uses connected car technology to capture data from the vehicle without requiring aftermarket devices that plug into the On-Board Diagnostics II (OBD-II) port. This means you can collect battery health readings across a large population of vehicles with minimal overhead.
Conclusion
Battery health will remain a central concern affecting the resale values of used EVs for the foreseeable future. As the market matures, buyers will demand greater transparency and reliability in battery performance assessments. Regular testing emerges as the best strategy to address these concerns, supporting informed decisions and protecting resale values.
Solutions like BatteryCycle are poised to lead this transformation, offering scalable, data-driven tools to assess and monitor battery health. By fostering trust and transparency, these innovations pave the way for a more resilient used EV market, ensuring buyers and sellers can confidently navigate this evolving landscape.
