Auction executives talk EV preparation at NAAA Convention
Auto Remarketing, Wednesday, 28 September 2022, 1007 Words, Copyright 2022. Cherokee Media Group
Nearly 62% of the used electric vehicles available on the retail market are Teslas, with the next-closest competitor (Nissan) having a 6.6% share, according to Autonomy’s debut EV Market Report released earlier this month.
That’s part of why the number of EVs flowing into wholesale auctions has remained small, as Tesla’s used vehicles tend to go back to the automaker, explains Grace Huang.
“Because most of the EVs have been Teslas, that’s why we haven’t seen it,” said Huang, who is president of the Cox Automotive Inventory Solutions Group that includes Manheim, during an interview with Auto Remarketing earlier this month in Dallas at the NAAA Convention.
“But I do think we will start seeing (the volume) in the coming years. With the EVs, affordability will be key. Can a manufacturer make a vehicle that’s affordable, like the LEAF or like the Bolt that a lot of people can afford? And I think that you have to have that for adoption to really hit the numbers that the government — California, really — hopes for.
“It’s great that California wants a lot of EVs,” she said. “But it’s not realistic if you can’t afford it and/or you can’t charge it, because the grid can hold it.”
Affordability, infrastructure, volumes — such is the reality of the used EV market, which Huang and fellow auction executives John Hammer of ADESA and Cam Hitchcock of America’s Auto Auction addressed during a panel at the convention.
As Huang pointed out during the panel, there is a lot of “complexity” and operational challenges that the auction industry will have to face, including charging and weather-related impacts.
But it’s a big opportunity.
“These cars need to get charged. And we have a lot of space, all three of us,” Huang said during the panel. “We have a lot of space that can hold a lot of chargers. Now whether the grid can service all those vehicles is another question, but we have a lot of space and it becomes a perfect depot at night for charging, especially when we’re thinking about fleet clients.”
At America’s, the auction company has learned on a fellow company within Brightstar Capital Partners to help navigate the waters.
“We’ve been working with one of our sister portfolio companies called Amerit Fleet Solutions, which has helped us quite a bit as we’re developing our strategy for the chargers, technicians,” said Hitchcock, who is CEO at America’s. “We may end up outsourcing to them some of that initially until we see what the flow is really going to look like.”
The key, he said, is that the company is “properly invested,” and the timing of that investment is right.
Hammer, who is president of ADESA, echoed some of that cautious-but-prepared approach to EV investment.
“I think if we had started investing out of the gate as aggressively as we originally thought, we would have overspent. It seems like it’s just moving slower and we’re able to learn more,” Hammer said.
And companies within the auction space are partnering with EV-centric companies to prepare.
For instance, ADESA teamed up with Recurrent, an EV battery and range analytics company, to launch a new condition report to show EV battery performance on used models.
Meantime, Black Book announced the integration of its VIN-specific data into a valuation tool built on Recurrent’s new Range Score.
Range Score is designed to make it easier to understand expected range in a used EV by comparing a unit’s current expected range to what was normal when new, which often differs from its EPA-rated range.
While early yet, such moves may be important with increased used EV volume on the horizon.
To Huang’s point on additional wholesale volume of EVs, the Autonomy report shows a market where the number of automakers in the EV game and available models has increased. And eventually, those vehicles will be sold in wholesale channels, particularly automakers beyond Tesla ramp up EV production.
“EV share of overall used cars is 0.6%, but it is highest for the newest model years,” Autonomy said in the report. “The shift has, to some degree, paced along with the increasing availability of EVs per model year, growing from just one model (Nissan LEAF) in model year 2011 to 31 EVs in model year 2022.
“As the number of EVs for sale has increased each model year, it follows that there would be a higher proportion of used EVs available for sale by model year,” Autonomy noted.
EVs have less than a 0.5% share of all 2020 model-year used vehicles for sale, according to Autonomy. But that share jumps above 1% for 2021 used vehicles and to nearly 3% for 2022 model-year pre-owned vehicles, the data shows.
The 31 used EV models for sale this year is up from 19 in 2021 and 15 in both 2020 and 2019, according to Autonomy
There are more than 2,500 used EV units for sale from the 2021 model year and over 2,000 from the 2022 model year. Volumes of used EVs for sale from the 2018, 2019 and 2020 model-years, respectively, are each north of 1,500 units, but less than 2,000 units, the data shows
“The EV race is on. While today Tesla is synonymous with electric vehicles, 130 new electric vehicle models will be available by 2026, offered by over 40 different brands,” said Georg Bauer, president and co-founder at Autonomy in a news release. “It’s an exciting time to work in the automotive industry and an even more exciting time to be a consumer.”