Sharp Price Adjustment Observed in the Used EV Market.

H1 2024: Sharp Price Adjustment Observed in the Used EV Market.

Over recent years, we've witnessed the onset of a transformative shift in our perception of private transportation. Electric Vehicles (EVs), once a mere fraction (~2%) of newly registered cars in Ireland just five years ago, are now being seriously considered by the majority of prospective new car buyers. Enhancements in EV technology, fuel cost savings, governmental incentives, and heightened environmental consciousness are among the factors driving the surge in EV registrations in Ireland.

To put this growth into context, in 2019, there were 3,443 registered EVs, comprising approximately 2% of the total. By 2021, this figure had risen to 8,643 (8.2%), and in 2023, the number climbed to 22,789, representing 18.7% of total new registrations for that year (SIMI). This rapid shift in consumer sentiment to an alternative fuel type left car manufacturers racing to increase their supply and selection of EVs in their range.

As more and more EVs were being produced and purchased by consumers, in time, these cars started to transition into the used car market. Just two years ago in Q1 2022, there was just a modest presence, with approximately 640 EVs listed on DoneDeal, accounting for less than 1% of the total stock. However, this figure has since surged, at the time of writing there were over 4,500 used EVs on DoneDeal, accounting for 5.1% of the stock of cars on the website. Such abrupt changes in market conditions over a relatively short period of time can have a large impact on prices, and the EV market is no exception.

Rolling 12 month % Share of New Registrations by Fuel Type (SIMI)

Using DoneDeal data, we can develop a mix-adjusted price index specifically for used EVs in Ireland. The past two years has seen a dramatic rise and fall of used EV prices in Ireland and in other markets around the world. For context, in Q4 of 2022 the annual rate of inflation for used EVs was +20.2%, one year later in Q4 2023, it dropped dramatically to -11.6%. Now, in the second quarter of 2024, after a drop of -4.1% in the past three months, used EV prices are now -14.8% lower compared to the second quarter of 2023. This price deflation is unique to the EV market; the same Q2 2024 figures for annual inflation of ICE and hybrid cars is +4.9% and -0.5%, respectively. What is causing this price adjustment and what does it mean for consumers?

DoneDeal Used EV and Hybrid Cars Price Index 2020 - Q2 2024

Source: DoneDeal Price Index Data, 2020-2024

As with most markets, a rapid increase in the supply of used EVs (more than tripling in under two years) pushes down prices, but this isn’t the only side of the story. In 2023, manufacturers significantly reduced prices of new  EVs, largely in response to heightened competition from Chinese EV brands such as BYD, MG and Ora. This coincided with a shift from the early adopter phase of EVs to broader market acceptance. The slower transition of EVs into the mainstream consumer market will take time, influenced by factors like range anxiety, nascent charging infrastructure, concerns regarding battery longevity, and the phasing out of government incentives. Consequently, there's a dip in demand, alongside a substantial increase in supply by manufacturers. Price reductions in new EVs directly impact the second-hand market, as evidenced by the data from DoneDeal.

EVs are now more affordable than diesel and hybrid cars

Significant price reductions in EVs means that they are now more affordable than diesel cars and hybrid cars on a like-for-like basis, and, while they are still more expensive than petrol cars, that price gap is rapidly narrowing. A widely cited barrier to switching to electric motoring was the relatively large up-front cost. But this is now changing. Using a wealth of data from advertisements on DoneDeal we can see how the like-for-like difference in prices between EVs and other fuel types has changed over the last few years. 

Looking at a sample of used cars on DoneDeal that are less than 5 years old, we can see how EVs have become cheaper than diesel and hybrid cars. In 2022, an EV was on average 10.2% more expensive than an equivalent diesel car. In 2023, as prices of EVs started to fall, that difference between EV and diesel cars dropped to 2.6%. In the first half of 2024, EVs are on average 8.1% cheaper than diesel cars on a like-for-like basis, and 9.5% cheaper than an equivalent hybrid car.

Similarly with petrol cars, the price gap is narrowing as EV prices continue to fall. In 2022 an EV was almost 30% more expensive than a petrol car on a like-for-like basis (age, mileage, make, etc) whereas in 2024 that gap has narrowed to 12.8%.

Average price differences for used EV cars versus other fuel types over the past three years

We took a sample of used cars less than 5 years old on DoneDeal and compared the difference in price between EVs and other fuel types on a like-for-like basis (holding car age and mileage etc constant). The table below shows how the difference in prices has changed over the past three years as EV prices have fallen.

EVs vs equivalent ICE cars	Petrol	Diesel	Hybrid
2022 Price Difference EV vs	29.4% more expensive	10.2%	3.6%
2023 Price Difference EV vs	21.9%	2.6%	0.8%
2024 Price Difference EV vs	12.8%	-8.1%	-9.5% Less expensive

Source: DoneDeal Data, 2022-2024

The main takeaway from this price correction is that prices for EVs are falling thereby making them more affordable. This is positive news from an emissions perspective, as improved affordability and the development of a second-hand market should, in time, lead to wider adoption of EVs.

Broader Market Trends: Internal Combustion Engine (ICE) Cars

The market for petrol and diesel cars is starting to emerge from its pandemic and Brexit induced inflationary period, with the annual rate of inflation for ICE cars slowing to 4.9% in Q2 of 2024, the lowest rate since 2019. This has been mainly driven by a catch up in supply from both the new car market and imports, over the past year. New registrations and used imports are up 1.8% and 25.4%, respectively, in H1 2024 compared to the same six-month period in 2023. Imports are however still less than half of the level that they were in 2019: 50,717 in 2023 compared to 117,047 in 2019 (SIMI).

Demand for used cars, as proxied by ad views on DoneDeal, increased by 15% higher in H1 2024 compared to H1 2023, while the supply of used cars increased by 19% over the same period. Price inflation dropped to -0.4% in the second quarter of 2024, down from 2% in the first quarter of 2024. The rate of quarterly inflation was quite different between the lower (<€6k) and upper (>€20k) ends of the market: 1.4% and -2%, respectively.

DoneDeal Price Index: 2018 - Q2 2024

Price index trend from the base month of January in 2018, for all cars, showing stability pre pandemic and the steady rise in Car Price Inflation since. 

Source: DoneDeal Price Index Data, 2018-2024

Car Price inflation - Real world indicative examples

We took a sample of cars with different age and value profiles to better illustrate what car values might look like for buyers and sellers in the market today

Car examples	Audi A4 2007	Audi A4 2014	Audi A4 2018
Price June 2023	€ 3,199	€ 13,060	€ 27,911
Expected Value June 2024	€ 2,420	€ 10,945	€ 24,007
Actual Value June 2024	€ 2,737	€ 11,483	€ 24,485
% Change in Price	-14%	-12%	-12%
% Implied inflation	13%	5%	2%

Source: DoneDeal Price Index Data, 2020-2024

Summary Price inflation by car price cohort

The below table displays current inflation rate by market segment and time period.

	Lower Priced Cars	DoneDeal Price Index	Higher Priced Cars
Quarterly Inflation	1.4%	-0.4%	-2.0%
Year on Year Inflation	12.0%	4.9%	1.1%
Inflation since Pandemic	159.50%	88.70%	58.70%
Indicative price in sample	€6,450	€12,600	€20,995

Source: DoneDeal Price Index Data, 2020-2024

Over the last number of years, DoneDeal has collected a vast amount of data on the Irish motor market. Each year hundreds of thousands of cars are advertised on the site.

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The goal of the DoneDeal Motor Report is to use the information in this report to help all actors in the motor market make informed decisions about buying and selling. In addition, because it is freely available, the DoneDeal Price Index can help inform the media, the general public and policymakers about the latest developments in the motor market.

Methodology

DoneDeal is the largest car website in Ireland, listing 9 out of 10 cars advertised online from car dealerships. Economist Tom Gillespie analysed over 5m of DoneDeal’s vehicle listings from 2011-2024 using hedonic regression analysis to isolate pricing inflation associated with vehicles after controlling for mileage, age, and other vehicle attributes.

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Survey Methodology and Sample size

Statistics are based on cars advertised on DoneDeal for a given period in addition to a nationally representative survey commissioned by DoneDeal (2,000  Respondents) and publicly available information about the Irish Motor Industry.

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Credits

Economic Analysis: Dr. Tom Gillespie

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