If the electric vehicle wave builds and sweeps across transportation, it will first need strength from a deep enough sea of infrastructure, consistent battery evaluations and standards, and reliable valuations.
Those are among the many insights derived from the European electric vehicle market, which remains a few steps ahead of the U.S. one.
“I think the most dangerous thing is complacency,” said Johan Verbois, managing partner of 5s Consulting in Antwerp, Belgium during the Conference of Automotive Remarketing on March 29. “We need to be open. It's not about whether the wave will move there completely. No, it will move. But if it's 80/20, or it’s 70/30, it’s just as hard.”
Meeting the Big Electric Vehicle Challenges
Verbois presented a session, “The Realities of Electric Vehicles in Fleets & Remarketing Channels,” that covered three key and related areas, which pose specific challenges to the remarketing industry:
- The customer journey, such as physical-digital formats and e-commerce channels
- The powertrain transition, including how to handle and sell used electric vehicles
- Changing distribution models, from dealers, to auctions, to direct sales
“When is the wave going to come?” Verbois asked. “We need to prepare and know the infrastructure; we need to know when to do what.”
Verbois previously worked as head of fleet remarketing and dealer development at Toyota Motor Europe. He also has held various positions in sales and marketing with General Motors, Opel, Peugeot, and Mercedes-Benz. He now serves on the board of the Car Remarketing Association Europe (CARA).
Verbois cited the following trends and stats from his recent research:
- 14% of the European vehicle market in 2022 was pure electric vehicles and another 9% were PHEVs.
- In 2022, 79% of all new cars sold in Norway were 100% battery-electric powered vehicles.
- In Belgium, 78% of electric vehicles are in fleets, while in the Netherlands 48% are in fleets. The share of EV fleet usage overall is higher than private use in Europe.
Electric Vehicle Battery Usage Determines Quality
After considering the price of an electric vehicle, the battery is the main element that concerns buyers, Verbois said.
Driving and charging behavior affects an EV battery. Not everyone charges in the same way, while mileage varies among drivers depending on distances driven.
Determining battery capacity and range on a used electric vehicle often depends on learning the history of the vehicle’s usage, Verbois said.
“This is not yet an exact science. Many companies know this is the case. So how do you measure this? How can you go back in history and calculate the value? How can you show that his driver has not done what he should have done? If for example, he only drove 50 miles a day and he used a fast charge every other day?” Verbois asked while illustrating the challenge.
One lesson learned is it’s better to charge an EV for one hour and drive away than charge it and not drive it for 24 hours.
“That’s because the battery is warm and has been charged. If you then start driving, it doesn't need to warm up anymore and doesn't use energy.”
Even in European countries with many electric vehicles, drivers lack adequate information and communication, Verbois said. To build confidence in EV resales for consumers, the market needs a consistent certification of the car’s condition.
“Everyone wants to prove how bad the batteries are. No one sees it from a sales perspective on how can we guarantee that this car is good for you?” Verbois said.
A used EV’s range and battery capacity can vary based on how far and often the new buyer will drive it. Some customers won’t need the maximum range. “What do we need to have to convince someone that the EV is for them?”
Obstacles & Opportunities for Electric Vehicles
To keep EVs affordable, focusing on residual values is more important than ever for an OEM. There are many external factors that must be sorted out, from government regulations, taxation, inflation, depreciation, interest rates, and incentives.
The used EV market in Europe has not yet fully developed enough aggregate data for consistent assessments and valuations, Verbois said.
Meanwhile, the online environment needs to support consumers and B2B buyers in ways that can help them analyze the vehicles in searches based on consistent metrics and standards.
“In an auction environment, there's information that the buyer needs because they want to buy the correct vehicle for the one that will buy the vehicle from them,” he said. “Even in Europe, the skills and the knowledge are not where it should be.”
A recent survey showed that right after price (69%), the second most important subject for used EV buyers is the battery. Here are some hard truths about electric vehicles:
- Battery deterioration is technically unavoidable
- Range deteriorates according to how temperature affects it
- Consumption remains relatively stable
- Driving and charging behavior affects length of range
- These factors all contribute to the battery state of health (SoH)
A battery considered in the best condition is one where the driver has followed these practices:
- Anticipated, or scheduled driving trips
- Rare use of highways and interstates
- No fast charging
- Rare charging of battery beyond 90% capacity
- Low average depth charging
- 30%-50% average charge at storage
To help standardize the process, CARA Europe established a working group in April to facilitate remarketing and support residual values of used BEVs through:
- Trust in the battery
- Easy communication with buyers
- Independent assessments and certification
The end goals are to:
- Set the SoH standard
- Evaluate technology and process possibilities for vehicle individual battery assessment
- Review, validate and real-life test technologies for obtaining SOH data
- Propose a settlement process in case of disputes
Many of the challenges and opportunities will increase the costs of electric vehicles
Among the challenges:
- Transportation safety
- Vehicle weight
- Energy consumption
- Loading capacity
- Compound upgrades for efficiency and safety that will improve the performance and amenities of EVs
- Possibility of remote inspections
- Assessing fair wear and tear leading to the battery state of health
- Determining a detailed SoH report and refurbishment needs
Residual values are even more critical for BEVs based on these TCO factors: Depreciation, which comprises 62% of the residual value, financing, taxes, insurance, service, consumption, and highway usage.
Making Electric Vehicle Resales Consumer-Friendly
Verbois presented five key EV consumer needs for digital retailing and e-commerce:
- Convenience: Support my online journey with an easy experience, smooth and seamless.
- Security: Give me peace of mind that whenever something would go wrong, there is a safety net.
- Trust seller: Support my need for reassurance that vendor can be trusted.
- Trust vehicle: Help me to be confident that the vehicle is in line with expectations by a transparent view without hiding any details.
- “My” car = choice: Facilitate my search to find the best choice for me personally supported by filters, favorites, and comparisons. I need to check all details to be sure.
Research of used vehicle customer websites across 240 fields found the following standards for successful EV resales:
- Search: Narrow down the search to give the consumer the confidence to choose the best possible vehicle based on their preferences.
- Display: Describe and display the vehicle to create confidence in the choice and increase desire of the product.
- Electrification: Support the BEV customer in their purchase by adding the required information and trust.
- Sales: Create a seamless consumer online flow by offering the required services while adding ancillary services sales opportunities.
- Trust: Create trust in both seller and vehicle by highlighting quality, being transparent on vehicle history and consumer experiences and offering a safety net.