About 80% of used car dealers in China refuse to accept electric vehicles older than five years due to concerns over battery life and replacement costs. According to the China Automobile Dealers Association, a 3-year-old EV in China now resells for approximately 45% of its original price, compared to almost 55% in 2023.
China currently has 44 million EVs on its roads, making it the first country to experience large-scale aging of these vehicles. However, industry experts note that dealers struggle to price used EVs accurately because there is no agreed-upon method to measure battery health. This valuation problem is expected to extend to countries that have imported Chinese EVs as these vehicles reach the five-year mark.
Chinese carmakers exported more than 2.5 million EVs last year, with Europe and Southeast Asia being the primary markets. Chinese vehicles now account for 55% of EV sales in countries outside Europe and the U.S. Experts highlight that while exporting cars is simple, building a support ecosystem for second and third owners is more challenging.
Battery warranties typically cover the batteries for eight years or 160,000 kilometers. A replacement battery can cost up to a third of a new car's price. As warranties expire, the cost of failure falls on the the owner. In some markets, such as the Gulf region, customer interest in used EVs drops significantly after the five-year mark.
Battery degradation varies based on usage. A Geotab study of 22,700 EVs found that an average EV loses just over 2% of its capacity annually, while those relying on high-power fast charging degrade at up to 3% a year. In extreme cases, such as taxis driven 80,000 kilometers per year and fast-charged constantly, batteries can lose up to 8% of their capacity annually.
When a used EV becomes unsellable, its final value is determined by the recycler's price for the metals inside. For lithium-iron-phosphate batteries commonly used in Chinese EVs, this value is a few hundred dollars at most.
