EV sales are up but battery issues fail to charge up market for used vehicles

Everyone wants to buy an electric vehicle nowadays but its high price is a huge barrier. But have you ever thought of buying a second hand EV? If you have not thought about it, then it is a good thing and if you are thinking of buying a second hand EV, then drop the idea. Let us tell you the reason behind this.

The sale of new EVs is gaining momentum in our country. In FY24, total EV sales grew by 41% to a record level of 16.6 lakh units. In March also, more than 1,97,000 units were sold. People are in a hurry to buy EV before the FAME-II subsidy scheme ends. From April 1, 2024, the government has started Electric Mobility Promotion Scheme 2024 with a budget of Rs 500 crore so that the subsidy support for buying electric two and three-wheelers continues till the end of July.

According to a survey, only 5 percent of people in India want to buy an electric car this year and most people want an EV costing less than Rs 10 lakh. Perhaps that is why the share of cars in total EV sales is only around 6 percent. In the past financial year, two wheelers contributed 56% of EV sales and three wheelers contributed 38%, hat is, two and three wheelers account for 94% of total EV sales.

Just like the contribution to total EV sales, the second hand EV market has also been lagging. The  quality of batteries and lack of demand-supply are two major challenges in this.

Let us understand these challenges in detail.

Talking about the first challenge, the cost of the battery in any EV is close to 50% of the total cost of the vehicle and it is very difficult to test it from the perspective of quality and usage. In comparison, to petrol-diesel vehicles, the running information of the vehicle is very important to assess the depreciation of EV battery. Not only this, the tools and procedures used to test the condition of the battery are very technical, costly and not easily available.

The second challenge is to check the deterioration of the battery.  In mature markets like Germany and China, the battery of an EV can be used for automotive purposes until it deteriorates to 80% of its original discharge capacity and the same standard is used in India as well.  After 80% of the original discharge capacity is used, the energy density of the battery becomes unviable for automotive use, so they are retired.

Apart from the problems related to battery deterioration, low demand and supply of second-hand EVs is also a big challenge due to which this market is not able to pick up. Very few EVs come for sale on consumer-facing platforms like BeepKart, Droom, Spinny and Credr.  The same situation is also seen in the sales figures of second-hand EVs where demand-supply is a big issue.

So even though the pace of EV sales in the country is gradually increasing,  the second-hand market of EV is still very small. And it is dull because customers lack information about the quality and technical understanding of electric vehicles. It will take some more time for this market to grow.

So if you are planning to buy a new EV, then think beforehand that you will not get good money if you sell it after a year or two.