One of the most pressing challenges dealerships face is properly evaluating the influx of battery electric vehicles (BEVs) and hybrids taken in on trade or purchased from auctions.
Unlike an internal combustion engine-equipped vehicle, battery-powered vehicles contain electric drivetrain components that can only be inspected with advanced tools that fully interface with the vehicle’s battery management system (BMS).
Thanks to prohibitively high repair costs, a mistake like taking in an EV with a failing battery can cost dealerships anywhere from $10,000 to over $20,000. In addition to lost profits, a troublesome EV can cause poor customer experiences that erode trust in the dealership, leading to a poor reputation in the community.
A great case in point is the story of a 2014 Tesla Model S 85 that was taken in on trade and cost the dealership over $15,000.
2014 Tesla Model S 85: Deceiving Appearances
In October 2023, a franchised dealership of a well-known German brand bought a 2014 Tesla Model S 85 with 65,000 miles from a walk-in customer for $22,000.
After a visual check and test drive, the dealership’s service department approved the car, noting a clean light gray interior, a dark blue metallic exterior with minor cosmetic scratches, and a pass on the suspension, brakes, and motor a test drive.
However, a few days after the deal was settled, a problem emerged: a battery management system (BMS) fault code, U029, appeared alongside a dashboard message indicating the “Maximum Charge Level Reduced.”
Dreaded BMS Code U029
The Tesla Battery Management System (BMS) fault code U029 signals that the battery’s maximum charge level has been reduced, limiting the EV to between 50% and 30% of its range. This might be due to several reasons, such as battery degradation, a fault in the battery cells, or other system-related issues that affect the battery’s performance. Tesla engineers designed this code as a protection mechanism to prevent further damage to the battery and avoid safety risks.
Addressing this issue usually requires a detailed diagnostic check by Tesla service technicians but typically requires a complete battery replacement.
After two weeks of discussions with Tesla, the dealership learned that the battery warranty on the troubled Tesla had expired, significantly decreasing its value to an estimated $7,000 wholesale.
On The Spot EV Battery Health Reports
Frustrated by the experience, dealer leadership contacted vsNEW, a tech startup specializing in evaluating EVs, to evaluate the troublesome Tesla.
Upon an initial inspection, vsNEW staff immediately suspected that the customer cleared the error code before trading in the vehicle. Although there is no way to prove that this happened, our team has seen several examples of similar situations where a BMS fault comes up days or weeks after a trade-in.
As a test of our own system, we cleared the BMS U029 code and ran the battery health test to see if the faulty battery would be detected. After resetting the BMS, vsNEW successfully pinpointed the problematic battery module and flagged the battery for issues.
To identify early signs of battery failure, vsNEW examines extra data from the battery management system (BMS), such as voltage, temperature, and internal resistance metrics, using a database containing thousands of comparable vehicles. This analysis helps detect problems such as uneven voltage levels and elevated internal resistance, which are indicators of potential premature battery failure.
In addition to companies like vsNEW, major industry players also offer EV-based solutions.
Cox Automotive Leads The Charge at Auctions
Cox Automotive has introduced a new feature through its Manheim auctions to enhance how dealers can assess the battery health of each EV they purchase.
This service leverages Manheim’s LotVision technology to provide a VIN-specific evaluation of each EV’s battery, presenting details such as battery health score, remaining capacity, warranty specifics, and battery chemistry on Manheim.com’s condition reports (CRs) and vehicle detail pages (VDPs).
This initiative not only empowers buyers with detailed, vehicle-specific information to make well-informed decisions but highlights Manheim’s proactive approach to embracing the surge of EVs in the wholesale market by investing in advanced EV-specific solutions.
A New Reality
As the market for EVs and hybrids matures, dealers are increasingly facing challenges unique to these sophisticated vehicles.
Establishing a standout EV evaluation and reconditioning program to safeguard profit margins and maintain outstanding customer service is crucial to differentiating your dealership from competitors.
This strategic approach will protect your bottom line and position your dealership as a leader in the evolving automotive landscape.