With the Tesla Model 3 formally announced and Tesla Motors [NASDAQ:TSLA] taking scads of deposits, some have heralded this as the moment that the electric car becomes available to everyone. With several automakers indicating that their next generation EV will be similarly capable and others suggesting that they’ll target the lower end of the market, it’s certainly true that the Model 3 and its kin open up the market substantially.
The fact that the next generation of EVs have markedly improved range — and that EV technology, as it has matured — has overcome some of the earlier concerns regarding reliability, opens EV ownership to a much larger proportion of the population. But perhaps it’s not the top end of the market that will be most interesting to watch. The majority of shiny new electric cars, be they Tesla Model 3s, Chevrolet Bolts, or Nissan’s next iteration of the LEAF will stick to that same market segment where the current LEAF, Focus EV and e-Golf have gone – the upper middle class.
What will be fascinating is the transition that will occur at the lower end of the market. Until now, a mixture of limited availability and high initial expense has led to remarkable residual values for used EVs. But amongst owners of vehicles like the Tesla engineered Toyota Rav4, and indeed, the original Tesla Roadster, there has been some discussion of the impact of the Model 3 on the second-hand value of their cars.
The second generation Toyota Rav4 EV has held its value remarkably well – retaining a used market value of around $30,000 until very recently. Checking the used adverts still finds many vehicles listed in that area, but recently a few have started to appear in the lower $20,000s – with some owners commenting that this summer – as the final year’s production come off lease, there is likely to be a glut of used Rav4 EVs hitting the market. And hinting to potential purchasers that this year may be the one to buy that longed for EV SUV.
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