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The residual value of an electric car: the most important component is the battery
The older it is and the higher the mileage, the lower the value. This rule of thumb applies in the same way to cars powered by a combustion engine and electric cars. But that’s where the similarities end. This article is about a component that is only found in electric cars: the (drive) battery.
The residual value of an electric car is influenced by several factors, the most important being the battery. It is the battery’s SoH (state of health) that determines the car’s residual value. The lack of standards in the still young electric car industry means that “there is no uniform method for calculating SoH,” according to Aviloo, a Vienna-based company specialising in battery diagnostics. At the moment, the common denominator is what interests all e-users the most: the range.
Electric cars: battery condition and service life
Lithium-ion batteries are said to have a service life of eight to 15 years or 150,000 to 300,000 kilometres, depending on usage and charging habits. Various manufacturers issue warranties for their batteries, often with an SoH of at least 70% over eight years or 160,000 kilometres. Such warranties can have a positive impact on the residual value of an electric car since they provide credibility and safety. Also, well-known car brands that have proven to be reliable and durable have a higher residual value than less well-known brands.
The following aspects are important in terms of service life:
Capacity loss: The battery of an electric car loses capacity over time (degradation of the battery). “You have to think of a battery as a 10-litre canister. Let’s assume that constant use leads to the build-up of limescale. At some point, maybe only nine litres will go in,” explains Herbert Meier, Fleet Project Manager at Mobility.
The residual capacity of an electric car battery is usually stated as a percentage of its original capacity. For example, Tesla has published data showing that its batteries still have around 80 % of their original capacity after 240.000 kilometres. Other data likewise indicates that it is possible to travel several hundred thousands of kilometres before the battery power drops significantly.
From the manufacturer’s perspective, it is crucial for this figure to remain as high as possible for as long as possible. “Some manufacturers install an 11-litre canister, but you can only fill it with 10 litres. This means that you don’t notice the loss of capacity until the capacity drops by more than a litre. Others don’t provide a buffer, so users notice from the outset how capacity is dwindling,” says Meier. However, batteries age not just as a result of use but also as a result of time (calendar ageing) – rather like a person sitting around on the sofa doing nothing.
The number of charge cycles: this is also an important indicator of the condition of a battery. A charge cycle is a full charge from 0% to 100%. Batteries have a limited number of charge cycles. In short: the more cycles the battery has completed, the greater the decrease in capacity.
Fast charging (DC charging): this may place a greater strain on the battery than slow charging (AC charging). Batteries that frequently undergo quick charging can lose capacity more quickly.
For Mobility, too, it is very important to diagnose and evaluate the batteries in its electric vehicles. On average, the cars are replaced every five years or when they have travelled 90,000 kilometres, after which they are sold on the used car market. At the moment, the industry as a whole still lacks the expertise and to some extent the data to determine the residual value of a used electric car.
How is the state of health determined?
Since mid-2023, Mobility has used a measuring device made by the Austrian company Aviloo that provides a precise analysis of the capacity of car batteries. The test unit is connected to the vehicle and the battery is tested under real-life driving conditions. “We charge 100% and run the battery till it’s flat,” says Meier. “This measures the amount of electrical energy consumed. That is compared to the manufacturer’s specifications, which gives us a figure for each car.” One important point here that the condition is evaluated independently of the manufacturer. This is because the SoH indicated by the manufacturer often deviates from the actual state of the battery. These measurements are only carried out on a random basis, however.
Mobility then receives a detailed report from Aviloo containing the most important key figures such as residual capacity, number of charging cycles and the general state of health of the battery. At the moment, Mobility is also trying to gather as much experience as possible “so that we know how the various batteries in our electric cars lose value”. As already mentioned, there are still no uniform standards or norms in the industry. Very limited information is available on what a calculated SoH expressed as a percentage really means in terms of residual value.
Mobility has various e-models in various different price categories. The vehicle fleet comprises 3,000 vehicles throughout Switzerland, 500 of which were electric cars as of the start of 2024. The aim is to fully electrify the fleet by 2030.
How can I positively influence the value of my electric car?
Some manufacturers offer to replace or recondition their batteries, and this may increase the car’s residual value. But changing a battery can often be very costly. After all, a battery is not only the most important part of an electric car, it’s also the most expensive part. “It would also be possible to replace individual battery cells that no longer perform at their full capacity. But that’s also extremely time-consuming and expensive,” says Meier.
What costs less is to draw up complete documentation that shows the car has been inspected regularly and correctly. A service history of this nature might potentially have the effect of increasing the car’s residual value. Nevertheless, the maintenance status of an electric car is not comparable to that of a fossil-fuel car. “In the case of a fossil-fuel vehicle, the residual value can be determined relatively easily based on the maintenance status and by checking the condition of the vehicle,” says Meier.
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