Plenty of families like the idea of using an EV to help save the planet. But it’s buyer beware in the nascent second-hand market where the more affordable options are.

When climate activist Kim O’Sullivan bought a second-hand plug-in hybrid, a 2014 Mitsubishi Outlander, for his family at a cost of around $26,000, he believed he was doing his bit for the planet.

It’s caused him nothing but grief since, including a near-miss accident on the freeway. His wife Rohini says she can barely get her son the five kilometres to his school before the car’s battery dies.

What’s worse, when the driver switches the vehicle over to petrol, it can suddenly lose power and the accelerator stops responding. The family now only drive the Outlander on back roads and borrow a relative’s car for longer trips.

The O’Sullivans are not alone. After record EV sales in 2023, around 150,000 electric vehicles (EVs) are on Australian roads and a second-hand EV market is developing for families who can’t afford the usual $60,000-plus price tag for a new vehicle.

But given EV car batteries degrade, buying a used model can be a lottery. A standard lifespan often cited by manufacturers for an EV battery is eight to 10 years or around 160,000 -200,000 kilometres – whichever happens first. However, it’s still early days in this industry, so it’s difficult to be precise about what happens over a car’s lifespan. And regulation is thin on the ground, making it harder for buyers to know what they are getting.

O’Sullivan, an IT consultant and part-time climate activist, is still an optimist about EVs but describes it as a sort of “gold rush era” where consumers can be easily duped and are offered little protection.

“We have solar panels on our roof, and we wanted a family car but something to reduce our carbon footprint,” O’Sullivan says. “We understand that we are pioneer buyers, but this is just a question of basic product claims and safety.”

He says the family can’t sell the car, unless they choose to lie about the battery life, something they would not do. Others lack such scruples.

EV experts want better consumer protection and policy mechanisms and O’Sullivan agrees. “There’s a lot of snake oil out there. Governments should be ensuring there’s support for people ready to make brave decisions.”

Anthony Broese van Groenou, co-founder of the Good Car Company, which deals in second-hand EVs, warns more buyers will be caught out as the market grows.

“In terms of being able to decarbonise really quickly, moving to EVs is one of the biggest things we can do,” says Broese van Groenou.

“But if it’s not co-ordinated properly, it’s going to be a shit storm. We need to have policies in place.” He cites the example of the container deposit program. “There should be some sort of system where used batteries are easily recoupable.”

The economics of a replacement EV battery remain fraught. That means many older EVs are getting dumped, much like iPhones are discarded when a newer model comes along, particularly in markets that have been early adopters.

China is now producing around 6 million EVs and plug-in hybrids a year. It accounts for about 60 per cent of the world’s electric fleet, estimated to be about 26 million. While government subsidies have fuelled a rapid take-up, there is another, less encouraging side of the market.

Last year, a Bloomberg investigation revealed fields in China full of dumped EVs. These are mostly models a decade or more old and made when battery development was a long way behind where it is now and cars couldn’t get far on a charge. Many were bought by ride-hailing companies.

Abandoning these vehicles reduces the climate benefit, given they are more emissions-intensive to build than combustion cars so they only produce an environmental dividend after a few years. Each of the vehicles’ spent batteries also contains precious metals such as nickel, lithium and cobalt.

Broese van Groenou says the next wave of billionaires are likely to be drawn from the ranks of those who discover ways to reuse these precious metals. He also believes that limited battery life may only be a transitional problem, given the technology is evolving so quickly. He notes China now has battery swapping stations and, while it can still cost up to $15,000 to swap a battery in Australia, in five or 10 years time that might come down to $5000, making used EVs more viable.

“I was recently in Shanghai where pretty much all the cars are electric and Teslas are unremarkable. You just notice not being bombarded with traffic noise and stinking fumes. What will that do to property prices?” he asks.

Future fixes are not much help to families like the O’Sullivans. Mitsubishi has refused to fix the problem with the family car, and they have had no joy despite trying the Fair Trade Ombudsman, Department of Infrastructure and The Queensland Civil and Administrative Tribunal.

There is now a change.org petition with close to 5000 signatures showing other families with similar issues. Contacted for this article, Mitsubishi says it is “not able to comment on specific customer circumstances”.

The Australian Automotive Dealers Association, which acts for the interests of 3000 new and secondhand dealerships, believes it is upfront costs and the slow roll-out of charging technology that are the major obstacles for would-be EV buyers. AADA chief executive James Voortman said the second-hand EV market is still in its infancy with just 150,000 EVs among the 19 million vehicles registered in Australia.

AADA research suggests the second-hand market for battery electric vehicles accounted for only 1.25 per cent of all used vehicles for sale, and only 0.6 per cent of cars sold, in November.

“We believe it will take a good number of years for a thriving second-hand market to emerge,” Voortman says.

“There is also a bit of caution from used car buyers and sellers when it comes to EVs due to uncertainty around resale values. Significant discounting of new EVs has implications for the used car market.”

Voortman says the lack of public charging infrastructure remains a barrier for customers and this is “closely linked to concerns around charging times and vehicle range”.

But the Good Car Company’s Broese van Groenou argues the automotive industry talks up the fear factor because EVs challenge established business model.

“People say the batteries only last 10 years and below 80 per cent they are not viable, but that is just the car manufacturers wanting to sell more cars,” he says.

“If you’re not spending thousands of dollars a year on a petrol car, you will pretty quickly make your money back.

“Once people realise how incredibly cheap they are to run, eyes will begin to open. Imagine being able to charge your car while at work and then going home and running your house off the battery.”

Broese van Groenou does not have huge sympathy for O’Sullivan’s hybrid car, a type of vehicle he describes as the “worst of both worlds”. He also warns a sunset clause on the fringe benefit tax exemption for hybrids by 2025 is likely to cause a glut of such models in the second-hand EV market.

“If you are getting a second-hand EV, you’ve got to do a battery diagnostic,” he says. “Like anything, if a battery is treated poorly, it won’t last long. However, we’ve also done a trade-in on a 2012 Nissan LEAF that still had 80 per cent battery life.”

Broese van Groenou says the major challenge for the success of EVs is Australians’ love of their cars and the fairytale of long-distance driving.

“Most of us live in the city, just run around and drop the kids off, so drive less than 50kms a day. But we have this identity where we think we’re all going to be driving across the desert. It’s emotional, it’s not rational.”

“I love the sound of a V8 which you can’t really replicate with an EV. You get a different experience. It taps into something primal.

“I know we love our cars, but they are also really practical tools and if they can save us money while saving the environment that’s a pretty bloody good thing.”

Extracted in full from: https://www.afr.com/policy/energy-and-climate/this-family-bought-an-ev-it-didn-t-work-out-well-20231214-p5erm4

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