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The battery test race to work out what used EVs are really worth

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(This Oct. 23 story has been corrected to mention that Driverama is a unit of Aures Holdings in paragraph 15)

By Nick Carey and Paul Lienert

LONDON/DETROIT (Reuters) – A race is on to certify battery health and performance in used electric vehicles, with a clutch of startups scrambling to help buyers figure out how much a secondhand EV is really worth.

With traditional combustion-engine cars, mileage and years racked up can quickly tell prospective buyers how much they should fork out. That formula does not work with EVs – whose value depends largely on their battery’s driving range and ability to hold a charge.

Until recently, there was no way to measure battery health, hampering used EV sales. But that is changing as companies rush to scale up EV battery tests – some of which take just minutes.

One of them is Altelium, a UK startup that has a developed an EV battery state-of-health test and certificate launching this year in more than 7,000 U.S. car dealers and over 5,000 UK dealers through dealer service providers including Assurant and GardX.

“If the second-hand car market doesn’t work properly, the new car market doesn’t work properly and the electric transition won’t happen,” said Alex Johns, business development manager at Altelium, which says it has received interest from other markets including China. “We’re in an implementation race.”

A battery typically makes up around 40% of a new EV’s price. How that battery is treated is key. Charging an EV rapidly too often, constantly charging when the battery is nearly full or leaving it for long periods fully charged can degrade its battery more quickly.

Austrian startup Aviloo, which has developed a test for dealers and private individuals, has found that after 100,000 kilometres (62,140 miles) EV battery health can vary by up to 30%.

A consumer who wants a used EV with 90% of its range when new could end up buying one with just 70% because of the previous owner’s bad charging habits – which should potentially shave thousands of euros off its value, said Marcus Berger, CEO of Aviloo.

“With an EV, mileage and age don’t tell you anything,” said Berger. “It’s all about the battery.”

CRITICAL INFORMATION

Automakers provide in-vehicle EV range information that critics say is often excessively rosy, making independent tests vital. A lack of visibility has hurt the EV market.

According to EV battery tracking startup Recurrent, U.S. used EV prices in September were down 32% year-on-year, versus a 7% drop for fossil-fuel models. UK used EV prices were down 23% year-on-year in August while those of fossil-fuel models were up at least 4%, according to AutoTrader, which cited “consumer concerns around battery life in used EVs” as cause for concern.

A price war started by Tesla has also weighed on used EV prices.

AutoTrader and Deutsche Automobil Treuhand data show residual values for three-year old EVs in the UK and Germany are over 10 percentage points lower than fossil-fuel equivalents.

“Knowing the capacity of that (EV) battery is going to be critical,” said Stephanie Valdez Streaty, director of Mobility R&D at Atlanta-based Cox Automotive, which owns Manheim, the world’s largest used-vehicle auction house.

Driverama, an EV-focused unit of Aures Holdings, which buys around 100,000 used cars in Germany annually for sale across central Europe, uses Aviloo to weed out EVs below 80% battery capacity or with battery defects, said CEO Eldar Vagabov.

‘RELIABLE NOT RUBBISH’

For Michael Willvonseder, 38, an independent battery test was essential before spending 31,000 euros ($32,820) on a 2014 seven-seater Tesla Model S with 240,000 km on it.

The resident of Wiener Neustadt, south of Vienna, used Aviloo and found the battery had 90% of its original capacity – with a range of 412 km versus 456 km when new.

“I want a car that’s reliable, not rubbish, and I need it to last a long time,” Willvonseder said.

The race to properly value used EVs is becoming urgent because of a looming influx of vehicles.

In Europe, for instance, more than 1.2 million new fully-electric cars were sold in 2021 – and many will hit the used market in 2024 when their lease contracts end.

If used prices remain low, that could hurt new EV prices.

“You need a high functioning used-car market for residuals on new cars to be good,” said Scott Case, CEO of Seattle-based Recurrent, which has signed up 20,000 EV owners to track battery data, and is also working with Black Book and dealers.

Owners who care for their batteries could earn a “potential premium of thousands of dollars” when selling, Case said.

Startups face competition from German certification agency TUV Rheinland, which operates in 60 countries. It has launched Battery Quick Check – jointly developed with startup Twaice – in car workshops across Germany and expects to launch in other markets next year.

“People just want less risk,” when buying a used EV, said Battery Quick Check managing director Katharina Alamo Alonso.

($1 = 0.9446 euros)

 

(Reporting By Nick Carey and Paul Lienert, editing by Ben Klayman and Deepa Babington)

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