When 32-year-old Abdul Haqqim was deciding last year whether his new car should be an electric vehicle (EV) or an internal combustion engine (ICE) car, among his topmost concerns was its resale value.
There are multiple claims online that an EV’s resale value would tank due to factors such as battery degradation and the speed at which newer technologies emerge.
“Back then, the information that I had was not much, (and) there was hearsay that potentially the resale value would not be as high as a normal petrol car,” said Mr Haqqim, who is an account manager in an advertising firm.
Before he bought his car in May last year, he thoroughly researched EVs and their resale value. To that end, he was comforted that the EV he purchased came with a six-year battery warranty.
This allowed for a one-to-one swap to a new battery should the original battery fall below a certain capacity.
On whether new EV technology might render his vehicle outdated or redundant, lowering its resale value, he said “core technologies” such as battery life and charging have likely “plateaued”.
Other updates, such as ventilated seats, did not bother him as much.
“It’s more of a good-to-have than a necessity, just like how the difference between an iPhone 15 and iPhone 16 is just a bit,” he said.
But not everyone shares his optimism, even though EVs have grown in popularity in Singapore.
A total of 5,947 EVs were registered in the first four months this year, comprising about 40 per cent of new car registrations, according to the latest Land Transport Authority (LTA) data.
The data also showed that China’s BYD has overtaken Toyota as the top-selling car brand in Singapore, selling 3,002 cars and making up about 20 per cent of total vehicle sales in Singapore in the first four months this year.
Toyota sold 2,050 cars in that same period, while its main EV competitor Tesla sold 535 cars.
BYD’s growth has been exponential – from three cars in 2020, to 89 the following year, 786 in 2022 and 1,416 in 2023. Last year, its sales figure went up to 6,191.
Tesla’s sales have also boomed in the last four years, albeit at a slower pace. From 20 cars in 2020, it grew to 924 in 2021, then 875 the following year and 941 in 2023. Last year, it sold 2,384 cars.
CONCERNS OVER RESALE VALUE
Although sales of new EVs have increased quickly, some drivers remain sceptical of their resale value. Comments on online forums discussing the viability of EVs have raised such concerns.
“There isn’t much demand in the market for secondhand EVs, and in time to come, when EVs with newer or better technology are available, your resale value will tank even more,” read one comment on a Reddit thread discussing considerations drivers should have before buying an EV.
Mr Anson Lee, director of car dealer Euro Performance Asia, said he has found it “extremely hard to sell” secondhand EVs compared with ICE cars.
Of the 20 he has attempted to sell so far, he has only managed to move three. Some have been sitting in his shop for over a year.
For the three that he sold, all of them were about a year old, and he had to sell them at about 40 per cent below their initial price, he said, adding that he was able to sell similar ICE vehicles at about 10 to 15 per cent below their initial price.
One reason for the low demand for used EVs is that drivers see them as a “gadget”, he said.
Using a mobile phone analogy, he said: “If you compare it to an iPhone, for example, if you are using an iPhone 13, and the iPhone 15 comes out, will you still buy an iPhone 13?”
He added: “Even if you look at Tesla, when the Model Y came out, everyone sold away their Model 3, and people no longer wanted a Model 3.”
The Tesla Model 3 was first released in Singapore in 2021, and the newer Model Y was released the following year.
He added that the difference in functionality between secondhand and new EVs is “not that far off”, but drivers “want to buy the latest model”.
Secondhand car marketplace SGcarmart has also seen slower sales for used EVs.
Its editorial manager, Mr Desmond Chan, said that EVs tend to take around a third longer to sell than ICE cars.
According to statistics compiled by SGcarmart last year, 56 per cent of used EVs took more than 42 days to sell, while this figure was 44 per cent for used ICE cars.
Drivers who CNA spoke to shared concerns that their EVs might draw low resale values, with many buying EVs with the plan to use them for 10 years – the duration of the Certificate of Entitlement (COE).
In Singapore, a COE is required to own and use a vehicle. Drivers must bid for these certificates in open bidding exercises conducted twice a month.
“A LOT OF MISINFORMATION”
With these concerns at the top of some prospective buyers’ minds, could this prove a hurdle for Singapore’s EV push?
Among the government’s medium-term green goals is for all new car and taxi registrations to be of cleaner-energy models by 2030.
Responding to queries from CNA, an LTA spokesperson said that the EV resale market is “relatively new and evolving”, and prices have yet to achieve the “stable equilibrium” seen in the long-established ICE car market.
“While the high adoption of new EVs will eventually lead to a larger resale market, it is likely that the used EV market will experience a period of adjustment before reaching the same level of maturity as the ICE car market,” added the spokesperson.
One transport analyst said that there is “a lot of misinformation and misunderstanding” about the EV resale market.
Associate Professor of Economics at Singapore University of Social Sciences (SUSS) Walter Theseira said he is “not sure” if claims of poor resale values are supported by data, particularly for EVs designed and built after 2020.
“A good EV from 2020 is still very competitive in functionality to one designed in 2025,” he said.
“While early adopters may have suffered great reductions in resale value, it is much less likely that today’s EVs will be surpassed significantly within a few years.
“The narrative of low resale value has, I think, been driven by vested interests, particularly in the resale car space where the majority of the trade is non-EVs and where there is little expertise in handling EVs,” he added.
Consumers and dealers lack understanding of some EV functions such as charging, battery degradation and EV tax policy, he said.
“Actually, it’s quite a lot of information, so I can understand why (dealers) are reluctant … If the buyer asks questions, they may not feel confident to answer,” he said.
He added that a lot of what buyers ask for is “model specific information”.
“So just because (dealers know about) some BYD and Tesla models, it doesn’t mean they can answer a question about another EV.”
BATTERY HEALTH
It has not hindered sceptics, and the analogy some go back to is that of a mobile phone’s battery health.
“The battery will degrade and it will deplete just like your handphone,” said Mr Lee, the car dealer.
If you keep “fast charging” the battery of an EV with a 300km range, it will “maybe drop to 250km, 230km”, he added.
While it is true that the batteries of an EV will degrade over time, the way that it does so is “far better than those of an iPhone”, said Associate Professor Zhou Yi from the Singapore Institute of Technology (SIT).
For example, the EV battery standard in China stipulates that it retains a minimum “state of certified energy” of 70 per cent after eight to 10 years.
EV batteries have advanced power management systems that regulate charging and discharging, he noted.
He said that EV charging infrastructure in most countries, including Singapore, is well regulated, maintained, and of “good standard”.
“EV batteries are far better in design, management, charging and maintenance than those of phones,” he added.
Agreeing, Prof Tseng King Jet from SIT said that most mobile phones are not expected to be used beyond four years. That is why reputable mobile phone brands do not have batteries lasting beyond that time.
“EVs, on the other hand, are generally expected to last up to 10 years,” he said.
“Hence, reputable EV manufacturers are currently ensuring this expectation can be met by offering 10-year warranties.”
Some EV distributors in Singapore have rolled out 10-year warranties for brands such as South Korea’s Hyundai and Kia, and Chinese brands Aion, XPENG, Zeekr, Skyworth and BYD.
TECHNOLOGY ADVANCING TOO FAST?
The fear that technology would advance and make his car outdated was one that 57-year-old Ronnie Loh had when he purchased his EV in May.
He had chosen to buy an EV in part due to the attractive incentives by the government to encourage EV adoption, which helped him save S$40,000.
However, the project manager in a commercial food service equipment firm told CNA he had his doubts.
“When I bought this EV car, I told myself that if I changed it (before 10 years), no one would want to buy my car,” he said.
He added, for example, that there is a perception that battery technology has been advancing quickly, with batteries in newer EV models seen as safer and being able to charge fully in a shorter time.
These changes may lead potential buyers to perceive his car as outdated, he added.
He has not calculated the expected loss in value as the EV market is evolving, but he is prepared for the worst.
“The resale market seems very bad, so once I buy my EV, I will have to be stuck with it, so I have mentally prepared (myself). If the situation demands it, and I have to sell for a very big loss, then so be it,” he added.
Assoc Prof Theseira said that when EVs were still nascent in the 2010s, it was true that resale models from that era would not be competitive in today’s market.
“Basically, almost no EVs designed and built in the 2010s are competitive to those built today, as those built today are cheaper to make, and have greater capabilities (such as) better range, efficiency,” he said.
However, he said changes in technology and prices have slowed down dramatically.
Tesla models from the early 2020s still have functionality that is “extremely similar” to current-generation EVs, he added.
“The resale value (is) hurt primarily by price cuts in current-gen EVs due to manufacturing cost reductions,” he said.
However, he acknowledged that there have been cases of EVs that have suffered high depreciation in resale value due to improving technology and cost changes.
Technological advancements, economies of scale and changes to COE prices have led to some newer EV models being cheaper, and this can dampen demand for older EV models.
One example was the first batch of Tesla Model Ys that were launched locally in 2022. They were priced high and that was when COE prices also peaked, said Assoc Prof Theseira.
“They have depreciated very significantly due to a combination of COE prices falling significantly and new Model Y pricing falling,” he said.
The Model Y was priced from S$142,471 without COE when it was released in 2022, while the new Model Y released this year was priced from S$103,476, according to Tesla’s website.
WHAT ABOUT GOVERNMENT SUBSIDIES?
Another reservation that some EV drivers shared about selling their cars is the seemingly lower deregistration returns compared with a similar petrol car.
When an EV is deregistered before the COE expires, it typically has a lower deregistration incentive – known as the Preferential Additional Registration Fee (PARF) rebate – compared with ICE cars.
When a car is registered in Singapore, drivers have to pay an Additional Registration Fee (ARF), which is a percentage of the vehicle’s open market value.
When they deregister their car before it is 10 years old, they may get a PARF rebate. The rebate is calculated based on the age of the car and the amount of ARF paid.
Newly registered EVs typically have lower ARF values than ICE cars, as drivers enjoy up to S$40,000 off the initial fee:
They are eligible for the EV Early Adoption Incentive. Up to the end of this year, they can receive rebates of up to 45 per cent off the ARF, capped at S$15,000.
A Vehicular Emissions Scheme rebate of S$25,000 will also apply to most electric cars until the end of the year, which would be subtracted from the ARF.
Since the ARF determines the PARF rebate, the lower the ARF, the lower the PARF rebate an EV driver would get upon deregistration.
For example, drivers Mr Loh and Mr Haqqim received the maximum S$40,000 off the ARF. This meant they did not have to pay the fee when they registered their EVs.
This means that upon deregistering their car, they would not get a PARF rebate.
This could lead to the perception that EVs have an inherently lower resale value, which is not true, said Assoc Prof Theseira.
“The difference here with an EV vs an ICE car is that the PARF is much lower for an EV due to up-front rebates,” said Assoc Prof Theseira.
He said that what is important to look at is not resale value but depreciation.
“Many EVs have low resale value for a car of their type, but that is because they received high up-front EV subsidies and also had low original purchase prices,” he said.
“Hence, their depreciation may be comparable to that of many peer ICE vehicles.”
He added that the majority of cars have little “residual value” at the end of their COE lifespans. Residual value refers to what dealers and exporters would pay for the car’s body.
“It is negligible for mass market cars regardless of fuel type … prices for cars close to the end of the 10-year COE are typically the paper value plus a few thousand dollars for the body, as well as COE-based adjustments,” he said.
“Thus, the correct expectation for most car owners should be that they would get very little for their car in 10 years’ time, save the PARF (rebate).”
Source : https://www.channelnewsasia.com/singapore/electric-vehicles-ev-resale-value-cars-market-5154696
