A glut has used-car depreciation accelerating
bloomberg.com
bloomberg.com
1) Saw at Manheim Auto Auction (one of the largest) 300 Nissan Leafs run through the auction line in one afternoon ahead of some of our cars. Drop in "value" of leafs went down 10%+ in one day. All were recently off lease. 2) For similar reason, Santander is holding 4000+ cars on auction lots "waiting for pricing to stabilize". Reality is, when they run those cars through the auction, they will have to book the full losses. Say they anticipated 20% repossession rate and that they would get 80% on the dollar when auctioned on those losses. When they run them through now and get 50% on the dollar, their securitization pools will be creamed.
I've seen a few in London, Nissan don't seem to market them very hard in the UK.
http://newsroom.nissan-europe.com/uk/en-gb/media/pressreleas...
It may be this location but Craigslist is pretty slim pickings.
However, this adds a lot of headache and risk for the auction operator - tons of uneducated customers who won't be able to pay, try to back out of bids, get pissed when the car has defects (auctions are typically as-is affairs), crowd the lot, etc.
However - if you see a car you want coming up, try asking a local broker to buy it for you for a flat fee, a few hundred bucks over the closing price. It's a guaranteed sale for them with no hassle ...
My nearest auction house is Saltash, Plymouth and twice/weekly sales and upwards of 200 vehicles go through the books. It's quite something to see a car brought to the line, bid on and sold in 2 minutes.
Private buyers pay a larger commission per sale compared to bulk buyers, but hammer price is the same.
There's a twice-yearly plate change in the UK also, so in the coming weeks (from Sep 1) there will be a glut of used cars traded as part exchange for new vehicles.
Instead of "universal basic income" - we should have "free cars for every individual" -- Look at how THAT would affect autonomous driverless cars!!!
With UBI, you get money. You can spend it on whatever you need or want.
With "Universal Cars" you get a car. If you already had one, you probably need to sell one or the other. But now everyone has a car, so the resale value crashes to nearly scrap. If you keep it, you need to pay for insurance, maintenance, and actual usage, which may or may not be a net positive.
Let's suppose you don't already have a car. Why not? If you live in a city, you may not have a need for a car. Selling it won't help much. Parking may be impossible or too expensive. Perhaps you cannot drive a car. This car is going to be useless to you.
On the upside, it bolsters the car manufacturing industry. On the other hand, many mechanics will go out of business because it will be cheaper to get a different car than fix the one you have.
On the gripping hand, expect gigantic traffic jams, rising fuel prices, and soaring pollution levels.
As long as you have a slave class doing the producing who are forced to take your money. Otherwise you just get inflation because you haven't added anything to the supply of production side.
But that's not the world we live in.
There are actual quantifiable fuckloads of cars in the states. It's really a wonder there's enough customers to feed this industry at all, ability to pay the financing notwithstanding.
Amazing that mark-to-market is still not restored 10 years after its suspension.
It's that the trading market is sufficiently thin that even a few hundred units of freshly off-lease vehicles will crash the price.
David Gerard makes a similar point of Bitcoin in Attach of the 50 Foot Blockhain -- that "market capitalisation" of crytpocurrencies is complete nonsense, due to market thinness. Rather, you want to look at total transaction volume. A large player can move the market significantly on a very small number of trades.
Price, it turns out, is far more like pressure than volume. Punch a large hole in something, and it falls rapidly. Squeeze it to a small point, and you can keep it quite high, but on very small total quantity.
Or voltage, as we sorta worked out on G+ :-)
Definitely a niche thing for heavy urban areas that have the charging infrastructure though. I can't imagine owning one in the Midwest.
Since then, our needs have decreased and range has increased a bit. Would love to trade in one of our 25 mpg vehicles for a Leaf. Plenty of chargers around Palo Alto, including at work!
http://www.plugincars.com/sites/default/files/leaf-dash-bars... [0]
https://www.nissanusa.com/electric-cars/leaf/charging-range/... [1]
Things I remember off the top of my head:
* there's generations of Leafs, and later ones are better in terms of battery management
* there's a device you can buy and an iPhone app to get better, in-depth info from the battery on a car you intend to purchase
* It was high temperatures that were the achilles heel for early Leaf's so watch out if you live somewhere like Pheonix or if you suspect the car came from somewhere similar
* make sure to check out all the various rebates available for new leafs (from state, federal and utility companies, and group buy offers) to make a fair comparison with a used model.
I don't even commute and I can't imagine the stress of driving something like that.
o_O
auto trader is typically dealer sales and paid-listing private party. the best deals won't be found there.
Our local electric utility ran a $10k discount on the new high end models recently and I thought that was a bargain.
https://www.bloomberg.com/news/articles/2017-08-09/bmw-nissa...
https://www.theguardian.com/business/2017/jun/10/car-loans-p...
One of the UK regulators recently warned about the exposure to these loans. "An initial fall in prices could lead to a surplus of used cars coming to the market, which could further weaken prices and cause material losses to lenders through their GFV risk." (http://www.bankofengland.co.uk/pra/Documents/publications/re...)
That’s probably less of a concern in the US, where the lenders have more experience with these things, although car sales (and leases) have also grown rapidly in recent years, so there is still something to worry about.
In both countries, as I understand it, it is the lender who loses out if the resale value is less than rejected. So at least individual car owners are somewhat protected, and the biggest risk might be having to return the car and not being able to get a new lease/PCP with attractive terms.
When you put it like that, it reminds me of the endowment mortgage situation in the UK which led to people having serious issues at the end of their mortgage term [1]. Obviously not at the same scale, but it'll still alter the market considerably.
And those lenders are linked to the car manufacturers for a large part of the market (since car finance is largely a form of vendor financing).
Who then book the losses to the cost of a new car, or start shipping off lease cars to Africa.
Unlike houses, cars are mobile. So you can correct the market if you have enough power over the market.
Anecdotally, it's really apparent amongst my peers; many are driving new (less than two years old) BMW, Audi and Mercedes that would probably cost a whole years wage or more outright.
Luckily, for people like me who buy almost new for cash, this is a good thing.
[0] http://uk.businessinsider.com/statistics-uk-bank-exposure-pc...
Like, why don't they just PCP or Hire Purchase a cheaper car. They'd get whatever benefit the PCP provides, and spend less money. What about the PCP convinces them (rightly or wrongly) that they can afford those cars?
There's so many people doing it I feel I must be the one that is wrong, and there's some tax dodge or something they are taking advantage of.
Possibly nice cars are just cheaper, or everyone is richer or people can get credit for cars where before they couldn't.
It might just be me, I thought people spent too much on cars anyway, and now they seem to have nicer, newer cars, so I assume they're spending even more, but as a non-car guy maybe that only seems weird to me.
It's because you get the benefit of the part exchange value of the car in three years time now, rather than in three years time.
That simple discounted present value trick allows you to have a nicer car the first time you get on a PCP plan, because it lowers the total amount of credit on that plan vs the alternative.
> What about the PCP convinces them (rightly or wrongly) that they can afford those cars?
At the end of the PCP plan, you don't get to keep the car (it's more of a rental than a purchase). Therefore the monthly payments on a 3-5 year PCP are going to be lower than on just a loan for the full price of the car. That makes it more "affordable" to people than actually buying a car - and the issue of what to do in 3 years time, when you will have no car, is conveniently forgotten.
I just bought a new car for the first time in my life. The safety of those features was worth the $10k premium for a new car.
And in 3 years, I'll have all those features on my used Toyota. ;)
You can do the same thing with the big German luxury sedans, but upkeep will be more. Those aren't Toyotas underneath. It's still pretty reasonable for the amount if car you get; just budget for it.
Built on a totally different platform than the Avalon (The Avalon is even FWD)
No pre-collision braking (A partial system was included on some Japanese models, but none on the US model)
No blindspot monitoring
So, hardly "all that stuff".
The LS430 is basically a Toyota Cavalier.
Or - the LS430 is basically a Toyota Century.
But the LS430s aren't really comparable to the current gen Toyota safety systems. The LS430s have dynamic cruise control but they won't bring the car to a complete stop, the dynamic cruise control in the 01-03s is a little weird (and I think it has some reliability problems). And the dynamic cruise control is bundled with the Ultra Luxury package which has a lot of stuff to break (an extra A/C unit for the rear, air suspension, and double thick glass that can fog internally if it cracks).
The Modern Luxury trim cars have the dynamic cruise control without the air suspension, a/c unit, and a few other gizmos but they're really rare.
And I'd be remiss if I didn't mention it, but the 01-03 LS430 is probably the best used car value in America. You can get a decent one for 5k (they'll ask for 7k but tell them to pound sand) and they're unbelievably nice. They're not Avalons, but they drive like every Toyota ever just with more poise and fluidity.
For the price of 1 air shock replaced at the dealer, you can get an independent mechanic to put the car on conventional suspension and it'll still ride good enough on smaller wheels.
I bought it specifically for these features.
I used to drive old used junk all the time and the truth of the matter is that the newer the better and you will miss what you don't have. Yes, the car industry is a racket but keep in mind that a car is not an investment except in some wealthy circles.
I have never been in an accident.
I drive a pickup I paid sub $1000 for. Been driving it for three years no issues. That $10k could buy me ten trucks.
Would I take it on a trip? No, I rent a car for less than a car payment.
In my opinion buying new vehicles is a foolish waste of money I could be spending on something else.
Much less a serious accident where important safety features make a difference is one of those things you won't generally hear the reverse being said since, you know, you'd be dead.
It's kind of hard to drive them at the same time, though.
Gambler's Fallacy. Prior incidence has no effect on future occurrence.
A lot of the new safety features are for low-speed collision protection, automatically sounding horn and applying breaks when your car gets close to another, say in traffic. Unless you go top-range you generally won't get actual driving automation. Other than that it's just convenience; Climate control instead of air con, reversing sensors and camera instead of (as well as) mirrors and turning your head around etc.
We’re not gambling, we’re driving cars. And the fact that the current F1 champion has won some races means that he is more likely to win the next one than I am. And the fact that I have a lower-than-average rate of driving collisions means that I have a lower-than-average chance of having a collision in the future. If you doubt me, ask an insurance actuary.
However, since it's the same driver for each of the "trials" then the Gambler's fallacy doesn't really apply.
Don't tell them that, otherwise us people who only buy SH cars will have nothing to purchase in 5 or 10 years.
Don't run into stuff? Most of that tech is only useful if you are an absent-minded driver and even then it only covers some cases (e.g. emergency braking doesn't help if the car in front of you slammed into something and you were following too closely). They are selling this tech by exploiting your fears, don't get caught up in it.
Getting in a wreck in a 2014 Corolla is still incredibly safe due to the crumple zones and airbags. The $10k you blew on those features in the new model could easily pay for the damages to a 2014 and would cover all of the cases those features didn't (e.g. someone running into your car in the lot).
I agree on the camera.. it's been especially useful in more than a few places on my work truck, but I worry that features like BSM go along with a trend of designing more "stylish" interiors that have significantly reduced visibility along certain angles.
The difference between my small Japanese car and my sisters American SUV is amazing. I can physically see everything around my car, in her car, there are huge chunks of surrounding space that are blocked by pillars and other design considerations. If you feel you need BSM, then you may just be driving a horribly designed car.
Making it seem like it was just your fate that day. Which if it was at-fault, it certainly wasn't. It sounds a lot better than "I am either negligent or incompetent and shouldn't be trusted with piloting a 2-ton hulk of metal."
If you checked your blind spot every time like you ought to, the blind spot detection is at best a minor additional safety backup. I see a lot of people relying on it instead of actually doing that, and the systems aren't perfect. (One good example: Someone else is starting to merge into your blind spot but hasn't gotten in the lane yet).
This is not true. On some freeways in my country, idiots have a habit of driving 2x the speed limit. Checking your blindspot at the time you started the maneuver is no guauantee it will still be empty a half a second later. The blind spot detector is pretty helpful IMO.
Btw .. I don't understand what perfect world some people live in. Do you live in a world where programmers write bug free code every single time like they have been taught?
Also having Dynamic Cruise might teach you what a proper following distance is; hint, most people have no idea about what 2 seconds gap actually equates to. The DCC distance is typically set in seconds, or at least in the Mazda it is (1,2,3 or 4). Even 1 second is more than most people give, in Melbourne Australia.
Speaking as a 2014 Mazda 3 Astina owner, this tech works. Including if someone cuts in and then slams their brakes. Autonomous braking functions is the biggest safety invention since the Dynamic Stability Control. Try to Google effectiveness of AEB, and it's quite conclusive.
E.g. "The findings showed a 38 percent overall reduction in rear-end crashes for vehicles fitted with AEB compared to a comparison sample of similar vehicles." https://www.researchgate.net/publication/275772651_Effective...
I'm excited by the new Tesla cars extra sensor and autonomous driver tech packages, which includes so many more ways of reading the environment than what my "mere" Mazda 3 radar + cameras offer. If I had the budget, I'd definitely be getting into that.
FAB slowed down my car enough for me to get a chance to maneuver around it.
I much prefer the array of red leds I had to face instead of dealing with a wrecked car and possible injuries.
1) Lease rates arent necessarily in sync with the used car market 2) Buyers are keeping cars longer if they purchase 3) Subprime loans and buy here/pay here dealers are multiplying.
THIS IS A BUBBLE. I wont call when its going to burst, and it wont be like the housing bubble, but the fallout will be great...
Do you think we'll see the same domino effect here, but just at a lower magnitude? Or is there a different path for this bubble to ripple out through? Perhaps when people lose cars they lose jobs that they can no longer commute to?
Those who buy their car have a known payment, they might owe far more than the car is worth but that payment won't chance and other than an accident they eventually have a paid off car. They might not be able to trade their car in as soon as they would like, but they at least have a car.
(i) car manufacturers are big enough parts of the market that they can buy up used cars and scrap them/export them, putting the cost of that onto new cars
(ii) they can lobby government to introduce environmental standards. Japan exports a good part of its used cars because of the cost of maintaining a used model.
The difference with cars over houses, is that cars are mobile.
So the issue, if there is one, is just the usual one of over-lending via agency originators and securitising those bad loans onto muppet pension funds searching for yield. But that's not unique to the car market.
I'm wondering if people hate the dealership experience so much they're driving up the price of used cars?
I'm still just utterly confused by the used truck prices I was seeing.
Think of a vehicle as having indoor storage, long term comfort (space to not be cramped) outdoor storage and passenger capacity. Crew cab trucks are used like full size sedans with outdoor storage instead of a trunk. That's a pretty good blend for most use cases since most people can use the second row as a trunk when not carrying passengers.
Insurance, registration and parking costs are a disincentive to buy specialist vehicles (like the electric commuter cars HN loves).
They last forever, are known for being inexpensive to maintain, and in the rare occasion you actually need a pickup, now you don't have to rent one. There's no situation where you need a sedan but a four-door pickup won't also work. So they hold their value very well.
>Certain segments are shedding value even more quickly. Subcompact cars, such as the Honda Fit, and large sedans, such as the Chevrolet Impala, are depreciating faster than average. Big SUVs, vans, and pickups are holding their value a little better, and imports tend to drop more quickly than domestic models.
http://www.mrmoneymustache.com/2015/04/28/what-does-your-wor...
Those little truck beds are so cute. They look like a toy truck bed. Can't even put a sheet of plywood in one. Since the cabin is basically an SUV, the truck bed is basically an open-air trunk.
In 5 years (2022), everyone will know it will be illegal to buy a gasoline car in just under 8 years.
I think there will be very little demand for the regular old gas powered car. (excepting maybe exotics, or "pleasure drives", which much be a tiny fraction of overall sales)
That car you have to fill with liquid cancer is going to be worth extremely little, very soon.
It's similar to when Color TVs were invented. What happened to the re-sale value of all the B&W TVs that were already out there? They plummeted, because they had been superseded.
This scenario will be even more aggressive, because laws will ban the sale of the "old tech".
Contingent on low battery prices which make range and charge rate competitive.
In my mind, just as getting 3x more colors gives you exponentially richer storytelling, 3x more range (way more than that actually, since a gas car can be in almost continuous use with brief stops for fuel) gives you the freedom to go exponentially many more places, do things etc
Not in the winter.
>because laws will ban the sale of the "old tech".
?
So when you can't even buy one new, why would someone want a used one? (unless, like I said, it's a pleasure driver or some exotic, which is a tiny fraction of all cars sold)
Think of all the things that have been replaced and superseded in history - once the new thing exists, the old one drops in price dramatically.
There are plenty of 20 year old vehicles out there with plenty of life left in them.
For the same exact reasons many people today choose to buy used gas cars over new electric cars.
Because the prices of non-collectable ICE cars is bound to plummet unless we haven't solved the battery charge speed issue (as in, in practice, supposedly it was recently solved in theory).
If people would want to buy them before considering availability of new ones, banning new one increases market clearing price of used ones by eliminating an obvious alternative.
Now, as the number on the road dwindles, you'll start to see reduced support infrastructure (gas stations, parts availability, etc.) which will make ownership less attractive, but that's likely to be a slow and lagging process. So, if there are still utility advantages to gas cars, I'd expect used ones to become more expensive initially with a ban on new ones, but drop sometime later.
After all, people will still ingest their liquid fuel and expel their waste. ;-)
True, but for most drivers on most days they will be able to charge up at home overnight. Charge time won't matter as much then. Drivers in dense urban environments will likely move towards a car sharing model since, as you noted, the costs and practicality of infrastructure retrofitting will be exorbitant.
We already have lighted parking, don't see why adding outlets is that hard. We're talking slow overnight charging here for the most part.
Because otherwise, "None" is a bit strong - there's hundreds of new homes and apartments within 5 miles of me that have dedicated parking spaces.
Even my block (seems to be 1960s) has dedicated off-street parking for 8 cars (admittedly there are 12 flats but I suspect 8 cars for 12 flats in the 60s was an outlandish estimate.)
Hmm, in trying to find an example, it doesn't look as bad as I know it is.
This is the kind of estate I was thinking of
https://www.google.co.uk/maps/place/Ambleside+Primary+School...
but many of the fronts have been turned into parking
These are pre war
https://www.google.co.uk/maps/place/6+Newfield+Rd,+Nottingha...
I know these places and night-time parking is more of a squeeze than these images show
I think a lot of them will stay in business and just have a smaller tank/less pumps.
As long as people still pop into the convenience store to get a soda and a candy bar, it doesn't matter if they're filling your tank with gasoline or charging your battery.
The fact that the Chevron gets any business at all seems to validate this strategy at first blush.
https://www.fastcompany.com/60019/tiger-costcos-tank
It's an older link, but they still do much the same. There have been court cases brought against them by consortiums of other gas stations here and there, but AFAIK Costco has emerged victorious so far.
And wouldn't you know, I use the more expensive one, because it's the one that I can get to without making a bunch of turns.
[1] http://www.emeraldinsight.com/doi/full/10.1108/0258054051061...
With no electricity, gas can not be pumped from the tanks.
Even when it can, there is immediately a line-up of 100s of vehicles.
(I see this very often in West Africa)
I'm guessing that if the number of electric cars surged by 25% for a few days, it would be much less of a problem.
[0]: http://www.kgw.com/news/eclipse/gas-shortages-long-waits-rep...
Some parts of the US aren't able to easily meet energy demand they can forecast when it goes up by amounts like 25%. For instance, Pepco pays to install thermostats where they can turn down/off your air conditioner[0]. Same with Dominion Energy[1]. I would be unsurprised if an influx of people of the size to cause gas shortages would also cause problems for electrical grids in many parts of the country.
[0] https://energywiserewards.pepco.com/md/faq/index.php#q2
[1] https://www.dominionenergy.com/home-and-small-business/ways-...
My company maintains an old boiler from the 1880s connected to a steam engine/generator from the 1920s. Because we have it maintained and can start it up with 12 hours notice the power company gives us a substantial discount on our power. I understand we actually did turn it on about 5 years ago when something major happened to the grid. We were able to power our [small] town alone. This is one of the least efficient power plants in the country and thus one of the most expensive.
Yes, it would require more rare earths than are currently economically feasible to mine if we replaced every fossil fuel engine with a permanent magnet electric motor of equal power.
The only real difference between the two is the design difficulty of the drive circuitry for the VFD to run the induction motor. That's largely a solved problem.
Almost all car charging is done at night, when grid load is far lower. Charging will not be a problem, and there is no material shortage likely in the near future.
I've certainly run into homes that couldn't add a clothes dryer circuit without major renovation involving the city.
Not saying it will be be an issue everywhere, but the span is too short for it not to be an issue in many places.
Given the short time frame, proof that there aren't issues would seem more prudent. Whether that's manufacturing capacity for batteries, or grid shortfalls in certain areas, or whatever.
It is a cost cutting measure rather than an infrastructure limitation (people chose a 20A connection because of the standing charge cost) in the newer building, but I suspect that if a significant portion of the population need to double their contract and maxed it out during the night, there is going to be some work needed.
The poster mentioned Spain, which uses 230V (unlike the USA, which uses 120V), so 20A should be around 4600W if I did the calculation correctly. With a quick search I found a window AC with 18000 BTU using only 1700W, so even with 15A it would be possible to run one AC with plenty to spare.
And 4600 KW is only a couple tons. You'll need more than that for a 5-ton central HVAC to cool an average house in a hot or humid area.
My guess is "they don't". A quick web search reveals less than 50% market penetration in homes of air conditioners.
That said I live in an apartment with 30A 100V service, and I've run 3 air conditioners at the same time no problem.
Scrap yards in my state (and I'm sure many others) are required to take identification from anyone that sells them metal.
Also, electric motors can use aluminum wiring, and many induction motors have aluminum rotors since they can be cast at a lower temperature than copper.
And you could of course replace the copper with the incredibly plentiful aluminum, which actually has superior conductivity per unit mass to copper. (Copper is nice because it's volumetrically more compact and is easier to make electrical connections with, but if it were seriously in danger of a shortage, none of these are anything like showstoppers to switching to aluminum.)
the Model S and X use induction motors. The Model 3 uses a permanent magnet motor:
https://www.edmunds.com/car-news/auto-industry/2017-tesla-mo...
Germany's upper house passed a non-binding resolution about how they want it to happen in 2030. What others are there?
There are bunch of countries talking about 2040 and a few including the UK have legislated. However, that is safe enough that the current bunch of legislators will be long gone. It might also be like repeatedly missed emissions targets and so on.
Also, called petroleum liquid cancer is inflammatory.
However, there is a trend at the moment both in local government and national one. If that is followed by actual investment in charging infrastructure, sometimes between 2020-2030 electric cars could reach critical mass.
At the same time, some region and countries of Europe are already thinking going backward on fiscal encouragement to buy an electric car. In Europe the major part of the fuel cost is taxes, and at some point they will need to find something to tax electric cars on, doing it too early could kill electric cars momentum ... so wait and see.
(Yeah, I just got stuck behind a Waymo self-driving vehicle on El Camino again today. They are annoying, but much further along than anyone who doesn't live in Silicon Valley realizes.)
Getting down to the point, can you imagine the political fallout from crushing the value of a gas car? It's a truck sized political landmine, and no party is willing to touch that thing with a hundred foot stick.
Gas still has significant advantages that electric has yet to match. Worst gas has 53x the specific energy of the best Li-ion, and even with a hundred % efficient induction motor and a 10% efficient motor (try closer to 30% realistically), gas is still a much more energy dense fuel.
Still, gas has a ton going for it. It's quicker to "charge" by an order of magnitude; it's easy to carry an auxiliary supply to double or triple range. Cold weather and reliability are excellent (hundreds of thousands of miles with a minimum of maintenance). There are no concerns about cell wearout (batteries will last for 5 years, maybe). Virtually everywhere on the planet, there's someone in any population center who knows how to work with gas cars.
The network for gas is highly developed and highly entrenched. No one is giving up trillions in value without a fight. In all honesty, I expect to see gasoline powered vehicles on the road for the next 100 years, barring an unprecedented revolution.
this is a link https://www.nih.gov/news-events/news-releases/seven-substanc... to a Health and Human Services 14th Report on Carcinogens, classifying cobalt as a carcinogen
Point being, "liquid cancer" is fear-mongering hyperbole -- lots of things are carcinogenic.
Tesla's have less than 10% battery degradation after 8 years so far.
What will happen is people will buy an electric car as a second car. They'll get comfortable charging every night and then buy a Chevy volt like car that usually won't need gas but can range extender as needed. A large portion of those users will realize you don't even need the range extender most of the time.
How many cycles over 8 years?
Cold weather reliability for electric cars will get better.
Battery wear out will be a problem we learn to solve - replacement batteries already exist, they just need to be factored into the cost of the car.
Most of the things you need to work on for electric cars are exactly the same as gas. You still have brakes, tires, a suspension system. The rest are things that those mechanics will learn, just as their learned to work on gas engines.
When there are enough electric cars on the road the network will follow.
You are correct that in 8 years the gas/diesel car will still dominate. It isn't clear if buyers will switch to electric cars by enough that all new cars are electric in 8 years (if the buyers don't switch the politicians will blink and repeal the 8 year law). However as buyers switch to electric cars the infrastructure will follow.
The real question is will non-cars switch to electric. The fuel density difference is just a minor annoyance for cars. For truck, trains, tractors, and other heavy duty operations the energy density is much more important.
Nobody has addressed the infrastructural problem of recharging massive fleets of privately owned electric vehicles. It's a pipe dream that this will all be fixed by 2030.
This will never happen in the US for the foreseeable future. Considering how our broadband surcharges have been siphoned off with nothing to show for it, no amount of government intervention through taxation will fix this. That leaves market forces as the only factor in play for the US. The market is going to stick with ICE cars.
Recently in the UK there were some headlines when the usual suspects in the media published their worst case scenarios as "EVs could destroy the grid!" and the grid had to publish a clarification
http://fes.nationalgrid.com/media/1264/ev-myth-buster-v032.p...
And the price of gas might plummet as big oil realises no-one is buying.
Eventually this will end up costing more - all the gas stations will close as it gets too expensive with reduced economies of scale, but until they go out of business they'll cut prices.
The laws were written by incredibly over optimistic people with zero understanding of the actual science or practicalities.
Unless some fantastic new battery is invented very soon, there literally isn't enough lithium on earth to support the electric car market and lithium ion batteries are soon going to become prohibitively expensive.
Probably not true. Check out this thread: https://news.ycombinator.com/item?id=14922104
Particularly the analysis provided by hwillis.
And unless the power networks from a lot of countries are not modernized. Not sure about the States, but over-here in Eastern Europe we get power-cuts from time to time during summer months because everybody has their AC turned on (they usually don't last long, but it happens). If half of the 1 million cars that are now driving on the streets in my city were to be electric then I'm pretty sure that the local power network will just give up spectacularly.
And the world moves closer to the tale in Rush's song "Red Barchetta" from 1981 (https://en.wikipedia.org/wiki/Red_Barchetta).
A used Model S 60 (2013) can be found for ~40k @60k miles, which I think is good but not great, especially considering the quality issues early on.
I'm waiting to pounce on 1st generation electric cars that will be hitting the used market when the Model 3 is mass produced. The reason I haven't bought yet is that my current hybrid is fine and I expect used electric car prices to drop even further.
The article says GM sold only 7,592 Bolts in the first six months of this year. Tesla sold way more, and it makes a much higher profit per vehicle.
I don't know why Bolt sales are so low. When it came out the reviews were all very positive, and they said it would be strong competition for the Tesla Model 3. But the Tesla already has several hundred thousand pre-orders, whereas the Bolt is basically going no where.
It's been nearly a year since it was released. If they still can't ramp up production, then the whole project is pretty hopeless.
Besides, the article says they are halting production because it isn't selling.
In any case, are you predicting that in another few months it will be selling tens of thousands a month and finally be a real success? Well, we will see.
The reason is that people don't really want electric cars per se, but they do like the idea of owning a Tesla. And yes, the Model 3 is a status car still, because of the Tesla name and relative rarity, even though it's more mainstream in pricing.
If people wanted electic cars, Bolts would be selling better. Chevy sells tons of regular cars.
Nor are GM dealers pushing it, dealers prefer to sell ICE because they make more money on service.
For example, my buddy in Boulder, CO bought a brand new Nissan Leaf for ~$12k (MSRp ~$30k). In addition to the state/federal credits, the local utility was offering $12k rebates or something like that.
Combine that with the fact that some of the early models had really low range (I think the early Leafs were below 80 miles) and I could see why the used market is behaving the way it is.
I'm kind of in the same boat, but I'd really like to get an electric model that's been produced for a few years, which means there won't be much on the used market.
That's not a bad price, though.
So far I have been very happy, and have spent nearly no money on the car besides insurance and registration since my employer offers free charging.
Obviously range is an issue, but is mitigated since I am married and have a gas car as well to use on longer trips. My wife and I never both drive further than the leaf can take us in a normal work day.
Anyway, I tell this story because I was surprised to find that there were a huge number available in the Bay Area where I live. It seems that uncertainty over future models with increased range and the lifespan of the batteries has made many people reluctant to make a purchase leaving quite a glut. The retailer I purchased from had about 25 Nissan Leafs in his lot.
I drive a 2000 Jeep Wrangler, and while I don't ever plan to sell it at some point it will get too expensive to keep on the road to justify using it as a daily driver. I expect that will be somewhere around 300k miles, since I just put in a new engine at 160k.
Or check out Toyota Camrys, 2012 model year. You'll typically pay around $14,000 to $16,000 to get into one with 40,000 to 60,000 miles. So that's a 5+ year old car, a mid-value sedan, with a fair bit of mileage.
The average new car price is around $32,000.
The average price of the first 30 used cars for sale by owner on the Seattle craigslist is $5,896: https://seattle.craigslist.org/search/cto
Average price of the first 30 by dealer however, is $21,567: https://seattle.craigslist.org/search/ctd But who would be dumb enough to buy a used car from a lot?
I bought an Audi off lease last year. It's still under warranty, free maintenance (until 80k km), low mileage (37k km), fully loaded with options, and I saved $20k vs a new one.
It's not. The parent doesn't appear to understand the used car market in the US. Most people are not buying their used cars for $6,000 off of craigslist, that's a good way to end up with a pile of junk. It's a bad idea to buy a mid-value or higher used car outside the CPO or remaining original warranty programs if you can help it, ideally from a dealer.
They lease it and then ownership ends up with some dealer at the end of the lease.
CPO cars have a warranty, which sharply limits your downside risk. Buying a used car from a manufacturer is a much better deal than buying it from a third party.
Generally not as nice as CPO, but it's something.
Obviously, cars rarely fall apart as you drive them off the lot. Yes, there could be unexpected expensive repairs. But there's basically no realistic scenario in which you're going to be out the entire $35k.
I understand that you're exaggerating for effect, but it's this kind of thinking that convinces people to purchase expensive warranties that aren't (statistically) worth the price.
Tens of millions of people. It depends entirely on what you're buying. For example if you want to buy a certified pre-owned vehicle, you're frequently going to buy it off the lot from a dealership. The CPO programs from the major manufacturers are typically excellent. If you're buying a nice used car, with relatively low miles & a recent model year, it's more often dumb to go any other way than a reputable dealer + CPO.
Me, because it came with a 7 year warranty. The price was good and the dealer offers a shuttle to and from my work (or my home) when it is in for maintenance.
If I had a used car worth 20K still in a maintenance window I wouldn't sell it on Craigslist. Autotrader if I wanted to private-party to max my upside, dealer if I was lazy.
Your 20k used car is 2-3 years old and coming off lease, or the same car as a trade in. The dealer will put it on the lot with a "just off trade" sticker and sell it. It might or might not go on Craigslist. (if it is listed the ad finishes with "and many more cars like this so some in and see") If the dealer gets too many in on trade the rest go to an auto auction.
Remember, the dealer knows all the numbers that the leaser isn't told. The company who backed the lease 2-3 years ago did their best to make sure that when the car was turned in the dealer would look at the remaining value and think "profit if I buy that and sell it". The dealer is going to pay the lease company for the rest of the value of the car. If the dealer decides there isn't enough money in selling it the lease company has to send the car to an auto auction and see what price they can get. (I suspect that a lot more goes on in these cases but I don't know what)
Someone who needs a loan? I've bought/sold several cars on Craigslist, and it's always all-cash. Perhaps it's possible to get a loan from a bank to buy a car off CL, but it's easier to do so at a dealership.
In any case, anyone considering a new car and concerned about depreciation should consider leasing instead. That way you only pay the depreciation (which you'd pay anyway) and after 3 years you have the option of buying it as a used car for the remaining cost or moving on to a new car with no hassle trying to sell it.
* Even Steve McQueen's 917K only sold for $14.08M the other day.
* A 956 with five LeMans wins sold for $10.12M.
* The L&M sponsored 917/10 sold for $5.83M.
* A RS60 Spyder with an amazing pedigree sold for $5.40M.
* Jerry Seinfeld's 550 Spyder sold for $5.33M.
* Paul Newman's 935 sold for $4.84M.
... and the list falls from there. As usual, the most valuable Porsches have pedigree as winning race cars. Even the rarest road-going Porsches (959 Sports) I believe are all worth under $2M (save for wacky stuff like the flat-8 904), and only until recently (past 10-15 years) have Porsches really appreciated in value.
I love the 956 as much as the next guy (more, even) but the only model to ever win Le Mans five times was the Audi R8, and it wasn't with the same chassis, I'm sure. Did you mean they sold a Le Mans chassis that won five races, more generally? Not trying to be a pedant, I'm honestly curious which car you're talking about.
> The L&M sponsored 917/10 sold for $5.83M
That's a surprisingly small figure. Which really speaks to your point, I guess.
Regardless, most "classic Porsches" sell for under $100K. As I mentioned in another comment, the bulk of what's sold are 1978 - 1993 911s. 964s trade hands around $50-65K, and SCs more around $20-35K. Yes, there's stuff outside of that (Very good 993s commanding ~$100K now, 930 Turbos definitely not cheap, all RSs definitely not cheap due to rarity, 993 GT2s very expensive as well), but the bulk of non-supercar classic Porsches are very affordable until you get into the rare top-shelf stuff or the very old: in which value is dictated by pedigree, condition and rarity.
Additionally, with ~22 million used cars sold and registered in the US every year, a single 8-digit sale does not materially affect the average selling price of used cars. Never mind the fact that no used Porsche commands anywhere near $30M (and I believe only five Porsches are in the Top 100 most expensive cars sold of all time), which is where I had serious issue with the OP.
Until very recently, Ferrari limited worldwide production to 7000 total units (now it's 9000). Historically that was limited to demand (being unable to SELL 7000 units). Porsche sells about 20 times as many vehicles, so they're far less rare. Porsche sells more 911s in the US every year than Ferrari sells all its models combined worldwide, and has recently pushed 911 #1,000,000 out of the factory.
That's actually why we are in a Porsche bubble. It's difficult to get into very old Ferraris, Alfa Romeos, Lamborghinis, and other special cars of bygone eras because they've gotten too expensive. Collectors simply moved on to the next best thing -- Porsches, which also have very reasonable running costs in the scheme of things. The non-survivors are mostly transaxle cars and older Cayennes.
The Porsches worth good money are top-shelf performance, end of an era, rare as hell (< 500 produced/surviving), and/or have pedigree. The rest are nice cars with great dynamics and build quality (a few exceptions aside), and there's enough to satisfy demand. Modern stuff lives in a bit of a bubble as supply was less than demand, but usually that settles down after a few years when the "latest and greatest" that everyone wants comes out. Supercars and limited production top-shelf stuff aside, it'll be 30+ years before anything newer than 30 years really appreciates, and I say that having an odd one that is currently trading hands for 10-15% more than I paid for my custom order (new) 2 years ago (but I'll never part with it).
How many used cars are sold in a year? It's got to be more than a million, doesn't it? So, yes, that $15 million Porsche drives up the average price... by $15. That's not significant.
1 - https://en.m.wikipedia.org/wiki/List_of_most_expensive_cars_...
That puts used car sales (including private sales) at around 22 million units, and nearly 40M total cars sold and registered in the US in 2016.
Regardless, if someone wants to complain about expensive classic cars, Porsches aren't the ones to complain about, with most (bulk being 911s from '78 - '93) trading hands well under $100K (964s being more like $50-65K, SCs more like $20-30K) despite the Porsche bubble that's been growing for a long while now -- since Ferraris long ago got too expensive for first time classic car buyers.
And from the article:
>increasing share of those sales came with a lease
So, those leases become late-model, low-mileage used cars for sale.
At least, I think that's what GP is hinting at.
Cash for clunkers pulled like 700k out of the market.
The auto industry was making millions less cars and trucks per year from 2008-2012.
I don't think is was the case that used cars were literally more expensive, just that with 0% financing everywhere vs paying cash for used, or vs used car loan rates, you were probably better off getting a new car.
http://business.time.com/2012/03/22/when-new-cars-are-cheape... http://genxfinance.com/buying-a-new-car-may-actually-be-chea...
Short version, a couple of things hit at the same time. I don't think Cash For Clunkers was involved as those cars were much older than the 1-2 year old ones, but it was more a factor of:
* shrinking new car demand in a post-financial-crisis buyer market that was very cost sensitive and had internalized the "cars lose 20% of their value the moment you drive them off the lot" type stuff, so started ruling out even cross-shopping new cars because they wanted to save money
* banks and dealers having more aggressive incentives and better loan rates on new cars (which is true even in non-recession-times, but they had to get more aggressive as new car demand dropped)
I'd love to find a bunch of cars just "driven off the lot" I could get that discount on.
I think for the most part there just weren't very many quality (workhorse model, a-la Prius, Civic, etc.) used cars for sale in my area at the time that weren't 4-ish years old or more or which didn't have more than 64k miles or significant and obvious problems.
And yeah, interest rates on new cars loans were sometimes sub 1%, rarely more than 2%.
If the only thing an auto manufacturer has available to meet liquidity requirements is selling cars (and they've got access to absurdly low interest), then the price of those cars will fall.
Owners of used vehicles have use-value, and are similarly cash-squeezed (financial crisis), so hold on to those.
Would love to hear differing opinions :)
I don't disagree with you, but when reading the article you'll notice that the auto industry is pushed to sell more cars, year after year. Like a number of industries, now that they've had years/decades of growth, I'm not sure how they would handle significant loses.
Heck, even stabilization. I'm over 35, but consider myself young; was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat?
Since the Industrial Revolution, I don't think so. Now that you mentioned it, I think the concept of "corporation" is intrinsically related to growth.
Erm... A decrease in demand does not lead to an increase in price.
Decreased demand can lead to decreased production, causing further increased prices and further decreased demand.
If the market clearing price rises above the demand curve, production ceases.
Not can, does. You're moving further down the supply curve.
'causing further increased prices'
No... less demand leads to less supply at a lower optimum price.
Not always.
If I make fancy handkerchiefs, and I can sell 2 per month, I will make 2 by hand and charge a high price.
If there is demand for 100,000/per month, I'll develop a way to mass produce them and charge a lower price per handkerchief (which may further increase demand.)
But if demand fades, I won't be able to sustain the equipment/workers that produced the 100,000/ month, and if I continue to produce any, it will probably drop back to a higher price, even at a lower demand.
This can occur because of consumer surplus and differing marginal demand. At the mass-producing volume, people who are willing to pay 100x for the product get what they need for a price of 1x. The marginal consumer gets it for exactly the price he is willing to pay.
All those less motivated customers drop out at the higher price which is necessary to support a limited production, leaving the 100x customers paying at their maximum price, because no supplier can profitably produce that small an amount for a lower price.
For example, obsolete technologies may increase in price as demand goes down.
But the fact that I could is frightening. There will be so many people underwater on their loans.
The car bubble is coming and it's going to pop hard.
[1] https://www.edmunds.com/car-buying/how-fast-does-my-new-car-...
Auto loan risk is significantly mitigated by modern advancements in GPS & tracking technology. No other collateral is as easily repossessable as a modern car.
Which means I need to find an investment that will have a greater than 3% return. Since I can't really guarantee that, it's not really worth it.
I'd rather not put myself into a situation where I'm that badly underwater.
Hopefully the 1%'s lobbyists won't figure out how to plug this loophole in their rentier serfdom.
I expect full autonomous driving to be much further out. Where it could have an effect though is this. To the degree that new vehicles become much more attractive because of new sensor and software features, that would likely drive used car prices down. These could certainly increase the perceived value of a current model year car vs. one from five years ago.
Consider 2 similar 2015 Priuses, one with 32,000 mi, the other with 92,000 mi. The one with lower mileage will usually net a higher sale price.
As far as automation goes, in the consumer market, I highly doubt it will be anything more than a rich person's luxury for a good long while, since most people can barely afford a $10k vehicle, let alone a $100k one.
You're right that Silicon Valley lives in a cocoon, but more than a few occasions where I thought a SV idea or trend was stupid, unaffordable, and unneeded, it turned out that a few years later the entire world had adopted it. I remember thinking who the hell needs a smartphone and who'd pay for that. Then 6 or 7 years later I saw beggars in a third-world country with smartphones. Beggars.
I'm not ready to say that autonomous cars and ride sharing will be the norm in 5 years, but just because there are poor and rural people in middle America doesn't mean it won't happen.
[1] https://www.census.gov/geo/reference/ua/urban-rural-2010.htm...
Car leases commonly rely on some expected value at the end of the lease. Even when it is some relatively down played value then this information means that it would become even lower.
This should also then mean that the lease should become more expensive.
Eventually lack of information should cancel itself out.
/s
Any car I buy is getting sold to the junkyard for $500 in 10+ years and 200k+ mi. How steeply it's paper value declines between now and then doesn't matter much to me.
There's a tendency among people in business to mark everything to market. This helps avoid otherwise hidden losses but it doesn't actually make sense in some situations. For example, in the case of a family that owns two cars and replaces one every five years.
It seems reasonable that the scrap steel and used car markets would be correlated... If self-driving cars cause a drop in car ownership, it will be a good time to figure out a previously-uneconomical use of steel.