What do you think the used MME market will be like?

[LagerHead]

When someone goes vehicle shopping they are typically looking for a tool to get the job done. Yes, hopefully they like that tool but there are many tools that will work. In other words, it's a mistake to look at the EV market as being distinct and separate from the ICE vehicle market. Depending upon price and perceived value, people cross-shop gas and electric. More so than they cross-shop new/used. There will not be enough EV's (new or used) to satisfy demand for many years so I would not let the fact that a bunch of new models are slated to hit the market affect your appraisal of Mach-e's future resale value. Used EV's will cost a lot less than new EV's and there will be plenty of buyers who want an EV but don't want to pay new prices.

What will determine the resale value of the Mach-e more than anything else (and especially more than how many EV's are on the market in 4 or 5 years) is how reliable the Mach-e proves to be and how well the battery lasts. There will be early high-mileage data sufficient to make some good educated guesses in about 2 years. Guessing the resale value before then, like any new car model, is a crapshoot.

When the Tesla Model 3 was released I saw a lot of people on car forums pushing the narrative that the resale value would be horrible simple because the Nissan Leaf and Chevy Bolt had low resale values. And that was when EV's were as scarce as hen's teeth. But as people started to realize that the Model 3 had very good reliability and much lower battery degradation than these other EV's, the resale value turned out to be near the top of any car model:

Tesla Model 3 Bucks Trend of Electric Vehicles Depreciating Fast (caranddriver.com)

Tesla Model 3 tops list of cars that hold their value (thedriven.io)

And the Tesla Model X has held up very excellently as well:

Best Electric Vehicle Resale Value: 2021 Tesla Model X | Kelley Blue Book (kbb.com)

Most of this has to do with the reliability of the cars over time, the low operating costs and the longevity of the battery. Hopefully the Mach-e will follow in Tesla's footsteps but only time will tell. Any new car (gas or electric) will have plenty of depreciation in the first 3 years and I think most new car buyers fully understand that (which is why people tend to keep them for 5-8 years or more before selling). If anything, EV's will start holding their resale value even better than gas cars because no one will want to be riding horses er....I mean driving stinky, slow, expensive to operate gas cars when everyone else is zipping around in modern, clean, quiet, fast electric cars.

Google a guy named "Tony Seba" and watch a couple of his videos. His specialty is technological disruption and how it impacts economies. He projects that gas cars will become worthless rather quickly, much faster than most non-experts realize.

Sponsored

 

[AllenXS]

I will watch Tony Seba. I essentially purchased the MME because it was time to get a new vehicle and I saw the ICE market will collapse - ie less value of an ICE in 5-10 years if I purchased now. Hope I'm right but either way its a fun ride and not regretting either way.

 

[LagerHead]

Ummmm....It looks like we are talking past one another.

A car with a 6.2L V-8 that requires a steady diet of refined petroleum and emits toxic gasses out of a large tailpipe while sitting stationary is going to have a very limited market in 2030. Will it be collectible? Perhaps, but no one is going to want it as a daily driver.

We are not talking about speculating on collectibles but on buying practical transportation - two different things. The resale value of the Mach-e will be determined by it's history of reliability and longevity - we already know it's a unique, good-looking, affordable BEV.

 

[JSW]

I believe it will be a function of how quickly the technology evolves.
When I’m ready for something new in a few years, IF the new EVs get 450 miles of range, my “dated technology“ MMe will need to be sold at a steep discount to the prices of the new/better technology.

My personal view is battery technology will evolve substantially in 3 or 4 years, and this influences my dim view of resale value. That said, I bought the MMe knowing this was the case because there was simply no way I could “wait” that long for my next EV.

Any time you buy into rapidly changing technology, there is a price to be paid, and EVs are no different.

 

[LagerHead]

Actually, you are the only one trying to do that. I'm saying we will have to wait and see how the Mach-e fares in terms of reliability and battery longevity because those are the two most important metrics that will determine what percent of it's it's original value is maintained in the used market. And we don't have a very good idea of what they will be yet.

Side note (while we are predicting the future) probably half the country and most of the planet don’t care what gasses come out their tail pipes. And currently 98% of people prove that point buying ICEs.

The actual number of EV sales to ICE sales is actually higher than 2% but it's not determined by consumer preference - it's determined by availability. For example, Ford sells every Mach-e just as soon as they can get it to the consumer. Tesla sells every Model 3 and Model Y just as soon as they can build them. If it were possible to make more, they would sell more. This is not rocket science.

The limiting factor is battery production which is why Tesla built a huge manufacturing facility for Panasonic in Nevada in 2016 to make batteries exclusively for them. It's still not even close to being enough so they are building their own battery cells, currently in California and they are building larger battery manufacturing facilities in Texas, Germany and China. Because they need a lot of batteries. Because batteries limit how many EV's can be built, GMC is building factories to manufacture batteries for GM's exclusive use. And it's also why the Mach-e is guaranteed to sell in relatively limited numbers as far as they eye can see (because Ford has no visible way to acquire more batteries in the visible future beyond planned production which might be a bit optimistic to begin with). This has nothing to do with demand or consumer preferences - it's all about availability. That's why EV's are still only a small percentage of the overall vehicle market.

A lot of mainstream auto analysts get this very basic thing wrong when analyzing demand for electric vehicles (which is why I don't put any weight into what they say). They base demand upon sales which, works for car models that are not capacity constrained but, fails (and has failed) for EV's that are constrained by manufacturing capacity. In the latter case, sales numbers reflect how many EV's can be built, not how much demand there is for them.

Consumers are well known to care for their families health and do not want cars that emit toxic gases but their choice in the marketplace has been extremely limited. Even now, it is simply not possible to buy a pick-up truck that does not emit toxic gasses, even when just sitting still and idling. This is starting to change and change is a powerful thing. If you want a better idea of these kind of fundamental changes happen, look towards the experts of this kind of change.

Tony Seba has made it his life work to study this kind of change in consumer behavior (change driven by technological disruption). Not many people are in this field and many fewer are experts. His expertise is based upon 100's of studies of consumer behavior when confronted with a new way of doing something. Before we entered the current millennium, in the 1990's, I understood this kind of disruption and invested in technological disruption caused by computers and, a few years later I transferred most of my investments from computers into wireless data (cellular). By the beginning of the new millennium, a few short years, I had profited to the tune of a few million dollars after taxes. In the last three years I have made many millions more investing in the transition from oil and gas into electric energy and cars. These changes were 100% predictable once you understand how technological disruption works. Yet many mainstream analysts seem unable to learn.

My point in sharing this is not to brag about how much money I have, it's to illustrate how knowledge is power. How you can leverage knowledge into financial fortune. It requires only three elements:

1) Understanding change and how it plays out (more accurately than most people).
2) Some money you are willing to bet on #1
3) Time

Just as knowledge can be leveraged to make a lot of money, a lack of knowledge can cost you money. People make poor financial decisions all the time and sometimes it's due to their inability (or unwillingness) to understand how technological disruption works. Billions of dollars have been lost in recent years by very wealthy people invested in oil and gas and coal. These are people who are considered by many to be very smart people yet they were unable or unwilling to see the entirely predictable changes that were coming.

For all of these reasons, I consider it mandatory that informed car buyers watch at least one of Tony Seba's presentations on technological disruption. They are only about an hour long and each year he covers the same subject with minor updates. If you want to be really impressed, watch one of his presentations from 2017, when all the mainstream analysts were predicting a very slow growth of EV sales and limited demand. Instead EV sales have mushroomed, growing at an enviable rate (just as he predicted and continues to predict). Or watch his 2020 or 2021 presentation to see how how consistent his message has been over these years. Because they are not based on guessing or hopeful wishes, but on careful modelling that is informed by economics and previous major technological disruptions. He turns it from art to science.

Tony Seba 2017:
(14) Tony Seba: Clean Disruption - Energy & Transportation - YouTube

In 2010 Tony Seba was predicting that the electric car would replace gas cars starting about 2020 and it would accelerate from there and by around 2030 almost all new vehicle sales would be electric - essentially almost no new ICE vehicle sales. He wrote a book but people thought he was crazy and they were not afraid to say so. He was obviously wrong, his predictions were ludicrous! But his predictions were based on technology cost curves, that's right, economics! And he predicted these curves so accurately he only needed to adjust them slightly, by a couple of years at most. He didn't adjust them further into the future, he has pulled them forward. It's happening slightly more quickly than his cost curves predicted.

So keep an open mind and listen to experts who have proven track records. Because there are a lot of "analysts" using "common sense" to come up with predictions that turn out to be laughably inaccurate! Failing to set aside even one hour of your time to listen to an expert can be very expensive indeed! At the very least, you will come away with a better understanding of residual used car values than the short-sighted and rigid-thinking people who are paid by leasing companies to come up with predicted residual values. Companies will go bankrupt over their failures to adapt to the disruption brought about by the falling cost curves that cause technological disruption.

 

[NmbrsNvrLie]

As a former Tesla model 3 owner, I really expect values to hold. Despite the math, a lot of people don’t understand the tax credit situation or don’t qualify and I bet you can actually flip it pretty quick. People complained about the model S depreciation, but pretty much all $80-100k cars which actually are driven depreciate similarly. People who bought model 3 standard ranges can drive them for a year or two and sell them for minimal depreciation.

I predict values are going to hold way better than the residuals on Ford Options. However, if you go with the Ford Options plan, you get the upside if depreciation is lower and the downside risk of technological obsolescence is on Ford.

Took a mustang fanatic on a ride in my FE today and I’m really so much happier with this as compared to my Tesla. I think this is going to be a winner which appeals to a lot, keeping resale values strong. Also, I think the whole auto market is dealing with supply constraints which will continue for the foreseeable future. Lots of people were waiting to find deals on used Model 3s. They kept waiting 18 months only to find they would only save a few grand and most opted for new.

 

[Papa T]

Who knows? You can make a number of educated and informed deductions, but in the end none of us have a crystal ball, and forecasting the future is something that humans are very poor at. Yes, you'll see a good "prediction" now and then, but that's a little bit of confirmation bias. We make so many predictions as a group, that you will eventually find someone that gets it "right." Identifying that someone long enough before it happens is the catch.

Cars are depreciating purchases - period. Yes, some do better than others, and some may even become collectors down the road. But, I'm buying my MME because it fits me, and I enjoy it, not because I'm looking at it as a good investment, or even being less of a loss than another vehicle. It's simply the best car for my list of desires. What comes after that, I cannot really affect, so I'm not going to worry about it. Hopefully I get to drive it 'til the wheels come off.

 

[UW2]

I don't see it like that. It assumes the competition of the Mach-e is other electric cars. But most EV buyers are replacing gas cars. Since an EV serves almost all of the same purposes as a gas car, the competition is the entire universe of cars in the same size and price range. This is true whether the EV is new or used.

It's true that some people will only buy an ICE vehicle due to personal biases (or very special needs) and that some people will only by an EV, we can safely ignore that. But more importantly, some people will only buy a used car because they want someone else to take the depreciation.

So, I suspect there will be a strong market for used Mach-e's in coming years, especially if they continue to maintain their reputation as a good and reliable car. The truth of the matter is that an affordable EV, new or used, is an EV that will sell easily. The manufacturer's of EV's with good reputations are increasing annual production as quickly as possible each and every year yet they still can't make enough to satisfy worldwide demand.

The other issue to consider is, first year models tend to have a lower depreciation

 

[LagerHead]

Any time you buy into rapidly changing technology, there is a price to be paid, and EVs are no different.

Automotive technology is rapidly evolving - no doubt. But I don't think it makes sense to see this change happening in isolation. What I mean by that is that EV technology advances impact ICE cars at least as much as early EV's.

As EV's continue to get better and cheaper, the depreciation this causes to older technologies, ICE or EV, probably impacts ICE cars even more than early EV's. EV's with good reputations for reliability, low ownership costs and longevity will be more desirable than ICE cars with reputations of inconvenient oil and filter services, and weekly refueling and more replacement parts like belts, alternators, injectors, fuel pumps, mufflers, catalytic converters and air mass meters to pass smog tests, etc. etc. etc. As most cars on the road become electric, many cities will declare their urban centers as pedestrian and people friendly places and combustion engines will be limited in where they can go.

When it comes to depreciation of a new car purchased today, I would be more worried about a combustion car than an electric car. Electric cars are the future, not combustion cars.

Strange history: When the US made the transition from horses to the automobile, there came a point where there was a glut of horses on the market. Horse meat was very inexpensive compared to beef because the automobile had made horses for most transport uneconomical and impractical while beef had risen in price as much of it was being exported to feed the troops during WWI.

Most of the horses that were displaced by the automobile were eaten by Americans who previously had a social aversion to eating horsemeat which was re-enforced by 19th century newspaper articles associating it with poverty, social breakdown and revolution.

 

[LagerHead]

Umm, I believe the subject was predicting future resale values for specific car models that don't yet have reliability and longevity histories.

I’m a little less optimistic than you are about electric cars ruling the world, unless they’re forced on the public through government regulation.

You should watch Tony Seba's presentation. He's one of the foremost experts in technological disruptions caused by the predictable decline in costs of new technologies with increasing volumes. This is not speculation, it's well-established and the rates at which adoption happen all follow "S" curves. Tony explains this more concisely and with plenty of examples. The price declines with increasing volumes are very certain and predictable. This is a function of the competition inherent in capitalism.

Like all “alternative energies” the only reason they are “alternative” is price. The cheapest fuels aren’t “alternative.” People tend to show their true priorities and ideals when they vote with their wallets. It is much easier to keep your ideals when you’re wealthy.

People will (and are) voting with their wallets. Which is why solar and wind and storage will overtake coal, natural gas and nuclear and EV's will overtake gas and diesel. It won't be because of government intervention, it will be in spite of it (fossil fuels are currently more heavily subsidized by governments than alternative energies). If you want to understand this better, you really need to watch Tony Seba's hour long presentation. Not only will you learn a lot, it's more interesting to watch than most TV programming.

If you can get Youtube on your TV, it makes for a really nice hour long show.

 

[drivenfilms]

My buddy who is a sales manager at the dealership I bought my Mach said that it's too early to tell but if Tesla is any indication, resale value is going to remain high. The Mach E in my opinion might end up being just as, if not more popular than the Tesla. Even if they don't get the "iTs NoT a MuStAnG" people on board, it's still going to be a popular vehicle.

I've owned a lot of good looking, attention grabbing cars and I've never owned a car that has gotten as much attention in the first week of ownership as the Mach E has. It's insane!

That being said, I predict this is going to be a really popular vehicle so resale/trade-in value will be high.

Sponsored