Two reasons NADA gave the Nissan LEAF a low value retention score
The latest value retention guide from the North American Automobile Dealers Association (NADA) had a few surprises in it, including, for some of us, the poor expectations for resale value for electric vehicles. Most hybrids had a decent-enough score, with the Lexus CT, Toyota Prius, and Kia Optima being in the top three at about 54 percent and better. This means that a 2011 Kia Optima Hybrid would be worth about 54 percent of its new cost when traded or sold. As a quick note, Toyota also dominated the pickup truck list (see that here).
Yet with electric vehicles, of which NADA only lists two, the numbers are far more grim. The lowest hybrid car retention rate was the Mercedes-BEnz S-Class at just under forty percent. The Chevrolet Volt, the first of two on the EV list, barely beat that at just 41.6 percent. The Nissan LEAF came in under that at 38.2 percent retention rate.
Why would EVs have such low numbers and bad resale value at only three years of age?
NADA doesn't explain its reasoning in its Perspective release, merely noting that in 2011 (the year they go from), only the Volt and LEAF were broadly available on the U.S. market. This explains one reason, but not all of it. 2011 was the first-generation for both vehicles and both of them had troubles that first year or so with recalls, some PR issues, etc.
Another reason, however, isn't stated directly, but may be another portion of the cause - it is mentioned in the paper, but not explicitly given as a reason for retention values. That reason is price tag. In 2011, the MSRP for the Volt and LEAF was higher than it is now, with some dealerships tacking on even more to the price because of high demand. In January of last year, Nissan lowered the LEAF's price by $6,400 and the Volt followed with a $5,000 price reduction on the Volt. This put the LEAF at under $29,000 before incentives and the Volt at almost $34,000 before incentives.
Finally, we have to speculate about batteries. Both the Volt and the LEAF have large battery packs. Far larger packs than any hybrid has and the cars are dependent on those batteries to operate. If the battery doesn't work (aka "bricks"), the car is as useless as a gasoline-powered car with no fuel or spark plugs. Those early batteries were the subject of a lot of speculation concerning their true usable lifespans. With the LEAF in particular, this was a hotly-debated issue as the car has no thermal management to maintain battery temperatures. After three years, the warranties on the batteries have a large bite taken out of them and the batteries themselves are expected to have a smaller overall storage capacity - they lose capability over time. It only gets worse from there.
As a side note, we also have to wonder what, exactly, the secondary market is for these EVs. By most accounts, owners of the LEAF and Volt are not commonly trading them in yet. A quick look at Autotrader.com for used Volts and LEAFs in the Los Angeles area (traditionally the largest market for these cars), used prices for them seem to be about what the NADA guide would suggest they should be. A 2011 Volt is averaging around $24,000 and the 2011 Nissan LEAFs on offer were averaging around $18,000. The caveat, however, is that there were only a handful of listings for either car in the LA area.
Whatever the reasons for NADA not liking the expected retention value for electrics, it should be interesting that the first-generation of mass-produced EVs is scoring so low.