The Expert Podcast

Overview:

• The shift in electric vehicle (EV) demand vs. supply has been a major discussion for the past few years.
• Major Auto Groups are reporting that the used EV market is struggling, and even new EVs are difficult to sell.
• Used EVs are seeing significant discounts. For example, the new Mustang Mach-E, once priced between $60,000 to $70,000, is now selling for as low as $20,000 to $25,000 just one to two years later.
• The prices of new EVs were once marked up but have dropped drastically. Used EVs are now priced at roughly a third of their original cost.

What’s Happening in the Market:

• If you're in the market for a used EV, you may be able to find a deal due to the lack of demand, but this may not be sustainable long-term.
• The reason behind the low demand for used EVs is that new EVs are also struggling to sell. This makes it harder to push used EVs into the market as well.
• The first wave of used EVs will hit the market soon, but no one knows exactly what will happen when this flood of cars arrives.
• Most vehicles sold each year are used, and the used EV market could face even more challenges as it grows. The key test for consumer interest in electric vehicles is just around the corner.

What Does This Mean for Buyers?

• With the potential for a significant drop in prices, used EVs might become a more affordable option.
• For those interested in second-hand vehicles, it could be possible to get a low-mileage, newer EV for the price of a typical used gasoline car.
• However, there are still factors like insurance and electricity costs to consider.

Question for Listeners:

• If the price of a used EV drops significantly (e.g., from $35,000 to $20,000), would you be interested in purchasing one?
• Share your thoughts and opinions in the comments!

Key Point: If you're considering purchasing a used electric vehicle (EV), one of the biggest concerns is the condition of the battery. The battery is a critical component as it holds much of the vehicle's resale value.

Article Reference:

• We dive into a great article from Automotive News, a trade publication widely read by automotive industry executives, discussing the complexities of assessing battery life in used EVs.
• The article highlights that even dealers face challenges in evaluating battery health, and buyers should be aware of these concerns.

Key Considerations When Buying a Used EV Battery:

• Battery Life: This refers to how long the battery can power the vehicle. If the battery is near the end of its life, replacing it can cost tens of thousands of dollars.
• Battery Range: This can be measured by testing the battery health. Range is a key factor in determining how far the EV can travel on a single charge.
• Battery Longevity: Factors such as the age of the battery, its usage history, and environmental conditions (e.g., extreme temperatures) all impact how long it will last. However, predicting its future performance can be difficult.

Dealer Concerns:

• Dealers often purchase used EVs from auctions or trade-ins and are cautious about the state of the battery. They generally assume the worst-case scenario, estimating a 50/50 chance that the battery might need replacement.
• Dealers are also wary of the potential costs of battery replacement, as well as the risk of having to provide a warranty if the battery fails.

Buyer Tips:

• When purchasing a used EV, it’s crucial to conduct a thorough check of the battery. Don't just rely on the dealer's word. Consider hiring a third-party, reputable EV inspection service to assess the battery's condition and estimate its remaining lifespan.
• Be mindful of the way the vehicle has been used in the past. For instance, extreme charging or driving conditions might have accelerated battery wear.

Takeaway:

• Evaluating the health of a used EV battery can be complex, and it’s essential for buyers to gather as much information as possible before making a purchase. Worst-case scenario planning with the dealer can help, but it’s always safer to have an unbiased third party perform the assessment.

Overview:

• The used electric vehicle (EV) market is volatile, with prices dropping daily.
• Some cars have a "shelf life" of only a few days, meaning prices are constantly changing.
• Rumors suggest that Tesla is paying leasing companies to cover shortfalls in residual value, meaning leased cars are worth less than expected at the end of the lease.

Key Points:

• Used EV pricing is highly unpredictable.
• Be cautious when purchasing a used electric vehicle, and thoroughly check the condition of the car.
• Recent EV models experience 79% more problems than gas-powered cars, according to Consumer Reports.
• Testing the battery can be challenging, so it's essential to have a professional EV checkup.
• The used EV market is risky due to potential mechanical and valuation issues.
• However, with careful research and negotiation, savvy buyers can find great deals on used electric vehicles.

Introduction

• Is 2024 a turning point for electric vehicles (EVs)? Many think so. However, some argue EVs are in "total failure mode."
• Discussion inspired by a financial article shedding light on critical EV trends and risks.

Understanding Residual Value Risk

• S&P Global Ratings issued a white paper on EV residual value risks.
• Residual value: The predicted resale value of a vehicle after a lease ends.
• Leasing companies must accurately forecast this value to avoid financial losses.

The Leasing and Financing Problem

• Example: A $50,000 vehicle leased for 3 years is expected to retain a $30,000 value after lease.
• If resale value drops unexpectedly, leasing companies lose money.
• Finance companies also face risks when repossessing vehicles with lower-than-expected resale values.
• Misjudged residual values impact stock prices, credit ratings, and financial stability.

S&P’s Warning on EV Depreciation

• EVs depreciate faster than internal combustion engine (ICE) vehicles.
• Higher depreciation could lead to reduced recoveries for asset-backed securities.
• Reminder: Asset-backed securities were a major factor in the 2008 financial crisis.

The Personal Side of EV Ownership

• Challenges include charging issues and rapid vehicle depreciation.
• Example: A man loses money as he charges his EV in cold weather and faces declining vehicle value.

Market Shifts and Concerns

• Ford halts shipments of its Lightning trucks due to weak sales, despite previous high demand.
• EVs, once highly desirable, are becoming harder to sell even at discounted prices.

Key Takeaways for Consumers

• Consider buying a used EV if the price is right and the battery is in good condition.
• The battery accounts for most of an EV’s value, making it a critical factor in purchasing decisions.

Discussion Questions

• What does the future hold for EVs?
• Will the transition to EVs take more time, or were they oversold?
• Are we witnessing a temporary setback, or is the EV movement at risk of failure?

Tune in for a deep dive into the evolving EV landscape! 

Why Used EVs Are a Great Deal Right Now

• Significant depreciation has made used EVs more affordable.
• Large fleets, like Hertz, have released a wave of EVs into the used market.
• Luxury models like the Porsche Panamera, originally priced at $100,000, are now available for $30,000–$40,000.

Key Considerations Before Buying a Used EV

• Battery Checkup
  • Ensure the battery is in good condition with no dead cells or balance issues.
  • Battery replacements can be costly, and even if under warranty, repairs could cause downtime.
• Lifestyle Compatibility
  • Evaluate the range capacity to ensure it fits your daily driving habits.
  • If you're commuting short distances, used EVs are especially practical.
• Charging Access
  • Confirm that you have reliable access to charging stations.
  • A solid charging plan is essential for convenience and usability.
• The Bottom Line
  • A used EV could be the deal of the century, but only if it fits your needs and passes a thorough battery inspection.

Tune in to learn more about navigating the used EV market! 

The Supply Chain Impact on the Auto Industry

• The current supply chain issues are affecting more than just new car inventory and used car prices. It's also impacting the repair industry.
• New car dealerships are seeing empty lots, and the prices of used cars are soaring as people turn to them when new cars are unavailable.

Challenges in the Repair Industry

• Repair facilities, both at dealerships and independent garages, are struggling to get vehicles back on the road due to parts shortages.
• Some parts have months-long backlogs, delaying repairs for extended periods.

Example of Repair Delays

• A driver involved in a minor fender bender had to wait over a month for parts to arrive at the repair shop, which affected the timeline for simple repairs.
• Even mechanical and electronic parts are facing sourcing issues, with some shops stating that they’ve never seen it this bad.

Case Study: A 26-Year Veteran’s Experience

• A repair shop manager mentioned a Ford F-150 that sat for four months due to a part being unavailable.
• With rental cars in short supply, many people are struggling to find alternative transportation while their vehicles are off the road.

The Impact of Minor Collisions

• A minor collision or mechanical issue can render your vehicle undriveable for months if parts are unavailable, adding strain on transportation.

The Rental Car Shortage

• Check out your local Enterprise Rent-A-Car for inventory availability. Many locations are experiencing days with zero vehicles in stock, and when vehicles are available, the rental fees have surged.

The Electric Vehicle Shift and Parts Crisis

• As automakers shift focus to electric vehicles, parts for internal combustion engine (ICE) vehicles are becoming even harder to find.
• Manufacturers are no longer developing new gasoline vehicles and are not producing extra parts, worsening the current shortage.

Long-Term Effects on Legacy Vehicles

• The shift away from ICE vehicles means parts production is declining, which could lead to a lasting parts shortage, particularly for older vehicles.
• This could result in scenarios where cars on the road are no longer fixable due to part unavailability.

What This Means for Car Owners

• If you own a vehicle that’s more than a few years old, you may face difficulties finding parts in the future.
• The situation could resemble the past, like in Cuba, where cars were kept running through part scavenging, but with more complex and specialized parts in modern vehicles, interchanging parts may not be an option.

Your Thoughts on the Parts Crisis?

• What do you think about the potential long-term impact of this parts crisis on vehicle usage? Let us know in the comments!

Overview: If your car lease is about to end, here are three options to consider for disposing of the vehicle. Every lease is different, but these general guidelines can help you decide the best choice.

Option 1: Return the Car to the Dealer

• Drop off the keys and walk away if you're under the maximum mileage and there is no major wear or damage.
• Important: You might be walking away from hundreds or thousands of dollars in equity that you didn't know you had—dealers may not always inform you about this.

Option 2: Trade the Car for a New Vehicle

• Caution: Understand the difference between a trade-in and a turn-in.
• Leases offer a fixed price to buy your car at the end of the term, based on projected depreciation.
• What’s changed: Vehicle prices have surged in recent years, and your car may now be worth more than the original buyout price.
• If your car is worth more than the buyout price (e.g., a $30,000 car that’s worth $20,000), you can:
  • Buy it for the lower price and sell it for a profit.
  • Trade it in, but make sure to get the equity applied towards your new car purchase.
• Important: Ensure the dealer applies any equity from your current car towards your new car, or you may lose out on that value.

Option 3: Buy the Car

• Advantages:
  • You get a used car with a known history—no surprises.
  • If you’re over on mileage or there’s damage, it doesn't matter when you buy the car.
  • Buying the car locks in the price, even if the market value is higher.
• Things to Watch Out For:
  • Some leases require you to buy the car before reselling it.
  • Watch for any disposition fees (e.g., $200-$300) that may be included in the contract.
  • Some dealers may try to mark up prices for certification or repairs—check your contract to ensure these fees are not added later.
  • If you buy the car, make sure the title is transferred from the leasing company to your name.

Additional Tips:

• Start the process early—don’t wait until the last minute.
• Consider financing options carefully—dealers may offer higher rates than your bank or credit union.
• Make sure you get the title transferred immediately to avoid future hassle.
• Have questions about your lease turn-in? Leave us a message in the comments. This could be a great way to score a fantastic deal on your car, especially if you're aware of all the options available!

California's Push to Ban Gas-Powered Cars:

• California is looking to phase out the sale of gasoline-powered vehicles, requiring all new vehicles to be electric (EVs).
• Although this law is specific to California, it holds national significance as California represents 15-18% of the automobile market.
• Other states, such as Washington, are also planning to phase out gas-powered cars by 2030, with several more states expected to follow suit.
• As a result, around one-third of the U.S. population will live in states where gasoline vehicles will no longer be sold, and in some cases, even existing gas-powered cars may not be allowed to be registered.

The Challenges of Owning Gas-Powered Cars Post-Legislation:

• If these laws pass, it may become difficult to purchase or maintain gasoline-powered cars due to a lack of available parts and discontinued production.
• Manufacturers may stop producing parts for gas cars as the market shifts towards EVs, and maintaining older gas-powered cars could become challenging.

Rising Electric Vehicle Prices:

• Alongside these laws, EV prices are on the rise. For example, Ford has announced price increases of $6,000-$8,000 for certain EV models due to production cost hikes.

Implications for Consumers and the Industry:

• What does it mean for consumers if electric vehicles become a requirement and gasoline vehicles are phased out?
• Are you ready for an all-electric future? Do you have the capability to charge an EV and the infrastructure to support long-distance driving?

Impact on the Automotive Repair Industry:

• How prepared are automotive repair shops for the transition to EVs? Will traditional repair shops be able to handle the electronic-based repair needs of EVs, or will repairs become restricted to authorized dealers?
• Will third-party repair shops fade away as everything becomes more electronic?

Collision Repair and Dealers:

• Collision repairs for EVs may be more complex, especially when it comes to damage to the battery and floor pan.
• What does the future hold for car dealerships and used car lots? Will used EVs still be practical to buy and sell, especially when the battery warranty expires?

What Are Your Thoughts?

• Share your feedback on the transition to electric vehicles and the new laws changing the automotive industry. What do you think about living with electric-only vehicles, and how do you see the repair and retail sectors evolving?

Common Issue: Many vehicle owners face problems with liens remaining on their titles despite loans being fully paid. This issue occurs frequently, with hundreds of similar cases reported daily.

Real-Life Example:

• A North Carolina resident faced difficulties registering her vehicle due to an unresolved lien. The car's title bounced between California and North Carolina DMVs, highlighting inefficiencies in inter-state coordination.

How It Happens:

• When a loan is paid off, the lender typically stamps the title as "paid" and sends it to the owner.
• Lenders often fail to notify the DMV to update the title record, as this requires additional effort, forms, and fees.
• Owners assume their title is clear, but the DMV’s records still show an active lien.

Challenges with Lost Titles:

• If the stamped title is lost or never received, the owner cannot prove the loan was paid off.
• DMV laws prevent removing liens without official documentation from the lender.

Why Lenders Don’t Update Titles:

• Banks lack dedicated staff to handle lien releases.
• They often rely on vehicle owners to manage this process themselves.

Steps to Resolve:

• Once you receive the lien release or stamped title, immediately take it to your DMV to update the records.
• If the title is lost or incomplete, contact the lienholder to request replacement documents.
• Complete the necessary DMV forms yourself and send them to the lender for verification. Use certified or registered mail for tracking.
• Be prepared for potential delays, especially if the vehicle was purchased in another state.

Why It’s Important:

• A clear title ensures you can sell, transfer, or register your vehicle without complications.
• Unresolved liens can lead to legal disputes or court orders to correct the title.

Key Takeaway:

• Lien releases are not automatic. Owners must proactively update title records to avoid future problems.

Additional Resources:

• Watch our instructional videos for detailed steps on clearing liens and resolving title issues.

If you’re facing this problem, you’re not alone! Learn why it happens and what you can do to fix it. 

Discover why leasing a car in the past few years might have been one of the smartest financial decisions you made. In this episode, we dive into:

• The Basics of Leasing:
  • How lease agreements let you walk away after 2-4 years without additional payments.
  • Options available at the end of a lease: walk away, buy the car, or trade it in.
• Lease Buyout Explained:
  • Your lease includes a pre-determined buyout price, typically around 50% of the car's original value.
  • This fixed price can be advantageous when used car values increase.
• Residual Value vs. Market Value:
  • Historically, lease buyout prices matched market value, but recent trends show a gap.
  • Cars with a buyout price of $25,000 might now be worth $30,000 or more.
• Smart Financial Strategies:
  • Purchase your leased vehicle at the buyout price and resell it for profit.
  • Use the lease’s equity as a trade-in towards your next car.
• Key Insights for Current and Future Leasing:
  • Current market trends make lease buyouts attractive for vehicles leased between 2018 and 2020.
  • Understand the differences between lease turn-ins and lease trade-ins to maximize value.
  • Be cautious about leasing new cars today, as market conditions may not be as favorable in 2-3 years.
• Practical Tips for Lease Buyouts:
  • Ensure proper paperwork for the lease buyout process, as it differs from a typical lien payoff.
  • Buying out your lease could add equity to your next purchase or put extra cash in your pocket.

Take advantage of the current sweet spot for lease buyouts and maximize your financial benefits!