Cheap EVs come with hidden costs, industry players warn

Lower prices may be tempting, but battery worries, weak resale value, and limited servicing capabilities deter people from opting for EVs.

Several factors, such as the high cost of batteries, poor after sales service, and low resale value, make it difficult for EVs to capture a larger share of the automotive market even if prices are lowered. (Bernama pic)

PETALING JAYA:

 Lower on-the-road prices for electric vehicles (EVs) may attract buyers, but many other factors are likely to keep demand persistently low, according to industry players.

For instance, the demand for used EVs remains thin, keeping resale value low. In addition, battery life is still a major concern, and after-sales support continues to be patchy.

“These factors erode the long-term value of EVs,” Suresh Nair, a sales executive at Carconnections Subang, told FMT.

Nair said the uncertainty over battery life and the cost of its replacement has eroded trust in the used car market.

For most EVs the cost of the battery accounts for about 40% of the total price of the car.

“Right now, the resale value for EVs is very low,” Nair said, underlining the contrast with the used car market for combustion engine vehicles. Petrol or diesel-driven vehicles retain higher value because parts can be repaired or replaced.

Nair likens the electric car to a mobile phone. “Like the mobile phone, once the battery is depleted, the car has no value at all,” he said.

He said that while internal combustion engine cars can still fetch about half their original price after years of use, EVs often lack that prospect.

“You buy a car for RM100,000, and after eight years you might still get RM50,000 for it. Electric cars don’t retain that kind of value,” he said.

Prices quoted in the used car market underline the sharp drop in value for EVs.

For instance, one would have paid RM648,000 for a new Mercedes Benz EQS 500 in 2024. The same car goes for only RM350,000 in the resale market this year. In barely two years, its value has dropped by 45%.

Factors such as this will continue to put pressure on demand in the secondhand EV market, Nair said.

He pointed out that buyers also tend to go for new rather than used cars if they plan to buy an EV given that new ones come with a warranty. “As a result, some dealers are reluctant to accept EVs as trade-ins,” he said.

“So dealers like me don’t take electric cars,” he added.

Industry groups say these concerns reflect broader structural challenges in a still-maturing market.

Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) president Tony Khor said battery life and replacement cost remain critical factors influencing resale value.

Tony Khor.

“Unlike conventional vehicles, the cost of the battery in EVs represents a significant portion of the total value of the vehicle,” he explained.

“Due to uncertainties surrounding long-term battery degradation, warranty transferability, and replacement costs, buyers in the secondary market remain cautious,” he added.

Khor added that growing competition and more EV brands entering the market are putting downward pressure on prices.

“Oversupply depresses prices, especially in a developing market like Malaysia,” he said.

On after-sales support, Khor said the servicing ecosystem is improving but still in transition, with independent workshops slowly building their capability.

Highlighting the limitations, Nair noted that many EV workshops are not fully equipped.

“It’s going to take time before independent repairers can handle EVs,” he said.

Taken together, industry players say these factors could influence buyer confidence when considering long-term ownership. - FMT