Original by New Energy Outlook (ID: xinnengyuanqianzhan)

Full text: 3112 words, Reading time: 9 minutes

Amidst the rapid development of new energy vehicles, the used car market has failed to keep pace.

According to data from the China Passenger Car Association, the penetration rate of new energy vehicles has exceeded 50% for several consecutive months, yet in the used car market, the penetration rate of new energy vehicles lags behind, hovering around 7.9%.

The significant disparity between the penetration rates of new and used vehicles highlights the enormous development potential of the used new energy vehicle market. However, reflecting on this gap reveals that the current after-sales warranty policies for new energy vehicles have played a negative role.

Purchasing used new energy vehicles often comes with numerous uncertainties and risks. Issues such as reduced driving range, safety hazards, and the fact that most brands' warranty policies and benefits are limited to the first owner deter many potential buyers.

Market demand cannot be ignored indefinitely. Recently, good news emerged at the 2024 Guangzhou Auto Show, as an automaker's after-sales policy accompanying the launch of its new models broke the deadlock, providing unprecedented protection for non-first owners.

It is foreseeable that a brighter future awaits non-first owners!

1. New cars are hard to sell

Currently, "first owner rights" and "high discount rates" are stumbling blocks to the prosperity of the used new energy vehicle market.

Yan Ping (pseudonym) from Jinan recently encountered a frustrating experience. A year ago, he bought an electric vehicle and now plans to upgrade to a new model. Believing his well-maintained, one-year-old car would fetch a good price, he was disappointed by reality.

He drove his car to the local used car market only to find that many dealers were uninterested or offered drastically reduced prices. Upset by the offers, Yan Ping listed his car on an online used car platform, but the results were equally disappointing: "Although it's a nearly new car, as the second owner, the manufacturer doesn't provide a warranty, and I'm unsure about the battery condition. What if there are problems?" After a long period with few inquiries, he decided to keep driving it for now.

Yan Ping's experience is not unique. In the used new energy vehicle market, protection for non-first owners remains a significant issue. Battery performance, driving range, and subsequent warranty and maintenance are top concerns for buyers, especially prominent in used car transactions.

Driving range is one of the core competitiveness of electric vehicles. Many buyers worry that battery performance will decline over time, reducing the driving range. Regarding safety, while the probability of electric vehicle self-ignition is low, the consequences can be devastating if it occurs.

What adds to Yan Ping's frustration is that most new energy vehicle brands' warranty policies are limited to the first owner. This means that once the vehicle changes hands, the new owner often cannot enjoy the same warranty and maintenance services. This unfair treatment deters many potential buyers and contributes to the lower resale value of used new energy vehicles compared to traditional fuel vehicles.

Image/Warranty ceases upon change of vehicle ownership for certain brands

Source/Screenshot from New Energy Outlook

Many owners of used new energy vehicles have encountered unexpected issues: they thought the car was in good condition and the price was right, but soon the battery malfunctioned. Contacting the manufacturer revealed that the warranty had expired, requiring self-funded repairs. The high cost of battery repairs or replacements caused great distress for second owners.

Mr. Li (pseudonym) from Xi'an bought a used new energy vehicle at a low price and was satisfied for the first six months. However, after about a year, the driving range became erratic, sometimes dropping from 100 kilometers to just a dozen kilometers, making him anxious while driving.

Mr. Li visited a repair shop and was informed that the battery had severely degraded and was out of warranty, requiring self-funded repairs. The cost of replacing the battery was even higher than what he paid for the car.

More and more consumers are realizing that whether they are the first owner or not, they should enjoy equal after-sales service rights. The market demands change, and consumers need a fair and transparent used car market.

2. Used car owners call for fairness; the industry needs a breakthrough

It is well-known that the used car market is often plagued by opacity and deceptive practices. The aforementioned Mr. Li was clearly misled about the vehicle's usage duration, facing the dilemma of replacing the battery or the car itself.

Compared to used fuel vehicles, new energy vehicles' residual value is significantly impacted by the degradation of their key component—the battery. Without free warranty from the merchant, the residual value of used new energy vehicles is shockingly low.

According to real-time sales data from the Guazi used car platform, about 10% of car models have a first-year residual value of less than 50%, including well-known brands' new energy vehicle models.

Image/Some new energy vehicles are half-priced in the first year

Source/Screenshot from Guazi Used Cars & New Energy Outlook

Used new energy vehicles experience the highest depreciation in the first year, with over 50% depreciation after three years. In contrast, most fuel vehicle models maintain a residual value of over 50% after three years. Additionally, the replacement cycle for traditional fuel vehicles is 6 to 8 years, compared to just 3 to 5 years for new energy vehicles.

The low residual value of new energy vehicles makes many consumers more cautious when considering a purchase. The lack of after-sales service exacerbates this issue.

Most new energy vehicle brands have peculiar warranty policies—limited to the first owner. This means that once the vehicle changes hands, the new owner cannot enjoy the same warranty services as provided by the manufacturer. This not only harms the interests of non-first owners but also affects the healthy development of the entire market.

What's more, many insurance companies refuse to insure used new energy vehicles older than 3-5 years. Even if they do, the price is often unacceptable to owners. Insurance companies have a reason: the vehicle's parts-to-whole ratio is too high, posing a significant risk of loss.

Li Ping (pseudonym), who deals in used cars in Jinan, represents a common attitude towards used new energy vehicles. When someone wants to sell a new energy vehicle, he first checks the brand's warranty policy. If the brand has a clause excluding warranty for non-first owners, he refuses the vehicle.

"Even if the price is low, it's difficult to sell it quickly, so it just sits on my hands," says Li Ping. He has been burned before by accepting a cheap vehicle only to find no buyers. Without a warranty or after-sales service, the trial and error cost for such a large item as a car is too high.

Li Ping's sentiment echoes that of many potential consumers. They hope the market can offer more choices while ensuring the quality of after-sales service. This demand is not just personal but urgent for the entire market.

The policy of excluding non-first owners from warranty benefits not only makes it difficult for buyers and sellers of used cars to reach an agreement but also restricts the further development of the new energy vehicle market.

Protecting the interests of non-first owners is not only a respect for consumer rights but could also become a key point of competition in the future market for automakers. Only by establishing a fair and transparent after-sales service system can consumer confidence be boosted and the healthy development of the market be promoted.

3. Breakthrough! No difference between first and non-first owners!

Unreasonable rules are meant to be broken. The industry needs a breakthrough, and the breaker has emerged at the right time.

At the 2024 Guangzhou Auto Show, SAIC MG unveiled its compact pure electric SUV ES5 and other models. The relevant responsible person reiterated the lifetime warranty for the three electric systems (battery, motor, and electronic control) and the zero-spontaneous combustion promise. Surprisingly, the warranty policy has no restrictions on the identity of the first owner or mileage limits—as long as any quality issues arise with the three electric systems during the warranty period, full responsibility and lifetime warranty services will be provided.

Image/MG ES5

Source/Screenshot from the Internet & New Energy Outlook

While some automakers offer warranties to non-first owners, stringent restrictions exclude many owners.

SAIC's lifetime warranty for the three electric systems without restrictions on owner identity means that no matter how many times the vehicle changes hands, the new owner can enjoy the same warranty services. This policy breaks the limitations of traditional new energy vehicle after-sales services, truly achieving equal treatment for first and non-first owners.

Wait, there's more! MG ES5 promises to unconditionally replace the vehicle with a new one of the same configuration or offer a new car of equal value within 20 working days if the vehicle catches fire due to issues with the three electric systems. This promise not only boosts consumer confidence but also demonstrates high confidence in its products.

Image/SAIC announces Super Safe Chip Promise

Source/Screenshot from the Internet & New Energy Outlook

The three electric systems (battery, motor, electronic control) are the core components of electric vehicles, and their performance directly affects the vehicle's driving range and overall performance. Especially the power battery plays a crucial role in the residual value of used cars.

Li Ping, a used car dealer in Jinan, explains that used car buyers are naturally most concerned about the vehicle's performance. Applying this standard to used new energy vehicles, after understanding the vehicle's usage time and mileage, consumers are most concerned about battery health and driving range.

The core of new energy vehicles lies in the battery system, making battery condition crucial. "It's important to know the battery's brand, capacity, age, charging cycles, and whether there have been any repair or replacement records. Also, pay attention to the natural degradation of the battery, such as its degradation rate at different temperatures."

In a sense, the performance of a power battery is the primary reference for determining the residual value of a used new energy vehicle.

Returning to the topic of breakthroughs, SAIC MG's courage to make a no-difference warranty and zero-spontaneous combustion promise for first and non-first owners stems from its double confidence in technology and service. It is understood that the MG ES5 is equipped with a CATL battery, which, with its leading-edge power battery technology globally, provides solid guarantees for vehicle performance with high energy density, long life, and high safety.

Excellent products indeed give automakers confidence and increase their voice.

Looking ahead, with technological advancements and improved service levels, more consumer-friendly measures will be adopted. SAIC's innovative initiative not only brings good news to non-first owners but also sets a new benchmark for the entire new energy vehicle industry.

We call on the industry to work together to provide more innovative solutions to meet the evolving market demands. Only then can China's new energy vehicle industry continue to advance rapidly, and consumers can spend their money without worries.