“It was a little bit of a leap of faith,” said Rosalind Kelly, describing how she purchased her first electric vehicle. Instead of buying a new car from a dealership, Kelly, who lives in rural Manitoba, bought her plug-in hybrid EV, a used Chevy Volt 2017 Lt, three years ago on the online marketplace Kijiji.
The biggest motivator, she said, was the price: a new car that she had her eye on would have cost almost twice as much.
“That’s a lot of money for something that gives you a little bit of stress already,” said Kelly, adding that she spent about $2,600 for her car.
- Canada is lagging behind on EV adoption compared to China and most of Europe.
- Different EV incentive programs across the country have resulted in a provincial disparity in inventory, posing supply issues that also spillover into the secondhand EV market.
- Used-EV marketplaces are emerging as a solution that could help increase adoption of the vehicles, according to experts.
Kelly said her local Ford dealership was struggling to find her an EV; while she was waiting, she started her search online. She is one of many first-time EV adopters who have made the decision to look for a used EV in recent years.
Despite the federal government’s ambitious goal of zero emissions by 2035 for all new light-duty vehicles, Canada, where electric vehicles had 5.6 per cent market share in 2021, is lagging behind on EV adoption compared to Europe and China. The disparity of EV incentive programs across the country has resulted in lower inventory in some parts of the country. Driven by more affordable prices and potentially shorter wait times, many Canadians are turning to secondhand vehicles, spurring growth in the used-car market—which experts say could be a key to boosting the country’s EV adoption.
Bruce Wu, the founder and CEO of Carnex, a Mississauga, Ont.-based startup specializing in the resale of used high-quality EVs, said he is seeing great demand for used EVs. Wu said the price of a Nissan Leaf, for example, has risen from $25,000 to $36,000 on Carnex over the past few months due to high demand. The company aims to sell between 200 to 500 used vehicles this year.
“I can feel the market [is growing],” said Wu, adding that the online marketplace has seen EVs in the price range of $20,000 to $40,000 quickly selling out in just one day a few times in the past year.
Unlike traditional auto-sales platforms where users need to negotiate with salespeople and complete paperwork in person, Wu said Carnex allows customers to finish all their financial applications online within half an hour. After the customer completes the online application, the company delivers the vehicle to their home.
“What we are trying to do is make [the] used-EV buying experience as close as buying [a] brand-new EV, like Tesla,” said Wu.
Bruce Wu founded Carnex after working in the Canadian auto sector for over a decade.
Carnex also allows users to sell their own EVs on the platform. Wu added the company plans to use robotic technology to recondition older vehicles for resale, which he said is more feasible since Tesla and other EV brands only offer a few models for now.
“For example, if I’m reconditioning 400 different kinds of gas cars, I need a human being, but for one type of cars, or two different types of cars, I can use robots.”
Most new subcompact and compact electric cars from mainstream brands cost between $32,000 and $160,000. While prices for used EVs may vary depending on the condition of the car, some of the cheapest electric cars in Canada cost between $11,000 to $30,000 according to Canada Drives, an online vehicle retailer.
Canada’s used-vehicle market is sizeable, representing about $11.6 billion worth of sales in 2020, nearly double since 2012, according to data from Statista. Last year, used-car sales as a whole rose five per cent from 2020 amid semiconductor shortages.
“I think more government support in used electric vehicles will help people transition to EV cars faster, because not everybody can afford a brand-new car in Canada,” said Wu.
Darryl Croft, president of Electric Vehicle Network, an Ontario-based electric-car dealer that buys, sells and rents used EVs online, said he has “incredible faith” that adoption will increase.
“It’s not necessary to always buy a new EV and for Canada if they strictly rely on new EVs, it’ll be too slow to hit our objectives. So you really have to look at promoting used EVs in the mix to promote that transition,” said Croft.
EV adoption has seen the most success in Europe thanks to abundant government subsidies that have accelerated the process. Sales had a compound annual growth rate of 60 per cent from 2016 to 2020, compared with increases of 36 per cent in China and 17 per cent in the U.S.
Although Canada also has government subsidies, there are discrepancies between each province’s offerings.
“That’s a very uneven playing field right now,” said Cara Clairman, president and CEO of Plug’n Drive, a non-profit committed to accelerating the adoption of EVs in Canada.
The disparity has resulted in an uneven distribution of vehicles as car manufacturers tend to divert new inventory to provinces such as British Columbia and Quebec, whose governments provide more financial aid, and sales opportunities are potentially bigger.
British Columbia and Quebec are home to over 70 per cent of all EVs available for sale on Canadian dealership lots. Those two provinces also have many more EVs available per person since several automakers focus the vast majority of their inventory there, including Volkswagen (83 per cent), Kia (86 per cent), Honda (86 per cent) and Ford (98 per cent).
“The common complaint is that they [customers] can’t get them; they’re not on the lot. The dealers don’t have them and there’s a huge wait time,” said Croft.
According to a recent study commissioned by Transport Canada, 64 per cent of Canadian dealerships surveyed reported wait times in November 2020 of at least three to six months before a prospective buyer could drive a new zero-emissions vehicle home.
Croft said used EVs could provide an alternative for buyers in provinces with long wait times for new vehicles due to limited supply.
“Every day and every week that somebody is driving a gas car, it’s more emissions, more cost. In a lot of cases it makes more sense to buy a late model, high-quality, used EV than wait six months or … two years for the new one that you think you want,” said Croft.
Only new-EV sales are eligible for the federal government’s incentive program, which offers up to $5,000 to ZEV buyers. While a growing number of provinces have now introduced their own rebate programs in addition to the federal one, only Ontario, Quebec and New Brunswick have programs covering the sales of used vehicles.
“One caveat here, though, is that the used-EV market is still relatively small,” said Joanna Kyriazis, senior policy advisor at the Clean Energy Canada program at Simon Fraser University’s Morris J. Wosk Centre for Dialogue.
Kyriazis said the most important measure that the government can take to address adoption is to move forward with the national EV sales mandate.
“But that mandate does have to be complemented with continued support that helps consumers buy these cars,” Kyriazis said, adding that a focus on used EVs is important.
The secondhand market is also a signal of a long-term bet on the future of EVs. A 2022 study by J.D. Power found that 96 per cent of battery electric-vehicle (BEV) owners whose overall ownership satisfaction exceeded 900 points, according to J.D.’s scale, said they would purchase another BEV in the future.
“I compare it to the cellphone business when smartphones came out. A lot of people will upgrade their phone even if they don’t really need to. But they may want to because there’s new features or more range or bigger size,” said Croft.