A startup wholesale marketplace aims to help dealers and fleet operators liquidate what some expect to be an onslaught of used EVs.
Electric vehicles accounted for 9% of all new-vehicle sales in September 2023, up from 2.6% in February 2020. Momentum is “building in total EV sales volume,” according to J.D. Power’s October E-Vision Intelligence report. The forecast includes 3 million EV sales during the 12 months ending in December and 4 million by the end of third-quarter 2024.
As new EV sales rise, so will the number of used EVs coming in as trade-ins.
“The ability to immediately liquidate trade-in vehicles could be the difference between making money on that car and losing money on that car,” Jimmy Douglas, CEO of Plug, created to facilitate buying and selling EVs, tells Wards.
Many of the franchised dealers he speaks with are not yet “all-in on EVs,” says Douglas.
Using Plug, those franchised dealers can wholesale used EVs to dealerships specializing in electric vehicles. Used EVs at EV-specific dealerships sell 40% faster than at traditional franchised dealerships, says Douglas.
Plug is funded through venture capital. It anticipates making money through buy fees and value-added services such as inventory financing and transportation dispatching, he says.
The platform does more than just wholesale EVs. It also provides EV-specific details on each model, such as battery health and software-enabled features including advanced driver assistance systems, and whether such software is due for an update.
Plug’s target customers are the relatively small number of EV-only dealerships in the U.S., many of whom don’t have complete information readily available on the health of the used EVs they acquire, says Douglas.
And yet, that type of information is crucial for anyone acquiring a used EV, he says. “Used EVs are fundamentally different assets than internal-combustion-engine vehicles. (EVs) are more like computers on wheels.”
As such, the vehicles’ technology changes quickly. Purchase incentives around EVs are also evolving. “So, there is a need to transact them fast,” says Douglas.
“There is a lot of volatility in the market,” he says. “Our focus is on velocity. “The Plug platform is not yet fully live. A handful of dealerships, including EVAuto in Bountiful, UT, are testing it and refinements are ongoing.
In operation for about four years, the EV-only store sells an “eight figures” volume of EVs annually, CEO and co-founder Alex Lawrence tells Wards.
Sales are growing at a “steady pace,” he says.
EVAuto sources inventory from trade-ins, private sellers and other dealers. The process is both time-consuming and inefficient, says Lawrence.
Plug’s marketplace is “something we desperately need,” he says. “I’d love to buy all my cars that way if I could.”
Douglas is not concerned about the apparent slowdown in EV sales: “I don’t think the slowdown in retail sales we are seeing right now dramatically changes our long-term strategy.”
Douglas figures the number of used EVs coming onto the market will shoot up in a few years. One reason is that the number of leased EVs surged in mid-2023 when leased EVs were determined to qualify for a tax credit regardless of whether they met the strict sourcing requirements applied to purchasing a new EV.
A change in the way the tax credit for a new EV is applied may also boost sales, he says.
The used-EV market is worth under $10 billion right now, says Douglas, who previously worked at Tesla. But he expects it to rise to about $60 billion after 2026, based on units in operation and announced production plans. By 2032, Douglas expects the market to exceed $300 billion.
If those growth estimates are accurate, Plug has a bright future, figures EVAuto’s Lawrence. “As the market grows, (Plug is) going to be an important tool in the toolbox to sell used EVs.”