ICE to EV Retrofitting - Impact on Used Car Market
A take on the used car market, and mechanics' creativity.
I think the market for used cars will remain hot. Although the market is projected to shift toward electrification over the next decade, the world is experiencing a significant price squeeze on the used car market. Most aged used cars are implied to be internal combustion engines, and most speculate that the price spike is due to supply chain challenges. The price of used cars has increased 32% year over year according to CarGurus.
The Common Explanation
The source of price increases for the used car market was due to the automotive industry being pummeled during the COVID outbreak in 2020. The temporary lockdown and reduced labor pool cascaded throughout the entire supply chain. This made it challenging to meet the demand requirements from customers as materials and parts experienced delays. It isn’t worth belaboring the point, but it will continue to take time for the automotive industry to catch up. Just when the workforce was returning the Russia-Ukraine conflict has introduced another challenge for the world. Â
An Alternative Take
Complicated supply chains, reduced labor pools, and now an oil crisis! What else?? The growing demand for electric vehicles has also caused rapid price increases for the materials used in making lithium ion batteries. Therefore, this has caused many manufacturers to push price increases onto consumers as reported by CarNewsChina. Electric vehicles are reaching unaffordable prices, therefore causing the new and used internal combustion engine market to remain hot.
A recent article from InsideEVs, highlights a Honda S2000 that was equipped with a lithium ion battery pack. The mechanics converted a fun internal combustion engine darling of the 90s/2000s era, and created a 500hp electric go-kart. Â
Over the past couple years there have been reports of other vehicles being retrofitted with lithium ion batteries. A company called Zero Labs is making a business out of it transforming classic vehicles.
What Are Your Thoughts?
The dramatic increase in used car prices has persisted for a couple of years now, and there does not seem to be a clear consensus on when it will cool off. Could there have been some mechanics or specialists that saw opportunities in particular models of vehicles? The price increases of electric vehicles make them even more unaffordable for most people. Given that a lithium ion battery pack is roughly 40-50% of the total cost of an electric vehicle, some people probably saw some opportunity. The battery supply chain outside of Asia is still lacking, and a lot of things will need to go right for EV supply to catch up to the demand. Â
The US Government administration recently announced using the Defense Production Act to assist American companies in building the battery supply chain.    Â
The initiative is in place, but the near-term will still remain challenging. These times breed creativity and innovation!Â
Further Reading and WatchingÂ
Internal combustion engine to electric vehicle retrofitting: Potential customer’s needs, public perception and business model implications, F. Hoeft. March 2021.
Electric Cars Are Too Expensive For Many, But Retrofitting Could Be The Answer - Forbes
Before you buy an EV, consider building your own with a conversion kit!