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COX Automotive Australia, in a submission to the standing committee on Climate Change, Energy, Environment and Water regarding the electric vehicle transition, has lifted the lid on some of the many issues the industry needs to address as EVs start moving through the chain of ownership. 

Saying that it believes strongly in an electrified future, Cox Automotive said that its Manheim division was well-placed to manage issues such EV resale values, second-life refurbishment and re-use of valuable batteries.

It said the key topics for Manheim are:

  • Establishing a vibrant second-hand EV market
  • Creating transparency of used EV battery state-of-health
  • Establishing best practice procedures for the safe storage and sale of damaged EVs
  • Second-life batteries through Manheim Salvage, supporting repair, refurbishment, and recycling.

The submission said that Cox could offer market-leading data in these key areas, directly or through membership-based lobbies such as the Electric Vehicle Council and the Motor Trades Association of Australia and said that Cox was “ready and willing to play a part in the transport revolution”.

Establishing a vibrant second-hand EV market

The submission said that, given the Government has made fleet operators a focus for its EV-related subsidies, namely the fringe-benefits tax exemption program, it would make sense to focus on bolstering residual values too.

“Fleet buyers and managers work on a total cost-of-ownership model, including the value they capture when disposing of an asset, in this case an EV. Encouraging take-up at scale will require a stable and healthy used EV marketplace.

“Not just for fleet buyers either, but the private market too. The fear of poor resale is a powerful tool dissuading some people from buying one or many EVs.

Resale values have been compressed overseas by factors including:

  • Tesla slashing its prices
  • The rise of cheaper Chinese EVs 
  • Persistent consumer misconceptions around long-term battery health
  • A rapid technology advancement curve that renders late-model vehicles undesirable
  • Subsidies that drive new EV uptake at the expense of used.

“At Manheim just 0.2 per cent of our wholesale used sales this year have been an EV, but the floodgates will open soon. There have been about 160,000 new BEVs sold in Australia since 2019, but around 85 per cent of these have been sold since the start of 2022. This means the majority are on their first owner.

“Fleet and lease cars play an outsized role in this. To cite one example, about 40 per cent of novated lease cars are an EV now, due to the GST and FBT exemptions. For another, our client QFleet has just acquired its 1000th EV. Most of these are expected to come through Manheim auction lanes at disposal time.

“We project Manheim’s wholesale auctions in Australia will be dealing with hundreds and eventually thousands of these sorts of EVs, in earnest, from 2025.

“Actions we are putting in place at Manheim include broadening our established buyer pool by investing heavily in our Buyer and Vendor Services team, developing EV-specific digital auction events, and offering battery state-of-health (SoH) checks to ensure greater consumer peace-of-mind.

“We would encourage the Government to investigate the viability of purchase incentives for people or potentially even businesses considering a second-hand EV, which would simultaneously enhance overall affordability while mitigating poor residual values, which have the potential to put people off.

“A US-style rebate on second-hand EVs under a certain price might be one solution, another could be pulling levers such as stamp duty or registration reductions. In the United States, a $4000 ($A6000) tax credit on used EVs under $25,000 ($A38,000) spurred an almost immediate 34 per cent spike in used EV sales, according to Cox US vAuto data.

“A further suggestion is an awareness campaign promoting the long-term reliability of EVs, given the low percentage of batteries replaced under warranty to date,” the Cox submission said.

Creating transparency around used EV battery state-of-health:

Cox told the committee that while EVs do not require oil changes, they do require battery health checks. 

“Battery health score diagnostics will become the new vehicle logbook in future,” Cox said.

“There remains a great deal of scepticism from consumers and dealers when it comes to the vital issue of long-term battery health. Lithium-ion batteries account for between one-third and a half of the total cost of an EV, and while they generally come with eight-year warranties, uncertainty abounds.

This is not necessarily justified by what the data shows us. EV-focused data and analytics firm Recurrent in the US looked at diagnostics from 15,000 cars, finding only 1.5 per cent of batteries had been replaced under their warranty for losing excessive mileage. And these are early build batteries in the grand scheme.

“Yet consumer psychology is a large factor in any purchase decision.

“Fortunately, there are emerging products and services available to check a battery’s state of health and Manheim plans to offer one of these to its customers in the near future. Brands in this space already include Aveloo, Altelium, Mobi, and EV Battery Solutions by Cox Automotive (situated in the United States only for now).

“The United Nations Economic Commission for Europe is currently in the process of specifying Global Technical Regulations on battery health, and we would encourage the Australian federal government to support the proliferation of these services to ensure there is greater transparency in the emerging used EV market.

“Comfortable buyers are confident buyers.”

Second-life batteries through Manheim Salvage

Cox said that its Manheim Salvage holding yards around Australia already hold about 850 damaged electric and hybrid cars, which have been involved in accidents and sent to the company by its insurance partners.

“Naturally we are focused on best-practise EV fire safety protocols (working with the government-funded EV Fire Safe on risk mitigation) and are currently running a country-first long-term EV thermal imaging program to monitor changes in damaged battery ambient temperature under different weather conditions.

“Due to these initiatives, Manheim is well placed to contribute to discussions on the safe sale, handling and storage of damaged EVs.

“We would welcome the opportunity to provide input into this unique aspect of the EV end-of-life ecosystem as it is an important component for insurers to recoup claim costs (important to being able to minimise EV vehicle insurance policy increases) and for the flow of EV batteries into the circular economy.

“Further to these considerations, there are significant commercial opportunities in the repair and/or refurbishment of modules in these damaged battery packs, removing them for second life use in stationary storage systems or upcycled classic cars, or turning them into Black Mass for recycling as we already do in the US at commercial scale.

“Manheim can be a leader in this space in Australia, which has obvious benefits across the industry.

“By participating in and helping build a marketplace for the sale of repaired or refurbished battery packs and modules, Manheim can create value for insurance companies who can realise higher values for their damaged EVs and create supply channels for other players in the end-of-life segment which will have flow-on benefits.

“We would encourage government support for end-of-life initiatives, as well as training programs to ensure we have a suitable talent pool ready to capitalise on these emerging opportunities,” the submission said.

About Manheim: Manheim is a wholesale auction house with locations across Australia that facilitates the re-selling of cars, light and heavy commercial vehicles, and industrial equipment.

Its main partners in the remarketing space include public and private sector organisations needing asset disposal, fleet management firms, motor vehicle dealers, and automotive OEMs. Issues such as EV resale values and long-term battery health checks are critical to its forward planning.

Additionally, Manheim’s Salvage division works with major insurers to store and re-sell damaged and written-off vehicles – including EVs. Written off vehicles are primarily sold to vehicle repairers, parts dismantlers, and component and metal recyclers.

The company says it is deeply invested in helping create best-practise solutions for the safe handling of damaged EVs, as well as battery refurbishment and potentially recycling.

By John Mellor

AdTorque Edge