Public interest in the used electric car market is heating up with one Canadian dealer reporting a 40 per cent sales increase year over year and a newly announced financing deal catching industry attention
Toronto-based used EV dealership Electric Vehicle Network (EV Network) announced today that it has closed the company’s first seed-capital investment with Ontario-based investors, EV Angels, for $500,000. EV Network, with sales locations in Toronto and St. John’s, acquires used electric vehicles from across North America and puts them into the hands of Canadian drivers.
EV Network uses a contactless online-based system that offers a long rental period for customers to decide on a purchase. While its method may be unique in the industry, the used dealership’s existence — and latest successful round of financing — underscores the interest now growing up around used EVs for both sellers and buyers in Canada.
That growth is due, in part, to increasing supply as the new EV market matures. But its rise is also seen as a key step in ensuring the country achieves a faster, more equitable transition — because it puts EVs in range for potential buyers who can’t afford a new one.
“The underlying thinking is that we felt EVs should be made more affordable to all so that Canada can drastically reduce its emissions,” says Darryl Croft, cofounder of EV Network, in an interview with Electric Autonomy Canada. “We felt we were in a position to do that, so our goal was really to assist Canadians to migrate to electric vehicles by giving some cost-effective options.”
EV Angels is a new start-up investment firm dedicated to, “supporting start-ups, teams, and entrepreneurs who reduce the barriers to EV adoption” according to the company’s materials. It was co-founded by Sean and Daniel Hart, both of who will be joining the EV Network board of directors.
Bringing equity to the EV market
For most drivers, swallowing a many tens of thousands dollars expense to transition to electric drive can be prohibitive. With provincial rebates and purchase incentives for new EVs (let alone used) still a patchy experience, the financial bar to entry into the EV market remains high.
“Used electric vehicles play a big role in equity of the transition toward clean transportation and the green economy,” says Jérémie Bernardin, president and cofounder of the Electric Vehicle Association of Atlantic Canada, in an interview with Electric Autonomy Canada. Bernardin is also a partner in All EV Canada, a used EV company in Nova Scotia and Prince Edward Island.
“If someone wants to take part in that space, but can’t afford a brand new car, they no longer have to feel like they aren’t making an impact themselves in their own lives. It’s a lot more attainable for many when they make a used electric vehicle purchase.”
It’s not just a problem here. In Europe, while sales of new EVs are much higher than in Canada, data published in a recent post by the International Council on Clean Transportation (ICCT) shows new registrations there are generally concentrated in the highest-income households. While the ICCT concludes that the used EV market will expand as new EVs turn over in the market, it notes some countries are offering rebates on used EVs to extend access to lower-income buyers and accelerate adoption.
The difference rebates make for lower-income households to be able to purchase new or used EVs is marked, says the ICCT — especially so if the rebate is increased for lower-income buyers.
“As the used electric car market is slowly evolving, providing incentives similar to those offered for new cars seems to be a crucial element to broaden up the market to a wider consumer group,” states the ICCT post. “Additional incentives for lower-income households can help serve an even broader market, guaranteeing equal access to electric vehicles beyond the rich.”
It’s a sentiment seemingly echoed across Canada.
While no data is publicly available to give insights into sales of used EVs here, anecdotal reports from the roughly 20 specialized used EV dealerships now operating across Canada indicate a noticeable increase in used electric purchases. This is true especially in the three provinces currently offering used vehicle incentives, but even those in rebate deserts are noticing an uptick.
“Year over year from 2019-2021, we have seen a 40 per cent increase in used EV sales,” says Paul Repar, president of Oakville-based SHIFT Electric Vehicles, in an interview with Electric Autonomy Canada.
“It does feel like adoption is growing exponentially. I heard that Oakville has the highest per capita of Tesla owners in North America if you exclude California as a whole. [EVs] are almost all the inquiries we are getting. We are getting overwhelmed with demand.”
A different experience
One of the advantages of investing in a dedicated used EV dealership is the difference in experience for both customer and vendor. From first walking into an EV dealership to sitting behind the wheel many first-time EV drivers undergo a learning curve as part of the transition process. The experience can either be a discouraging or an inspiring one depending on the type of service a buyer gets on the front lines. This becomes the one of the biggest selling points of dedicated used-EV dealerships: incomparable expertise.
“An electric vehicle usually takes 10 times more time to sell than a gas car. In terms of investing that time into the customer: talking to them, making them understand the charging network, the features of the car, the warranty, how it works, how the warranty is different, how on a Tesla your phone is the key and how everything works in the car,” says Bernardin. “I can sell a gas car in 15 minutes. It takes me hours to sell an electric car.”
Many conventional dealerships run on a volume model: maximum sales, minimum time and bonuses for employees moving the most stock. The mindset in a used EV dealership is completely different with an emphasis on knowledge of the entire zero-emission ecosystem — everything from which vehicle provides the range a driver needs to being familiar with the electricians that can install the charging hardware.
“The consumer comes armed with questions and they expect you to know every single one of these cars and everything that’s involved in them,” says Bernardin. “It’s a pretty big challenge for a traditional dealership and I think it’s a great opportunity for specialized stores. It creates a niche opportunity.”
At the same time, it’s a niche that’s growing. And with more and more boutique resale EV retailers opening up across Canada, Repar suggests it might not be too long before the business is ripe for larger partnerships or greater consolidation.
With so much opportunity for expansion Repar says he is “surprised” there isn’t a more obvious interest in the used EV marketplace by investors looking to building the momentum of the “smaller, independents who have gone down that road.” But with announcements like the EV Angels and EV Network partnerships becoming more commonplace and bullish small businesses ready and willing to work to grow, 2021 may just prove the year Canada’s EV resale space comes into its own.