Selling and Buying Second-hand e-bikes

[flecc]

When selling and buying most vehicles the value is generally well understood and a fair price easily worked out, but with e-bikes there's clearly a problem since prices asked are often unrealistic and in many cases owners and buyers haven't any idea what the right price should be, as shown by the questions asked in here sometimes.

E-bikes are a special case since the battery forms such a very large part of the original price, but it's life is a fraction of the rest of the bike, and I'm therefore proposing a simple formula to deal with this and make it easy to assess realistic prices. Since the great majority of e-bikes use lithium batteries with around two years and/or 500 charge life, the formula is based on those.

The start point is the original new price of the bike, since in a rapidly developing field the latest price is irrelevant as new models will often have many improvements. Then to deal with the battery life problem, the battery is dealt with as a separate element on this basis:

One year old e-bike: Half the current replacement cost of a battery is established to give half value left.

Two year old bike: The whole replacement cost is established to give zero value left.

For ages in between in each of the above cases, the price established should be pro-rata, and in cases where the battery has been replaced at some point, the same pro-rata rule can be used against it's age.

Then the start point of the e-bike's separate value is estabished by deducting the current new battery price from the original purchase price and then a depreciation percentage is deducted in the same manner as for other vehicles, the initial depreciation quite high as is usual:

I year old bike: 25%
2 year old bike: 35%
3 year old bike: 45%
4 year old bike: 55%
5 year old bike: 60%
6 year old bike: 65%
7 year old bike: 70%
8 year old bike: 75%
9 year old bike: 80%

Then to the discounted price of the bike only, any residual value of the battery as established above is added back to give the fair second hand price.

Here's a typical example of a lithium batteried e-bike costing roughly £1100 originally, with today's replacement battery costing £514:

One year old, £1100 minus the rounded original battery price is £600, less the 25% depreciation of £150 but plus the £250 residual battery value = £700

Two years old the £600 bike price less 35% depreciation and no residual battery value to add = £390

That second case will shock many owners, but when one considers the battery could be at around the end of life, adding the replacement cost of £514 to that £390 brings it to £904 for a two year old £1100 e-bike, which you can see is as much as it can possibly be worth, despite the new battery. It also brings home how unrealistic the £700 is that I've just seen asked for the same age and type bike, since with the battery replaced the cost would be substantially more than the original purchase price and almost as much as a new model. On the other hand, if that two year old e-bike had just had the battery replaced, only the 35% age deduction would apply, leaving it's second hand value at £715. That's about the same as the one year old above, which is right since it's extra year of wear is offset by the new battery having the whole of it's life left instead of only a half.

Of course small adjustments can be made up or down for bike condition, but the general principle of separating the bike and battery prices is a sound way of dealing with their very different lives, and a fixed formula as suggested enables anyone to judge whether a price is fair or not.

The same method can be used for SLA batteried bikes, while for those few with NiMh batteries, the battery life can be taken as 3 years with a third of the last available price deducted for each year of use. At some time in the future LiFePO4 batteries will be adopted, though there's no sign it's about to happen, but when it does their life will probably be double that of the present batteries, so the formula is easily adapted to that sort of change .

Lastly I have experimented with a variety of differing formulae on the bike and battery separately and the above one is the only simple one that gives equitable prices across all combinations of ages and battery lives. It also allows for the improvement in second hand prices that would result from battery prices going down to former lower levels.
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[fishingpaul]

I agree with your realistic valuations,however i think auction fever on ebay often pushes the prices of ebikes well above their real worth.

 

[flecc]

Sadly true Paul, but hopefully with time the outlined method could become better known and in part set a standard like the well established motor industry ones. It will at least give a correct upper limit to bid to in an auction.

I'm going to use this method in future each time someone asks what to sell a bike at or asks if a bike's "for sale" price is fair, which will at least have the value of consistency. We really need to get away from what most have been doing, just assessing value on an e-bike's age without properly considering the battery element.
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[PaulC]

Thanks Flecc, this approach makes it easier as well for sellers of used e-bikes to decide on a fair asking price.
Paul

 

[frank9755]

That's a very sensible way of looking at it. When I sold my old Wisper I used a similar approach to get to an asking price.

One question: is it really right to base the valuation on the original price of the bike?

Taking Flecc's 'hypothetical' example, let's say that the bike in question had a new price of around £900 when it was first purchased (I paid more for my Wisper but some who were cleverer on the 'Best Offer' system, and less desperate to get hold of one, paid less than that!). Now, as a result of a combination of:
- improvements to the bike which make it a better bike,
- improvements to the bike which the customer may not value,
- upgraded battery,
- increases in costs for equivalent components,
- exchange rate movements,
- lack of a sell-off situation from a particular distributor
- a (perfectly justified) desire on the part of the manufacturers to earn normal industry margins,
- changes in VAT rates
the new price is actually £1,399, which is 44% higher.

Actually, that original price is largely irrelevant. Items have no intrinsic value based on what was paid for them at some point in the past. It is relevant only to the extent that it gives an indication of the quality of the bike relative to others available at the time. However most of the factors which have driven that movement are not related to improvements in the bike therefore, I would argue, the true starting figure is somewhere between the two: the current price of the bike discounted for genuine improvements to bike and battery, which should equal original bike price inflated for non-improvement factors above.

Sorry this is a complicated statement of what is quite a simple idea, but I think the rapid price increases seen across all bikes - electric and non-electric - over the last couple of years means it needs to be taken into account!

If you disagree with this, imagine for a second the reverse situation. Let's say the £ shoots up against the dollar, people open new component factories in Asia, the e-bike market gets flooded with new entrants with new innovations and batteries become cheaper through higher volumes. Suddenly a bike which sells for £1400 today with (to make maths easy) a £400 (retail price) battery is considered a bit old-fashioned by 2011 and the new price has come down to, say £700 (with the same batteries now being £200).
- Could you really sell a 2-year old one with clapped out battery for £650 (original price - (35% of original bike-only cost + 100% original battery cost))?
- No, what you had paid would be irrelevant and a true value would be more like £325 (current price - (35% of current bike-only cost + 100% current battery cost))

 

[rog_london]

Thanks for your efforts, Flecc, and the only basic flaw I can see is outlined by Frank. To give a ballpark figure, though, it's a valuable pointer.

A couple of points:

Allowing a battery life of two years is obviously sensible. You may well benefit - I think, for example, that modern lithium-ion batteries may well last a good deal longer than that if they're well looked after and haven't done a huge mileage. David from Wisper mentioned the other day that some four year old batteries were still in use, so the perceived wisdom that they die after two years isn't necessarily the case. Of course, the opposite may also happen and you might get an early failure, but a decent warranty would take care of this.

A neglected battery may well be more or less dead after a year and not covered by warranty - so there's still a considerable element of risk attached to the purchase. A long enough test ride to run a battery flat and assess how good it might be is almost certainly not an option until after parting with your cash and taking delivery.

The recent jump in the prices of all e-bikes and especially of their batteries is bound to affect the resale value to some extent and may well make a bike 'worth' more second hand than your figures suggest. That's likely to change in an adverse way though if/when we climb out of recession....

There's also the seasonal aspect - the buying market will obviously be more lively at this time of year than it might be in the arctic conditions of January. This can have a large effect on the number of 'bargains' available, especially on e-bay, for example. I've always bought my second-hand motorbikes between November and February for that reason.

Rog.

 

[rog_london]

More seasonally affected disorder

I've just thought of another 'seasonal' consideration - if you buy a secondhand e-bike late in the year, the chances are it's been in use within the last few months - if you buy one in March or April it's much more likely to have been sitting in the back of a garage unloved and more importantly uncharged since the sun last came out in September.

Rog.

 

[flecc]

One question: is it really right to base the valuation on the original price of

I understand the point made Frank and I did consider it carefully first.

However, that approach doesn't work as well as I can show. Take a two year old 905se costing about £1100 originally, but now the 2009 model listed at.

My valuation method makes a two year old bike with today's exact battery price discounted and 35% depreciation applied worth £381, which when a new battery is fitted makes the total £895.

Your method using todays 2009 905se price of £1449 produces an end result of £1122 which is not only more than the bike cost originally but is only 22% down on the latest model. I don't consider that enough of a reduction on a two year old in a rapidly developing field where the new bike will have numerous improvements over the old one.

I knew that many would find the £390 for two year old example instantly unacceptable, but on members own evidence it is realistic. How many times have we seen it rightly said that an expensive e-bike is really a £300 to £500 bike with the electrics fitted? In that context there's little wrong with that £390 for a two year old bike with motor less battery.

Using the latest new price formula makes the two year old bike without battery £608, clearly excessive at two years old when the bike is £300 to £500 brand new and the hub motor/controller maybe around £150.

And there's one final killer for the new price method that I'd identified, the fact that e-bikes are discontinued or superceded, giving no new price to work from, something very common in our rapidly developing market. For example the 905e, and the Lafree range.

With all those things considered, the original price method is the only dependable one in all circumstances and as I've shown, it gives equitable results. Of course one can include an inflation factor just as one includes a condition factor when assessing the valuation, but I think it best to stick to a basic formula which works in all circumstances.
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[flecc]

I think, for example, that modern lithium-ion batteries may well last a good deal longer than that if they're well looked after and haven't done a huge mileage. David from Wisper mentioned the other day that some four year old batteries were still in use, so the perceived wisdom that they die after two years isn't necessarily the case.

If a buyer can show some acceptable evidence of a lightly used battery Rog, that can be a small adjustment to the price after using the basic formula, but we can't assume such things when making a reliable formula.

David's mention of a four year old working battery is an inadvertant red herring. At that time they used cobalt cathodes which proved to be a fire risk so all manufacturers stopped their production three years ago. Those that were ok, and that included the ones Wisper used, worked well and could last longer with less age effect than the manganese cathode ones that replaced them. However, the cobalt ones still only lasted a maximum of 500 charges so one would only be working after four years if it had been very intermittently and lightly used, a very rare case. In addition it's capacity would anyway be only a small part of the original 10Ah so not worth much.

Once again a formula cannot be based on a very infrequent exception, especially since a buyer cannot know a battery's past treatment with any certainty.
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[flecc]

I've just thought of another 'seasonal' consideration - if you buy a secondhand e-bike late in the year, the chances are it's been in use within the last few months - if you buy one in March or April it's much more likely to have been sitting in the back of a garage unloved and more importantly uncharged since the sun last came out in September.

Rog.

Seasonal considerations are minor, unreliable and very variable Rog, so once again they cannot be reliably known by a buyer and shouldn't be considered in the formula. They can only be for individual judgment in each case.
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[frank9755]

Your method using todays 2009 905se price of £1449 produces an end result of £1122 which is not only more than the bike cost originally but is only 22% down on the latest model.

Those numbers are fine as far as they go but don't factor in the genuine improvements that Wisper has made which also need to be adjusted for.

For example on my 2007 bike the rear brake disintegrated before I used it - had to replace - and I had to spend a Sunday afternoon making a torque arm or the dropouts would have been toast. I also had to do the wiring fix, had to work out how to use the multiple red and green buttons, had a daft computer that gave the wrong speed, etc. All of those problems and others are fixed on the new Wispers - they are better bikes, so they are worth more! I'd estimate conservatively that lot (plus other things like better brake levers, and loads I'm not aware of) was worth an extra £250. So actually my method fully applied would get to something more like 40% less than the current price. Probably not a million miles off.

I actually did a similar calculation at the start of this year when I sold my Wisper! I think I used a sharper depreciation rate than your table, adjusted for some of the fixes I had made (tyres upgraded, torque arm, rear brake, etc) and put some residual value on the battery as was just 1 year old then - but basically the same idea.

Take a two year old 905se costing about £1100 originally

They cost less than that then! The 2008 model was launched at about £1100 but IIRC full list price at ETS was c.£950 when I took one for a test drive in late 2007 (less than 2 years ago). Would that lower price really make the second hand one worth less today? only £293!

The killer point of course is the one at the end of my previous post - what happens when prices go down quickly - as they will at some point. In my hypothetical example using the historical purchase price would then make the second hand bike worth 93% of new - which no-one would agree with!

In truth we can't apply a formula - these are only guides...bike only worth what someone will pay, etc. For cars - a far more mature market without the price swings we have seen in e-bikes - a historical price-based model is appropriate, but the e-bike market is not mature enough for it yet and I think using the current market + sensible adjustments will give a better indication than now-irrelevant historical prices.

Or try both methods and take the average!

 

[flecc]

Sorry Frank, I cant agree that the current market price without factoring in the battery separately is acceptable since it leaves us right where we are now, with quite ridiculous asking prices, often far too high.

My method prevents that and allows for the adjustments that you suggest to be applied anyway. At least it gives a reliable, consistent and universal base price to work from which doesn't exist at present.

Once again I say that the fact that prices might go down again is not a factor to consider, we just don't know that and cannot base judgments on that. It's true with all products and I don't see the sophisticated motor industry making allowances for the possibility of prices going down, despite them having experience of once when that actually happened.
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[frank9755]

Sorry Frank, I cant agree that the current market price without factoring in the battery separately is acceptable since it leaves us right where we are now, with quite ridiculous asking prices, often far too high.
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Agreed - I was valuing bike and battery separately too. I won't add any more to this thread as I don't think we are disagreeing about much and agreeing on the main points!

 

[flecc]

Agreed - I was valuing bike and battery separately too. I won't add any more to this thread as I don't think we are disagreeing about much and agreeing on the main points!

I agree Frank, I'd misread your post as meaning judgment on a single price, but it's clear now we are on the same general lines.
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[eddieo]

Type of use must come into it as well......There are some hardcore commuters on here, and good luck to them!

They do X amount of miles a day and charge at both ends and cover 1000's of miles in a year........

whereas mine. light, fair weather use only, charged on average once or twice a month.......probably covered less then 500 miles

so what would these otherwise identical wisper 905SE's be worth at 12 months old?

 

[AndyOfTheSouth]

An excellent thread - interesting and genuinely useful. Thanks as ever to Flecc and co!

 

[flecc]

Type of use must come into it as well......There are some hardcore commuters on here, and good luck to them!

They do X amount of miles a day and charge at both ends and cover 1000's of miles in a year........

whereas mine. light, fair weather use only, charged on average once or twice a month.......probably covered less then 500 miles

so what would these otherwise identical wisper 905SE's be worth at 12 months old?

These are the adjustment items I mentioned Eddie, and because they are so variable they cannot be a part of a base formula without making it ridiculously complicated. Your usage is very light, just as some are very heavy users. That's no different from any other vehicle where a judgment is made on the usage and condition of the vehicle and the indicated book price adjusted to suit. The important thing is to have an established and repeatable base to work from like the motor trade's book prices, since that is the only way the consumer knows what is fair or not

Remember though that Lithium batteries continuously lose capacity with age from the moment they are first used, regardless of how heavily they are used, so once again it's the reason why bike and battery have to be separated to establish the proper value.
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[BertYardbrush]

This is such a good idea. It is well worth considering having a separate "Flecc's price guide" on this site as a way of generating a healthy second hand market at realistic prices for the potential buyer. Most of the people on this site seem to have pots of money and get new bikes at impossibly regular intervals.

Lets have a bit of "trickle down" and distribution amongst the more economically challenged such as myself.

 

[fishingpaul]

Another point when buying second hand,is the often genuine lack of memory as to how old the bike and components are, i noticed a torq for sale on ebay which it said came complete with with a new and unused battery ,but the new battery was supplied by 50 cycles, how old is that battery now.

 

[flecc]

Another point when buying second hand,is the often genuine lack of memory as to how old the bike and components are, i noticed a torq for sale on ebay which it said came complete with with a new and unused battery ,but the new battery was supplied by 50 cycles, how old is that battery now.

It's a minimum of over 20 months old, and if it hasn't been recharged at least every three months it might be no good. In any case much of it's life has gone.

However such issues are not part of any vehicle valuation listing, they are a matter for individual judgment and the buyer as ever must be cautious and assume the worst. If a seller said to me they didn't remember when they got such an expensive item I'd just walk away.

I treat all such claims on ebay as nonsense, sometimes it seems every e-bike is "hardly used", "battery not used", "owner moved away", "ill" etc., and I think they're mostly just liars.

My advice is to always assume the worst, assess the value using my formula on that basis and bid only to that limit.
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