CARY, N.C. -

Electric vehicles took some time to gain steam in the new-car market, but once they did, sales took off like a rocket. Given the measured pace of new EV sales in the years prior to the acceleration in 2021, pre-owned EVs remain a “niche market,” due to the resulting low supply and other considerations, says Cox Automotive Jonathan Smoke.

That won’t last forever.

And the auto auction industry is keeping a close eye on the used EV market, preparing for the inventory that may come down the lane in a few years.

The National Auto Auction Association has made EVs a priority, in particular legislation and guidance around federal funding that impacts charging stations.

In fact, NAAA has submitted comments to the Federal Highway Administration, as that agency seeks public input amid the Department of Transportation and Department of Energy developing guidance for EV-related provisions in the Infrastructure Investment and Jobs Act that passed in November.

“As we begin 2022, we know electric vehicles are top of mind for all our members,” NAAA chief executive officer Tricia Heon said in an emailed message to members Wednesday. “We want to keep you informed about how federal legislation could affect our industry regarding EVs and EV charging stations as we know so many of you are eager for information on this important topic for all of us.”

Case in point, the federal Infrastructure Investment and Jobs Act. Heon explained there is $5 billion in funding that would go to the National Electric Vehicle Formula Program through the act. That money would be allocated to states to set up charging infrastructure, she said.

There is also $2.5 billion in funding as part of the act that would go to the Charging and Fueling Infrastructure Program. This competitive grant program would be for the launch of publicly accessible EV charging infrastructure.

The combined funding is over the course of five years.

“So, for example, under the new legislation, a state could receive $80 million over five years to support the expansion of an EV charging network in that state and can apply for grants out of the $2.5 billion available for EV charging,” Heon said.

Each state is required to submit a plan to the Department of Transportation explaining how it would use the National Electric Vehicle Formula Program funds for each fiscal year the funds are available, she explained.

Meanwhile, the Department of Transportation and the Department of Energy are required to create guidance for both the National Electric Vehicle Formula Program and the Charging and Fueling Infrastructure Program, Heon said.

With that, public comments are being requested by the Federal Highway Administration to help DOT and DOE build that guidance.

“NAAA has submitted comments on your behalf. We offered our support for these programs, outlined how our member auctions would benefit from these programs, and emphasized how our auctions are a key economic driver and integral part of the automotive industry,” Heon said.

“While all the details about the grant program and how the state funding will be allocated have not been released, we can assure you that we will stay on top of it and keep you posted on any further developments,” she said.

In current developments, the new EV market had quite a year in 2021.

According to Cox Automotive, there were 487,460 EV sales last year, which beat 2020 figures by 89%. When you add in HEVs/PEVs, the “total electrified” market was north of 1.45 million sales last year, an 85.9% increase.

“It really was an acceleration this year and it's going to take time to see it really manifest itself in terms of similar growth in the used market. Because still in 2021, sales of used electric vehicles was very much a rounding error,” Smoke said in an industry conference call earlier this month.

“And we clearly see a future where that’s not going to be the case. But the slow growth and the slow adoption over the last decade prior to now has meant that it's been a niche market on used side,” he said.

Some of the prior hesitancy in new EVs ties into what is expected to be slow adoption of pre-owned EVs. Concerns over battery life and range of used EVs must be addressed, along with analytics needed to develop used EV valuation models. And of course, the low supply of used EVs.

“And so, you’re really not going to see strong adoption in used until obviously there's more supply available, but also when a lot of those concerns about charging and about the health and life of the battery are being addressed,” Smoke said. “And that’s an area where Cox and Manheim are being very focused on the future.

“We see a role we need to play in helping to diagnose those batteries and help to establish for valuing a used electric vehicle,” he said. “Because if you think about it, we've had a hundred years of insights to value combustion engines. The data is very limited to be able to do that as solidly to judge what the true value is of an electric vehicle that's used. 

“So those are areas where I think we’re going to see a lot of innovation. And there's no question you're going to see growth in years ahead. But really the used market lags a couple years behind this growth that we're seeing in the new-vehicle market.”

But again, perhaps not for long.