News out this week that the 2024 Polestar 2 will offer dramatic performance improvements vs. the current generation model.
The combination of hardware and software upgrades, including larger batteries and revamped motors, will extend the sedan’s range by 20% while using up to 9% less energy and charging up to 34% faster.
At first blush, you might not think this is big news. But it’s really got me thinking.
If EVs are able to deliver annual performance improvements like this (through a combination of both hardware and software upgrades), what's it going to do to the depreciation of used vehicles that are far less attractive to the consumer as a result?
If each subsequent generation of EV delivers dramatic performance improvements in both battery range and power and both the speed and power required to charge them, why wouldn’t a would-be EV shopper just wait for the next model year and postpone their purchase?
I remember back to when the personal computer’s Intel chip (and thus processing speed), and data storage were improving so quickly that by the time you had your Dell Computer delivered, it was effectively out of date.
For example, if you were interested in buying the current year Corvette, but knew that next year’s model had more horsepower and better fuel economy for the same MSRP, wouldn’t you be likely to wait to buy next year’s model?
And then there’s the issue of used vehicle depreciation and resale values.
If automakers are able to dramatically improve each subsequent EV model, why is anyone going to want to own a 5-year-old Polestar?
I already struggle with how the industry is going to set residual values on electric vehicles in an environment where we have 150 new EV models hitting showroom floors over the next two years, and the unpredictable demand from a U.S. consumer who is still skittish about charging range, charger availability and charging speed. Never mind the current inflation of EV MSRPs vs. their comparable Internal Combustion equivalents.
Remember back to the first generation of Nissan Leafs, when they came off lease? They had a stated range of 109 miles when new. By the time they came off lease 3 years later, you’d be lucky to get 80 miles worth of range out of them. Heaven forbid if you wanted to use the AC in the summer or heat in the winter. To state the obvious, the secondary market for used Nissan Leaf’s dropped like a stone.
Do we run the same risk if the pace of technology innovation in each new generation of EV is as dramatically improved as we’re about to witness in this new Polestar model?
Steve Greenfield is the CEO/Founder of Automotive Ventures.
This article originally appeared on CBT News.